Ecovyst (ECVT) 28 Feb 242023 Q4 Earnings call transcript

Good morning. My name is Bo and I will be your conference operator today. Welcome to Ecovyst's Fourth Quarter 2023 Earnings Conference Call and Webcast. Please note, today's call is being recorded, and should run approximately 1 hour. [Operator Instructions] Now at this time, I'll turn things over to Mr. Investor of Director Shiels, Relations. Gene sir. Please go ahead,

Thank you, operator.

Chief Ecovyst morning, With Full and Financial welcome Officer. Bitting, me Ecovyst's Mike the and to Fourth Ecovyst's Kurt Year are the this Quarter Officer; Chief call and Feehan, Good on morning Executive XXXX Earnings Call.

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

now over I'll turn to call Kurt? the Kurt Bitting.

and Gene, you, good Thank morning.

and the quarter the users results across colleagues economic macroeconomic Ecovyst deliver I valued Catalysts reliable and stability our our operational demand and relative for Ecovyst Advanced thank majority strong we fourth fundamentals of dedicated colleagues for the last helped and delivering my XXXX. core want purpose year, our Despite uncertainty to products financial to Despite finish Ecovyst of challenges First, XXXX. the for end to solid delivering Materials to of high-quality uncertainty, services customers. a both Ecoservices faced and their that remain

also XXXX. our and fuels production regeneration continued XXXX, providing toward and to the for High acid and of gasoline the higher to particularly support in were virgin with up volume up quarter fourth fourth applications. the volume Advanced where refinery trend was compared octane alkylate up Materials quarter softer for quarter XXXX. albeit, drive was utilization, weaker the dynamics considerably compared sulfuric demand sales fourth quarter with Sales of services compared associated macroeconomic favorable business In conditions, Catalyst, in pricing to cleaner industrial burning XXXX, of to fourth

pricing growth. While for sales higher catalyst lower compared the fourth polyethylene hydrocracking and to applications was and prior demand sales the volume to year catalysts customized strong quarter, contributed

fourth was volume pricing quarter our EBITDA Given XXXX $XX these adjusted dynamics, and million.

quarter, fourth in During deliver the on as the the core believe and we future positioning to are in growth operational our discussed we November Investor applications emerging maintained our in as that we Day. strategic the in our Ecovyst focus industrial applications and initiatives well priorities strong

joint expansion sustainable the production, of applications diesel specifically For fuel designed catalysts Zeolyst fuel waste. aviation these plastic venture, both advanced recycling of emerging for include and and the renewable ongoing sustainable for

SAF production growth are diesel momentum gain technologies expect alcohol-to-jet to we Zeolyst in We and renewable our the for additional benefiting year. this today, from

a use for silicas capture functionalized Select immobilized clean enzymes, in Alpha applications platforms, including as advanced portfolio, carbon number and highlighted our AlphaCat our water. advanced For our we silicas of such silicas nascent and

Xx, of debt year additional third of we X.Xx ratio as silicas the we we with for for a leverage the generation our end remained ended of In anticipate our enzyme sales financial to year this all light down for in reduction look achieved a support positive, results leverage quarter, ratio. We cash providing our at debt applications, quarter. net I'm applications. from quarter, and favorable net the first the of pleased these that emerging expand our to sale the fourth during announce advanced

our In capital substantial progress priorities, ratio below we as year in ratio a look toward focus our leverage leverage terms this to key make continued of target allocation reduction remains of X.Xx.

our Lastly, technologies. have past customers more with supporting over significant X made sustainable the progress products and in years, we

we business practices to sustainable across worked drive addition, our In more have organization.

companies spirit to of X rating. by all now were year, EcoVadis. that our Consistent progress, peer Ecovyst practices. of efforts top we platinum years business of achieved social with continuous EcoVadis gold status the sustainability our recognition corporate in recognition group. metal achieved Ecovyst in I'm of the our we with silver metal a principles recently overall report and of to improvement, pleased responsibility metal with ago, continued in EcoVadis X% status in This integrate into rated incremental sustainability with recognized the Last places recognition our

and we our November compelling, intact. and I shared turn want trends we provide long-term the near-term Investor financial We I'll update demand the our longer-term the growth Slide very in we an outlook on believe for targets uses As X, outlook. to emphasize Day serve expectations end demand remain remain end-use that to

However, rising destocking, China. persistent significant in rates, for factors, Europe geopolitical uncertainty, there arising inflation, interest number including a and near-term tensions we XXXX, of and economic believe is demand from weak

uncertain trends. are the near-term current environment, of macroeconomic cautious we about demand Given trajectory the

the half for XXXX, our year. As tempered while half anticipate a fundamentals expectations the we second we in stronger demand result, first of of the have

with XXXX. stable regeneration in services exports utilization refinery and gasoline high increased demand our we For business, expect

As standards these business regeneration favorable this our continues be to demand expect for a continue alkylate such provide year. X, fundamentals by we will services backdrop driven as to fuel Tier tightening

XXXX virgin sulfuric we the virgin expect For acid, Elliott impact of volume faced in acid recovery that production in the sales, significant headwinds sulfuric for sulfuric we light and acid in on XXXX. had Storm Winter

a in production the factor into us. nylon intermediates, while behind demand we Specifically in believe was is the destocking for of phase our destocking we sales experienced the softness XXXX,

However, plastics demand due and in in the for engineered surplus capacity weakness global continued uncertain, part to remains outlook demand Asia.

current and to expansion remain in favorable stable the copper underpinning with projected copper we economics expansion for We with that demand. We longer-term these deficit of copper ongoing prices. global service supply U.S. expect acid in for demand applications projects believe the the the sulfuric XXXX mining remain projects

industrial applications For applications we sales portfolio provide in stability the end acid a counter to XXXX positive sulfuric others. use range will level wide many we expect with of demand demand effect the in stable for serve, virgin serving of to softer in

see packaging in chloralkali stability such We paper water in lead demand and as are end we under expect amount acid in of and pressure relative weaker pricing currently virgin market uses sales long-term industrial as softer our sentiment in half potential sulfuric for treatment first acid. is for virgin rationalization balance see for XXXX, uses being contract, spot by demand such eroding while end sulfuric Overall, significant we contracts acid the of driven and resulting the weakness for batteries, short-dated sales. And capacity where to geographies. certain demand

in growth for For see activation by levels demand remaining correlated production strong sustainable our and demand our highly Likewise, business as XXXX, continued supported with treatment such interest. to business, we and fuel stable in spending. customer see services demand activity expanded catalyst ChemXX we consumer factors

Turning to Catalysts. Materials Advanced and

that believe over XXXX impacted run for inventory course. of For second polyethylene the destocking the demand that has half advanced catalyst its silicas, we adversely

XXXX, global excess projecting in are weigh market we capacity be X% believe will X% While rates. global demand to polyethylene on up that to forecasts continue to operating

half material catalysts, a a raw demand, Eastern demand American for Middle for representation exists. where We this second are near-term markets, in we but the well positioned in recovery the not change and economics. projecting As such, significant a given and more of our favorable prospect stronger are polyethylene costs year provide of believe we particularly production North energy in

export in momentum the with first Middle inventories. we remain the as position to quarter supported rates East, the sales activity. fourth and lower operating sales work through customers a North America, rates we weaker expect In expect feedstock advantaged by robust, modestly positive Following cost mid-XX% in in end-of-year range operating quarter strong

decline Europe, activity the the in we demand to be in Asia factor the to a due expect expect to sluggish Lunar For and Year climate. And restocking first XXXX Pacific, economic New we in poor quarter. polyethylene

fuels change X our Even in we healthy large core our change-outs customers XXXX, for and every to many catalyst joint year. fixed completed control that to Hydrocracking venture, expect applications. out our Zeolyst hydrocracking years. remain applications last high include Within though used for catalyst emission margins petroleum-based Zeolyst refinery refineries bed X catalyst value-add catalyst,

So and catalyst hydrocracking catalysts, we hydrocracking a be believe currently XXXX we of sales for was near-term that peak likely year for expect will cycle year XXXX a sales. lower

timing. In for quarter terms order our of sales lowered sales to cadence, we due revised the projections have first

expect the of in applications, diesel sales environment will our emission vehicles. we and into delivery lower current the production translate control For heavy-duty economic

processes. production used Turning production sustainable SAF, and diesel include dewaxing our phase those fuels of which the of renewable sustainable sustainable or fuel aviation are fuels, both the in zeolites to

We year. with in expect of second half robust sales in likely stronger sales XXXX, the the

fuel approximately by aviation grow North expected XXXX. is American XX% sustainable renewable incentives to production X attractive financial capacity facilities with projected diesel in to start this up supported and year, by

SAF start to XXXX. projected Union, up this For in diesel the European expected is to with grow facilities by year capacity X renewable XX% and

activity pilot production of Looking forward, we supporting referred using technology alternate progress good alcohol-to-jet. to see in licensor SAF as

provides Ecovis. our phase have on opportunities technology, of recycling of a SAF. the the chain carbon waste focus in used where to zeolites key We to plastic emerging advanced technologies catalysts Our in the believe play this build growth for the oligomerization role production are for significant

zeolites with in Opal higher to change as can recycling continue in production. industry feedstocks and pyrolysis We used on pyrolysis intensity these catalytic thermal be providing of for products processes oil, and end for Infinity of reduction in potential provides the the where expanding zeolite enhance family and our application to catalyst chemical work a use quality catalyst step which of leaders value

sales recycling commissioned. we continue recycling with have in expect had early see commercial in we This XX expected for to for this year, sales area, discussed Investor And Day, the catalysts plants momentum of already our to be there our are we we advanced recent pilot recycling. advanced plastic XXXX. in As waste

I'll financial of now results. quarter turn call Mike to the year fourth a full for detailed discussion more and our over

Kurt. you, Thank

XXXX and of I a will with financial begin review full fourth results. our quarter year

XX% including sales, businesses from of million across joint the sales share of in $XXX of proportionate XXXX. Higher Advanced $XXX volume the Catalyst continued benefit Zeolyst pricing million both sales to and and lower quarter for fourth the within our of favorable venture Materials quarter pass-through were compared impact the the fourth fourth Fourth up was pass-through and sulfur Ecoservices. was Adjusted million lower X% the costs largely from quarter. offset over the of $XX as well within year freight as million, costs natural prior by the gas $X quarter EBITDA

associated of of $XXX lower reflects higher pricing. share XX%, was to sales timing XXXX. with quarter sales sales pricing was the change partially sales. venture, in million volume selling for were $XX adjusted total of offset Ecoservices line quarter and and pass-through catalyst Favorable was effect lower million On lower higher in virgin for consolidated of the on compared sales the sales, pricing the volume XXXX. with lower The niche the fourth raw Zeolyst on for pass-through basis, across polyethylene offset EBITDA relative fourth the pricing by acid, joint custom XXXX, demand from sulfur by average material net catalyst sulfuric in year decrease $XXX costs. XX% in prices both Of full our The balance including the lower for were segments. partially of This a proportionate margin million

and along EBITDA with year adjusted XX%, XXXX. up driven to margin million, $XXX $XXX adjusted XXXX, costs. down was higher million X% by volume year repair for Full compared to lower the The compared full in unplanned XX% XXXX EBITDA XXXX sales maintenance was

the next prior year. quarter As the we to change I'll fourth components in the of move slide, EBITDA highlight adjusted the to compared primary the

had the than of to sulfur quarter sulfur for were quarters, $X cost Similar lower in several average an a with the of year. last prices. corresponding in XXXX these The variable million reduction in costs the impact lower selling fourth prior costs average of pass-through

sulfur As adjusted cost quarter EBITDA. on sales impact no such, the pass-through had on lower during the

be to favorable. to variable ratio price cost continues Our

also natural gas costs for the lower some these freight on were costs, of lower. pass-through and variable including the While quarter, pricing were

generating ratio. price-to-cost positive However, to implemented increases and be price a favorable, base continue

Turning to the segment results.

quarter with volume natural of begin pricing sulfur were to of the lower lower quarter costs. will We in lower regeneration by Ecoservices The $XXX pass-through of spot demand million sales $X factors $XXX and million the gas for for pass-through change fourth costs mining sales for million offset the services services primarily These partially Ecoservices. and sales. regeneration freight and in opportunistic sulfuric of fourth acid were XXXX. the compared with higher in associated higher and virgin reflects

fourth quarter the was million to prior Ecoservices $XX compared the $XX adjusted year. EBITDA in million in

raw was remains pricing decrease in pricing. and was margin associated fourth XX%, fourth EBITDA quarter in sulfuric for driven quarter adjusted lower While services the XXXX. pass-through EBITDA acid, of with adjusted strong the lower demand with line both by regeneration the net virgin material Ecoservices in

Advanced to fourth the proportionate XX% Materials venture Turning our including $XX XXXX. of for to million, Zeolyst Total nearly fourth sales Advanced quarter joint Catalysts, or sales, were and Catalyst. quarter $XX compared share and Materials up XX% of million

fourth sales advanced $XX compared were ago higher quarter of For million XX% the sales lines. up across reflecting year product silicas, quarter, all to

year-over-year. While sales the quarter was of of pricing lower the favorable volume increase niche catalyst fourth catalysts drove and sales for compared the polyethylene XXXX, custom higher to

of to higher million, driven or Materials adjusted was for compared For or higher were to the Zeolyst quarter margin fourth the EBITDA was quarter, catalyst. XX% Fourth sales and with by increase $XX Catalyst line up joint million year $X sales in XXXX pricing XX% volume. the and of quarter venture, by million, XXXX. XXXX, for $XX the with Advanced and ago up million fourth the quarter XX%, Adjusted Materials compared EBITDA of Catalyst sales driven hydrocracking primarily $XX Advanced

next Turning to slide. on leverage cash the and

fourth our net to continue Xx of quarter, for lower recent in year of was generation we progress as our providing target cash debt our generation from the than the year-over-year. change year million. an basis, full line EBITDA, Zeolyst $XX towards ratio was higher in adjusted expectations lower was the as below taxes leverage reduction flow unfavorable This very interest capital cash with strong, X.Xx. During a joint less a well by free On as cash make dividends in driven cash venture, but our and prior net working

As XX%. cash discussed continue in approximately November, in conversion ratio a to of we target our Investor Day

For XXXX, our XX%. conversion was ratio cash

a with maintain balanced reduction approach leverage to key a net allocation priority. capital continue We for remaining

our in During In XXXX, with shares connection cash of X.X million. equity offerings XXXX, we used we secondary to shares million repurchase repurchased $XX largely for sponsors.

had of ABL remains Our $XX $XX in we year-end, million. $XXX total balance cash sheet available under availability of and At million our of facility strong shape. million of comprised liquidity

in outstanding, matures XXXX. We of tranche have debt one which

borrowings Excluding under outstanding facility letters of there credit, year-end. outstanding ABL were our no at

of We during XXXX. outstanding cost XXXX. exposure have approximately approximately our our out on weighted average XX% third capped And debt our interest of debt of the was X% to quarter

XXXX. Now let's turn to guidance and expectations for

XXXX, sales $XXX a between For be proportionate million to basis on Zeolyst between GAAP and the joint we to for and we million, be and $XXX XX% $XXX expect $XXX our expect share million. of million venture sales

up such, total X% compared midpoint and sales joint the As million be proportionate to or anticipate of $XXX we venture sales million XXXX. Zeolyst our share approximately the to $XXX between at including

the the very we In are with on impact average terms effect sulfur XXXX, of largely pass-through pricing, a in the expecting pricing sales currently modest sulfur for of half decrease immaterial. of first

of octane services outlook, about expect high refinery discussed the utilization regeneration value continued comments and to demand activity. favorable, and our we Kurt support alkylate in end-use As his remains

recovery a of the related expect year-over-year relative expectation for to to of intermediates, primarily sales sulfuric production nylon going cautious We but acid sulfuric for volume. the virgin virgin production and modest into demand higher acid XXXX,

such, sales digits. As Ecoservices we be expect up to in mid-single

catalyst coming we in significantly is to in XXXX, sustainable be we off single-digit high typical growth catalyst expect like and for customized we And catalysts our joint lower Advanced in Catalysts, catalyst applications sales growth and year which sales to a and demand while silicas. double-digit hydrocracking In to expect are conditions polyethylene of XXXX. advanced venture, when for experienced growth Zeolyst drive in continued fuel in Materials peak sales improvement the expected low

million For land are EBITDA expecting in million. $XXX of adjusted to the $XXX range XXXX, to we

to $XX acid turnaround our for higher by long-term In pricing of is nylon by increases help regeneration higher virgin terms million on macroeconomic strong compared of on for discussed with pressure segment recovery and we during our virgin year and to acid percentage expectations, adjusted sales based expect and This somewhat offset acid and operational intermediates, November anticipated XXXX mining Investor volume maintenance ensure Ecoservices the million pricing enhancing EBITDA mid- $XX the the contracted into to full XXXX, to we increase into to services. a virgin reflect reliability XXXX Day. environment sales of downward associated costs uncertain driven as high-single-digit

on For Advanced single-digit by high up on Materials overall and XXXX. areas. driven growth Zeolyst fixed in EBITDA down emerging hydrocracking is to to year off demand basis, venture, growth cost catalysts expected driven XXXX, however, Advanced basis a sales in line sales and Adjusted joint anticipated lower into normalized more Catalysts, expected the in to adjusted and timing we cost be accelerate production expect our increased of EBITDA Silicas be high to XXXX sales percentage polyethylene emerging with be for associated absorption a is and single-digit by peak catalyst unfavorable a the for with applications.

our on be we basis. million an expect addition, $XX corporate to annual costs around In

For the site catalyst million CapEx full reflects adjusted are our in and activation CapEx Silicas costs City the The including million to higher Kansas to free capacity and expansion business. expecting investment year $XX XXXX, of million our ChemXX announced $XX of million we associated Advanced flow in previously $XX $XXX of cash with XXXX.

target no below expect a to Given uses this priorities, of X.Xx. net progress delever leverage debt of expectation for significant allocation generation resulting in cash our other half cash nearly capital turn, ratio assuming and for we towards

weighted average place have projecting cover of the our approximately are with $XX cost interest million of of a range of a approximately taking debt into we X.X%. account interest exposure, $XX XX% we For expense, caps which million, that in to

expectations On to of first a quarter to some EBITDA adjusted we expect guidance be provide year want first million. full Having consolidated covered quarter the I for $XX XXXX. directional basis, of for approximately XXXX, the XXXX our

the of For first the the quarter approximately quarter XXXX Storm last year, the light first Winter to compared of extended quarter of turnarounds Ecoservices, of Elliott adjusted impact of to XXXX. up in in be impact XX% first EBITDA and expect we

production is we recovery and prior absorption EBITDA expect polyethylene lower million with and Catalysts, and to by market The to fixed a sales Materials around $X first million. Advanced timing. For view driven adjusted XXXX quarter the adjusted year the to compared the $X of cost EBITDA be cautious between unfavorable associated anticipated primarily

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

Mike. you, Thank

Despite the industrial opportunities positive continue core Ecovyst. for will our economic on long-term solid We uncertainty, experience remain near-term believe to growth we and businesses growth.

We in have incremental leadership drive well-established and through opportunity. reliability translate our support also expansions serve debottlenecking that uses segment efficiency sales the into capacity customer end positions in to we to have gains relationships, articulated and and automation, our initiatives growth through will we volume Ecoservices and opportunities, plans sales

of For the customers refined for to for outlook alkylate appreciated, is demand role our will burning provide cleaner long-term regeneration America business, production in growth. in continue services products fuels believe serve we the and well opportunities and markets our export the of the North

we the industrial some in virgin applications of mining acid as acid, for demand the further demand and for global improvement softness in economy sulfuric sulfuric virgin improves. intermediates Although we demand in some nylon sales see near-term production expect strong, remains

our the balance for provide to believe a of level will continue of of also stability. industrial We overall applications portfolio the FX

catalysts, of to rates X%. will In historic believe return sales demand polyethylene we terms growth approximately of polyethylene our global of

the grow advantaged will share energy Specifically, in for customized differentially to America approach overall market, design Middle benefit positions East, our to the and from continue sales North our our from supply polyethylene feedstock benefiting catalyst which Ecovyst, leading and costs. of catalyst and we expect

firm our growth just is a Kansas significant Moreover, by not support providing have energized production by the further announced site emerging we expectations. provided are for commitments, growth expansion polyethylene we of customer technologies, at by supported catalyst for future City our that are Lastly, capacity aspirational. opportunities which

fuels. robust We of the see catalyst to supporting in continue production sustainable growth

capture and functionalized for and technologies, in leadership growth in recycling capture food, and well silicas the as biomass-based processes position carbon as to developed immobilization and that for technology water treatment have position chemical advanced advanced zeolites silicas we applications. We enzyme us have

we provide services we growth The across In product and our discussed EBITDA long-term in trends Investor organic anticipated Ecovyst's a of supporting the of compelling products lines. portfolio have that is technologies and as growth summary, Day. our XXXX reflected products believe for in the volume growth majority we

Our sales. year expected and off-cycle current hydrocracking around conditions our reflects for demand near-term guidance caution the event-driven

earlier, I arise. including As indicated of and year could provide catalysts, stronger growth acid for the conditions, believe we and virgin of sales for as polyethylene we incremental half opportunity second capture demand will sulfuric they the improved

time, line will the the ask to I At for questions. this open operator

[Operator Patrick to Instructions] We'll Citi. go at first Cunningham

trend higher first continue? Eric do Zhang key My on to catalysts? driving the you is This for question is, is what expect Patrick. through pricing And that

Eric, do do as Kurt. implemented we for XXXX our the towards along albeit we allowed and that has second us during us, the expect in is growth is half we've half that this price Well, prices. and the increases saw of largely time year, on latter really destocking believe goes weighted contracted of and we polyethylene, the year, behind double-digit sales

polyethylene, high Middle Just advantage are regions have lower as comment Europe, terms sales energy really of there as more regions well exposed or well in costs. less a Pacific in raw those those of centered in Asia uptick further materials we're an where our where America X and less of East, have and a expectations muted most as of our year. recovery North exposed the geographic-centric it's in a less generally this on

any is Ecoservices, trends on And elaborate been my customers there customers Have last in getting it. with recontracting? to that within existing Got re-sign? seeing you're any difficulties question you can

for Thanks question. the

contracts are years. longer to length, those anywhere look regeneration every So generally when XX you so business the X at in year,

given that renegotiation and basket So for year, a recontracting. of there's contracts certain up any are

contracts, basis. see where virgin of we price I've we've pricing time say to would successful that's under at of customers, space as acid, mainly really gone a spot we've the we consumers those some kind short-dated on as customers as those of around time I seen we've long-term say, are along. and call little XXXX. from of where The contract bit XX% been related, I industrial mentioned that In implementing caution pressure, our has about call. along, re-upped gone And a So sales that's would or increases some industrial has the XX%

Yefremov now Markets. next Capital Aleksey KeyBanc to at go We

Just a sales. on bucket pressure, the of as magnitude virgin you follow-up of of total your of or acid industrial percent piece Could price as virgin either that this of acid business a percent a the quantify short-term contracts?

Sure.

So virgin acid longer-term our sales, on on agreements, again, XX% acid, -- right? long-term is sorts under we at adjusting of we that So spot when or you short virgin call dated really things. just which those spot look are it contracts, portfolio that's of that XX% on it's

created see on some there's And I'd different I the settle the a created, what pulp in volume that some this lot also of we customers temporary geographies area geographies and don't a move been to cautious of imbalances some side. some, again, But has itself rationalization So couple of out. we it that's that really industry. is, in the really had pockets industrial where but say, industry, into We there's in operate. don't oversupply guess, paper in

in the industrial to had probably portfolio you we terms our really, about if quantify space. is we're of seeing acid to million pressure had that million that $X that's subject talk I So in XX% pricing to -- if of Aleksey, $XX this virgin

helpful. Very

applications to do bigger because driven you is from this elaborate faster, and on more You costs it increased outside mentioned it if Or could envisioned? hard is judge in of by these that those investments to opportunities kind just you emerging coming what are this? opportunities there's really accelerated cost

Yes.

Day, technologies advanced -- now you at making we that the we're a look really we sustainable priority the immobilized on Investor growing some When for stated is advancements our things emerging the if us. plastics key recycling, as fuels, during our So of enzymes. like

the really sales building of end those front capabilities in building those capabilities our in that, marketing and out we're areas. out on where So we're our areas,

to as investments expected front-end our long-term those we making sales Investor as we're deliver Day. in So outlined

Next now at BMO. to John McNulty

and question on So Catalysts. Materials EBITDA on the Advanced

first So -- first is remaining half was is it half back of looks of implies or the is basically or prior what be excuse to the kind the it the going half quarter which to me, quarters basically the X year, going almost flattish. like

So polyethylene talking us just in think is the bigger and at kind snapback where XQ the the of ramp side? I guess, Or we HPC as Is improvement the the lumpiness kind it look X the what's can catalyst that I the about guess the to you're about? bulk contributor it in you from? the help comes remaining of just quarters? weakness of

for John, basis. it, the QX it's to out, factors, actually we're of this right? double-digit earlier demand and mentioned a year, So feel polyethylene improve is Mike. cautious little over do Thanks of that in Yes, the call question. a prior combination around all polyethylene a a in we those seeing we bit continue starting the but expect

it we but year, into see off a then anticipated, than originally QX while it QX see also we is lighter QX, little year and a hydrocracking, QX. in in growing We came last peak that from do

of little primarily business, hydrocracking a Polyethylene catalysts. the the it's the of niche is more the and constant. some timing along of nature the with bit around custom So

XXXX, just However, off later saw a of of in out, up the but given what we the it's little it's year. ramping in starting half certainly lighter

Got it.

in of was about the I then tied some that slides, -- the longer Okay. bit the to that? makes little you be weakness to with we guess, pull normally where bit which than heavy-duty last I does truck regulations forward, one there that is sense. that? of assume maybe new a highlighted Is I market a thinking guess last? in little how the No, that it And some tend of long how should a Does year?

now, slowdown of there's say, there I right segment trucking to uncertainty There's the that linked just think, which in Yes. I'd is, couple a general the really in a general, headwinds on. where economic transportation going

-- So a 'XX, also was and there in trucks developed 'XX that big off. off then orders had they're off were a -- pretty and where lot 'XX, working worked -- back they've and coming big those backlog of

you there. see some slowness So

Euro due going which that next-generation have X by for were the Europeans in those emissions effect to X XX%. go go in years, going that I'd some into was Additionally, that of to pushed that catalyst say, off to the, has trucks reduce XXXX, regulation were delayed technologies

segment of of the little bit a a that combination things created headwind year. kind So those has of for this

go Begleiter now Bank. We at to next David Deutsche

Ecoservices, destocking. Winter headwinds some in number and and Kurt, the XXXX, turnarounds had outages, you demand in a weak of Storm,

given So mid-X% 'XX? that, in isn't a little than why the EBITDA plus faster growth

the for question, David. Thanks sure. Yes,

as overall healthy. customers, at the opinion a -- say Many few we've and call that's it the for on to So -- have that XXXX, adopted we from sulfuric in particularly XXXX. But on a relates as times, approaches I'd refining margins, our segment it and industrial when for business trends XXXX -- cautious in look stated virgin expect acid. you our of that cautious Ecoservices, especially it's what the look demand into played remains as the refining -- we taken

see on business very nylon, into treatment this into there ChemXX for virgin a the market we strong year recovery there. regeneration. We both year, was acid look year volume business particularly full this last we schedules headwinds do and year. where plan more have moving the where services The expect to It's a

I year. wouldn't say an up-cycle necessarily it's

million acid term it's and spot space pricing of as maintenance the However, reliability in on spending that $XX is year. more of earlier we segment to virgin some and product nylon pricing questions that about of Where we short see million pressure that the Ecoservices industrial and do that more on into we're about expect well space one as I creating to headwinds this talked that segment. the $XX on the move

reliability Day, which instituting, we're additional During talked have long-term reliability program as higher time. a really Investor we of resources that some the debottlenecking we there to really a the enhancement the about deliver as is over at is plants at as which as well combination plants automation, well

in extra change you there of see kick program. reliability that enhancement So cost the that's off some pushing really is that to

million is to at that that $XX should effort down onetime back million? that -- And be sustained 'XX should higher $XX should Or level? program, on that i.e., a come we in this by Kurt, or

Yes.

too, that will costs. and have mention do we turnaround I be, didn't of Some additional

half which place, actually So putting year. this do have will are to to of place be will place the obviously, in basis. -- turnaround the putting then plan. a -- be those we're going will year, that -- sustained first be on to in will going And accelerated resources we're it's take sustained the mostly that the it's automation costs that of piece in some go the We because on

horizon. that So I portion sustained will would the think over a be of

Hamed next go BWS Financial. at now Khorsand We to

business, have So first 'XX forth. might what you happened through how you was I had you the inventory of to had all has so and 'XX have question in in disruptions I in your that given are 'XX? mean because adjust

effects those are of kind 'XX effects there what lingering So from in in 'XX?

that started to think Winter the of you I $XX that downtime related terms and what of the extended the business at operational maintenance we had when at plant. back then in headwinds of Hamed, beginning really Storm out XXXX, go Houston million-ish the we had -- were XXXX, the obviously in Ecoservices

more just even this pockets I the expect to sell I've we about don't in in expect and headwinds yield some which produce events those market. though we Obviously, about some the of enhanced And program, volumes this acid talked year, the acid do virgin the volumes. year. of reliability virgin will industrial sulfuric So talked higher

half recovering, was the I abating were second particularly of which the was think catalysts, destocking other We talked that in the year headwinds us we went Mike see about for and half. polyethylene the there last on. said, as and second that that areas year that in

digits So expect be catalysts year. do this up double polyethylene we to

in but impacted secondly, this there. virgin acid in which destocking the year, business high segment, cycle saw the up second a recovery a half, we that the last nylon year then do certainly be certainly volume Nylon not We for to albeit And area. expect year,

a not is positive for new I Okay. on from or of a slow or was you're slide. a drag even quarters even the item conditions mean, a versus now? it you where such this highlighting negative on And my how deal that a is the prior you're slides for is an last that vehicles. now That's the that question side issue highlighting Why bad provided heavy-duty big today, side?

Yes.

think Euro past was segment terms regulation flattish standpoint, along market vehicles. in X. overall a that that diesel I vehicles just X, from the demand as the the -- us. largely of view as But look an when on not at huge thing for it's well we us. of in the It's we it moving heavy-duty the just earlier sales for overly we see for as diesel in Hamed, over essentially, think, headwinds mentioned I I business past, year the of there the backlog or it's heavy-duty our not terms And

the for So huge that I that headwinds it's an necessarily area definitely It's in we wouldn't segment. drag in that just segment are it there a see us. call

[Operator go Silver We'll to David at Instructions] now King. next CL

just But CapEx and maybe is there I of in timeline I an those little prepare of next spend. been -- some of the about the is or just anticipated demand the -- spending was initiatives guessing even CapEx lines, for had City, that a have I some with I if might question a year. -- -- wondering Kansas might was along spend growth. starters, increase your wondering to something bigger was for part your over the spend there, I'm the on And

of I the kind But to we and any here. if R&D then your a in operational guess, beyond get And of way pre-commercialization just what a spending. clearer be you beyond, type comments thinking the highlighted I either that, that, should I'm -- or beyond in view the to articulate is But of initiatives support spending some there of in or things, increase wondering mean could spend highlight a please? -- release about kind which growth, bigger your other you of

Yes. David, this is Mike.

our And period with So Kansas roughly a predominance increase of over do about going are the into Day the expansion. that the City that is of of CapEx The at associated Investor our part correct. -- XXXX. -- spending. would around range I think capital period spending, first time We given $XX million you in least on midpoint see that certainly guidance during question the at X-year we over take mentioned this

expanding that have upon and spend availability on facility not structures just is a bottoms-up So approach. our there. already that. We We're

significant the brand-new for making cost our as So catalyst with plant, a as building polyethylene not but you we might XX% perhaps CapEx is think are about there. capacity adding

some activation our look business. We Ecoservices additional to the start spending capital costs also expand to ChemXX to have and catalyst around continue in

some spending there's as there well. in So

and R&D to in the some that spending commercial, mentioned at Kurt some we are seeing as just look earlier emerging you free When ramp the products. start up -- additional our we of

us. have cost is a on it more are November Day. a about Ecoservices exactly we little additional about again, on we costs of of articulated sales little bit to earlier. turnaround where lot very we seeing and our Investor as talked spending talked that how hopefully, we and the we And taking there. in biocatalysis related also already the XXXX during sales a had some related excited bit So we're mentioned, been But our to We've the reliability

of spending. some cost your cost covers questions that the hopefully, on -- your So and

overall of wondering about the maybe from was plans, planned Yes, refining then portfolio And your I operational the customers. downtime Yes. another by just angle.

for what few take as advantage margins lot healthy a favorable they downtime could much refining been guess or last of have opportunities. very of the have guess, viewed as I And delayed profit So they deferred to I largely refineries anecdotally, years. as

events? As your outages the excluding XXXX, some or that XXXX mean another shared or there downtime we are full have close with to year should you, planned relative refinery look operating you downtime and of planned planned customers at of to expect Or I very strategies high or there? major utilization kind maybe the weather

David. Thanks, Sure.

look affects look at differently. acid -- particularly business a their we parts year the of When of our in the X operation refinery we So downtime, see don't really at you on in customer of this when amount units. high terms Ecoservices, it regeneration, turnarounds

expecting, an I say, average we're would of year. more So

coming in have catalyst place off hydrocracking at site turnarounds some in look to buying of catalysts, took are catalysts, place of some their were cycle XXXX, year the QX You XXXX, those selling it them XXXX, turnaround. they hydrocracking of on in which obviously, QX for taking peak a

So of so more expect in those well. year, low we for But again, our space that do a expect, customers. less be as turnarounds are hydrocracking this and to cycle we

in regions So we an the I are side, general, because that could just average or issues. it's different think turnarounds there refiners see have certainly other less hydrocracking off-cycle certainly other in Ecoservices in But year. and

there. highlight that Yes. did you Yes,

question a now we'll follow-up BMO. John McNulty And take at from

in strong of just up. on us because the guess up help ramping polyethylene wins assets much to growth and digits, So is which can account core had of have pretty think I a that's you versus demand, industry some how for are you the year, a double I about catalyst wins of still forecast process the bunch think

high So that may to you help that be some of the think about can benefit. level? But us

think really, and I just of John, both wins utilization mean rates. it's mix, I Sure. increased a

now right polyethylene So North enjoying see at East particularly -- in low prices America production. huge arbitrage a Middle I and you window would are recovery, a very gas natural

heavier weighting areas. have to obviously those little we a So

we're think And I some second So weighted. we're half recovery seeing area. -- again, in Mike mentioned that more it's

new but of some -- recovery lot then a of account some we've well. as yes, and of had that So it's it's recovery, wins

So say just little But bit I'd weighting, it's I it's had a mixed the the bag. side. a general of to if on more it give recovery

it have ladies further gentlemen, questions And no and appears today. we

Quarter bring you Conference remainder day. conclusion Goodbye. will of your great that like all Ecovyst's Fourth you a to We'd So the wish for today thank Call. us to so XXXX us joining much of Earnings all and