What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-05-03 compared with 2021-11-09 · 253 added, 561 removed, 581 unchanged (58% of the section changed)

4 unchanged sentences

Three months ended

September 30, Nine months ended

September 30,

2021 2020 2021 2020

Sales $ 179,714 $ 126,624

6 unchanged sentences

Interest expense, net 8,450 10,456

Debt extinguishment costs 15,185 14,004 26,902 16,517

Other (income) expense, net ( 218 ) ( 4,197 ) 3,081 ( 236 )

Other expense, net 140 5,174

Income (loss) from continuing operations before income taxes and noncontrolling interest 13,595 ( 7,938 )

1 unchanged sentence

Net income (loss) from continuing operations 7,875 ( 2,748 )

Net (loss) income from discontinued operations, net of tax ( 75,872 ) 30,469 ( 159,122 ) 16,255

Net (loss) income ( 71,183 ) 7,810 ( 165,051 ) 24,566

Net loss from discontinued operations, net of tax — ( 89,770 )

Net income (loss) 7,875 ( 92,518 )

Net income attributable to the noncontrolling interest—discontinued operations — 117

Net (loss) income attributable to Ecovyst Inc.

Net income (loss) attributable to Ecovyst Inc.

$ 7,875 $ ( 92,635 )

1 unchanged sentence

$ 7,875 $ ( 2,748 )

(Loss) income from discontinued operations attributable to Ecovyst Inc.

( 75,948 ) 30,171 ( 159,455 ) 15,351

Net (loss) income attributable to Ecovyst Inc.

Loss from discontinued operations attributable to Ecovyst Inc.

Net income (loss) attributable to Ecovyst Inc.

$ 7,875 $ ( 92,635 )

Net income (loss) per share:

Basic (loss) income per share - continuing operations $ 0.03 $ ( 0.17 ) $ ( 0.04 ) $ 0.06

Diluted (loss) income per share - continuing operations $ 0.03 $ ( 0.17 ) $ ( 0.04 ) $ 0.06

Basic income (loss) per share - discontinued operations $ ( 0.56 ) $ 0.22 $ ( 1.17 ) $ 0.11

Diluted income (loss) per share - discontinued operations $ ( 0.55 ) $ 0.22 $ ( 1.17 ) $ 0.11

Basic (loss) income per share $ ( 0.52 ) $ 0.06 $ ( 1.22 ) $ 0.17

Diluted (loss) income per share $ ( 0.52 ) $ 0.06 $ ( 1.22 ) $ 0.17

Basic income (loss) per share—continuing operations $ 0.06 $ ( 0.02 )

Diluted income (loss) per share—continuing operations $ 0.06 $ ( 0.02 )

Basic loss per share—discontinued operations $ — $ ( 0.66 )

Diluted loss per share—discontinued operations $ — $ ( 0.66 )

Basic income (loss) per share $ 0.06 $ ( 0.68 )

Diluted income (loss) per share $ 0.06 $ ( 0.68 )

Weighted average shares outstanding:

6 unchanged sentences

Three months ended

September 30, Nine months ended

September 30,

2021 2020 2021 2020

Net (loss) income $ ( 71,183 ) $ 7,810 $ ( 165,051 ) $ 24,566

Net income (loss) $ 7,875 $ ( 92,518 )

Other comprehensive income (loss), net of tax:

3 unchanged sentences

Total other comprehensive income (loss) 11,378 ( 3,139 )

Comprehensive (loss) income ( 66,681 ) 22,307 ( 151,154 ) 4,585

Comprehensive (loss) income attributable to noncontrolling interests ( 203 ) 607 113 ( 1,899 )

Comprehensive (loss) income attributable to Ecovyst Inc.

Comprehensive income (loss) 19,253 ( 95,657 )

Comprehensive loss attributable to noncontrolling interests — ( 277 )

Comprehensive income (loss) attributable to Ecovyst Inc.

$ 19,253 $ ( 95,380 )

3 unchanged sentences

(in thousands, except share and per share amounts)

September 30,

2022 December 31,

3 unchanged sentences

Prepaid and other current assets 26,696 16,165

Current assets held for sale — 205,090

Total current assets 302,298 291,669

5 unchanged sentences

Other long-term assets 30,237 15,374

Long-term assets held for sale — 1,149,443

Total assets $ 1,935,248 $ 1,931,219

3 unchanged sentences

Accrued liabilities 43,127 75,915

Current liabilities held for sale — 108,537

Total current liabilities 113,074 145,081

3 unchanged sentences

Other long-term liabilities 22,507 24,094

Long-term liabilities held for sale — 155,354

Total liabilities 1,169,617 1,190,482

2 unchanged sentences

authorized shares 450,000,000 ;

issued shares 137,835,243 and 137,102,143 on September 30, 2021 and December 31, 2020, respectively;

outstanding shares 136,953,030 and 136,318,557 on September 30, 2021 and December 31, 2020, respectively

issued shares 139,611,212 and 137,820,971 on March 31, 2022 and December 31, 2021, respectively;

outstanding shares 138,696,941 and 136,938,758 on March 31, 2022 and December 31, 2021, respectively

Preferred stock ($ 0.01 par);

authorized shares 50,000,000 ;

no shares issued or outstanding on September 30, 2021 and December 31, 2020

no shares issued or outstanding on March 31, 2022 and December 31, 2021

Additional paid-in capital 1,079,364 1,073,409

1 unchanged sentence

Treasury stock, at cost;

shares 882,213 and 783,586 on September 30, 2021 and December 31, 2020, respectively

shares 914,271 and 882,213 on March 31, 2022 and December 31, 2021, respectively

( 12,883 ) ( 12,551 )

Accumulated other comprehensive loss ( 9,184 ) ( 15,265 )

Total Ecovyst Inc.

equity 707,316 1,277,126

Noncontrolling interest — 53

Accumulated other comprehensive income (loss) 5,586 ( 5,792 )

Total equity 765,631 740,737

11 unchanged sentences

Balance, December 31, 2021 $ 1,378 $ 1,073,409 $ ( 315,707 ) $ ( 12,551 ) $ ( 5,792 ) $ — $ 740,737

Net (loss) income — — ( 92,635 ) — — 117 ( 92,518 )

Other comprehensive loss — — — — ( 2,745 ) ( 394 ) ( 3,139 )

Net income — — 7,875 — — — 7,875

Other comprehensive income — — — — 11,378 — 11,378

Tax withholdings on equity award vesting — — — ( 332 ) — — ( 332 )

Distributions to noncontrolling interests

— — — — — ( 516 ) ( 516 )

Stock compensation expense

3 unchanged sentences

Balance, March 31, 2022 $ 1,396 $ 1,079,364 $ ( 307,832 ) $ ( 12,883 ) $ 5,586 $ — $ 765,631

— — ( 1,490 ) — — 140 ( 1,350 )

Other comprehensive income — — — — 12,081 453 12,534

Distributions to noncontrolling interests — — — — — ( 593 ) ( 593 )

Stock compensation expense — 7,499 — — — — 7,499

Shares issued under equity incentive plan, net of forfeitures — 36 — — — — 36

Balance, June 30, 2021 $ 1,378 $ 1,492,334 $ ( 269,883 ) $ ( 12,551 ) $ ( 5,929 ) $ ( 740 ) $ 1,204,609

— — ( 71,259 ) — — 76 ( 71,183 )

Other comprehensive income (loss)

— — — — 4,781 ( 279 ) 4,502

Dividends paid on common stock ($ 3.20 per share)

— ( 435,593 ) — — — — ( 435,593 )

Disposal of business — — — — ( 8,036 ) 943 ( 7,093 )

Stock compensation expense

— 11,961 — — — — 11,961

Shares issued under equity incentive plan, net of forfeitures

— 113 — — — — 113

Balance, September 30, 2021 $ 1,378 $ 1,068,815 $ ( 341,142 ) $ ( 12,551 ) $ ( 9,184 ) $ — $ 707,316

stock Additional

capital Retained

earnings Treasury

capital (Accumulated deficit) Treasury

cost Accumulated

comprehensive

income (loss) Non-

interest Total

Balance, December 31, 2020 $ 1,371 $ 1,477,859 $ ( 175,758 ) $ ( 11,081 ) $ ( 15,265 ) $ 53 $ 1,277,179

— — 224 — — 285 509

Net income (loss) — — ( 92,635 ) — — 117 ( 92,518 )

Other comprehensive loss — — — — ( 2,745 ) ( 394 ) ( 3,139 )

Repurchases of common shares

— — — ( 2,059 ) — — ( 2,059 )

Tax withholdings on equity award vesting — — — ( 1,470 ) — — ( 1,470 )

Stock compensation expense

— 5,920 — — — — 5,920

Shares issued under equity incentive plan, net of forfeitures

4 177 — — — — 181

Balance, March 31, 2020 $ 1,373 $ 1,702,996 $ 103,237 $ ( 10,372 ) $ ( 58,759 ) $ 2,665 $ 1,741,140

— — 15,926 — — 321 16,247

Other comprehensive income

Distributions to noncontrolling interests

— — — — — ( 516 ) ( 516 )

3 unchanged sentences

7 63 — — — — 70

Balance, June 30, 2020 $ 1,368 $ 1,709,367 $ 119,163 $ ( 10,372 ) $ ( 46,714 ) $ 3,362 $ 1,776,174

— — 7,512 — — 298 7,810

Other comprehensive income

— — — — 14,188 309 14,497

Tax withholdings on equity award vesting — — — ( 162 ) — — ( 162 )

Distributions to noncontrolling interests

— — — — — ( 270 ) ( 270 )

Stock compensation expense

— 6,137 — — — — 6,137

Balance, September 30, 2020 $ 1,368 $ 1,715,504 $ 126,675 $ ( 10,534 ) $ ( 32,526 ) $ 3,699 $ 1,804,186

Balance, March 31, 2021 $ 1,378 $ 1,484,799 $ ( 268,393 ) $ ( 12,551 ) $ ( 18,010 ) $ ( 740 ) $ 1,186,483

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

Nine months ended

September 30,

Three months ended

Cash flows from operating activities:

Net (loss) income $ ( 165,051 ) $ 24,566

Net loss (income) from discontinued operations 159,122 ( 16,255 )

Adjustments to reconcile net income to net cash provided by operating activities:

Net income (loss) $ 7,875 $ ( 92,518 )

Net loss from discontinued operations — 89,770

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation 16,011 16,526

1 unchanged sentence

Amortization of deferred financing costs and original issue discount 497 532

Debt extinguishment costs 12,818 14,146

Foreign currency exchange loss (gain) 4,803 ( 577 )

Pension and postretirement healthcare (benefit) expense ( 1,786 ) 341

Pension and postretirement healthcare funding — ( 3,282 )

Foreign currency exchange loss 647 5,101

Pension and postretirement healthcare benefit ( 553 ) ( 595 )

Deferred income tax provision 9,341 ( 4,344 )

11 unchanged sentences

Net cash provided by operating activities, continuing operations 6,423 16,546

Net cash (used in) provided by operating activities, discontinued operations ( 7,420 ) 94,193

Net cash provided by operating activities, discontinued operations — 877

Net cash provided by operating activities 6,423 17,423

1 unchanged sentence

Purchases of property, plant and equipment ( 10,750 ) ( 12,563 )

Proceeds from business divestiture, net of cash 980,350 —

Payments for business divestiture ( 3,744 ) —

Business combinations, net of cash acquired — ( 41,994 )

Proceeds from sale of assets — 2,375

Other, net 81 —

Net cash provided by (used in) investing activities, continuing operations 892,912 ( 32,197 )

Net cash used in investing activities, continuing operations ( 14,413 ) ( 54,557 )

Net cash used in investing activities, discontinued operations — ( 22,012 )

Net cash provided by (used in) investing activities 851,969 ( 42,051 )

Nine months ended

September 30,

Net cash used in investing activities ( 14,413 ) ( 76,569 )

Cash flows from financing activities:

Draw down of revolving credit facilities — 127,500

Repayments of revolving credit facilities — ( 127,500 )

Issuance of long-term debt, net of discount 897,750 640,340

Debt issuance costs ( 1,293 ) ( 8,987 )

Repayments of long-term debt ( 2,250 ) —

Debt prepayment fees ( 8,481 ) ( 10,550 )

Proceeds from failed sale-leaseback 14,104 —

Dividends paid to stockholders ( 435,593 ) —

Repurchases of common shares ( 1,470 ) ( 4,051 )

Proceeds from stock options exercised 223 181

Tax withholdings on equity award vesting ( 332 ) ( 1,470 )

Other, net 27 12

Net cash used in financing activities, continuing operations ( 2,555 ) ( 1,458 )

Net cash used in provided by financing activities, discontinued operations ( 1,144 ) ( 534 )

Net cash used in financing activities, discontinued operations — ( 520 )

Net cash used in financing activities ( 2,555 ) ( 1,978 )

12 unchanged sentences

Description of Business

and subsidiaries (the “Company” or “Ecovyst”), formerly known as PQ Group Holdings Inc.

and subsidiaries (“PQ Group Holdings”), is a leading integrated and innovative global provider of specialty catalysts and services.

and subsidiaries (the “Company” or “Ecovyst”) is a leading integrated and innovative global provider of specialty catalysts and services.

The Company supports customers globally through its strategically located network of manufacturing facilities.

The Company believes that its products, which are predominantly inorganic, and services contribute to improving the sustainability of the environment.

On December 14, 2020, PQ Group Holdings completed the sale of its Performance Materials business for $ 650,000 , and the results of operations of this business have been presented as discontinued operations in the condensed consolidated financial statements for all periods presented.

See Note 3 for more information on the transaction.

Effective on August 1, 2021, PQ Group Holdings completed the sale of its Performance Chemicals business for $ 1,100,000 , subject to certain purchase price adjustments as set forth in the agreement.

Upon entering into the definitive agreement, the transaction met the held for sale criteria and consequently the financial results of the Performance Chemicals business are reported in discontinued operations in the condensed consolidated financial statements for all periods presented.

On December 14, 2020, the Company completed the sale of its Performance Materials business for $ 650,000 , and the financial results of this business were presented as discontinued operations in the condensed consolidated financial statements.

On August 1, 2021, the Company completed the sale of its Performance Chemicals business, and the financial results of this business are presented as discontinued operations in the condensed consolidated financial statements for the 2021 period presented.

See Note 3 for more information on the transaction.

In connection with the closing of the sale of the Performance Chemicals business, PQ Group Holdings Inc.

changed its name from “PQ Group Holdings Inc.” to “ Ecovyst Inc.”, changed the ticker symbol of its common stock listed on the New York Stock Exchange from “PQG” to “ECVT” and rebranded its segments from “Refining Services” to “Ecoservices” and “Catalysts” to “Catalyst Technologies”.

The Company has two uniquely positioned specialty businesses:

Ecoservices provides sulfuric acid recycling to the North American refining industry for the production of alkylate and provides on-purpose virgin sulfuric acid for water treatment, mining and industrial applications;

and Catalyst Technologies provides finished silica catalysts and catalyst supports necessary to produce high strength and high stiffness plastics and, through its Zeolyst joint venture, supplies zeolites used for catalysts that remove nitric oxide from diesel engine emissions as well as sulfur from fuels during the refining process.

and Catalyst Technologies provides finished silica catalysts and catalyst supports necessary to produce high strength and high stiffness plastics and, through the Zeolyst Joint Venture, supplies zeolites used for catalysts that remove nitrogen oxides from diesel engine emissions as well as sulfur from fuels during the refining process.

The Company’s regeneration services product group, which is a part of the Company’s Ecoservices segment, typically experiences seasonal fluctuations as a result of higher demand for gasoline products in the summer months and lower demand in the winter months.

9 unchanged sentences

Recently Adopted Accounting Standards

In December 2019, the Financial Accounting Standards Board (“FASB”) issued new guidance to reduce the complexity in accounting for income taxes by removing certain exceptions to the general principles and simplifying areas such as franchise taxes, step-up in tax basis goodwill, separate entity financial statements and interim recognition of enactment of tax laws or rate changes.

The new guidance is effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years.

The Company adopted the new guidance effective January 1, 2021, with no material impact to the Company’s condensed consolidated financial position, results of operations or cash flows.

In November 2021, the FASB issued guidance that requires entities to provide certain disclosures when they (1) have received government assistance and (2) use a grant or contribution accounting model by analogy to other accounting guidance.

Previously, there was no guidance under GAAP on recognizing or measuring government grants to business entities.

The new guidance does not provide any additional guidance on this topic;

rather, it only provides guidance on required disclosures for business entities that receive government assistance and apply another grant or contribution accounting framework by analogy.

The new guidance is effective for fiscal years beginning after December 15, 2021 with the new disclosures required on an annual basis, and can be applied either prospectively or retrospectively.

The Company adopted the new guidance on January 1, 2022 and will include the disclosures as required in its annual reporting with respect to any government assistance or grants subject to the scope of the guidance to the extent material.

AND SUBSIDIARIES

2 unchanged sentences

Accounting Standards Not Yet Adopted

In March 2020, the FASB issued guidance to address certain accounting consequences from the anticipated transition from the use of the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates.

In October 2021, the FASB issued guidance that requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with revenue recognition guidance.

Under current GAAP, contract assets and contract liabilities acquired in a business combination are recorded by the acquirer at fair value.

The new guidance creates an exception to the general recognition and measurement principles related to business combinations, and is expected to result in the acquirer recognizing contract assets and liabilities at the same amounts recorded by the acquiree.

The new guidance is effective for business combinations occurring during fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, with early adoption permitted.

The Company is currently evaluating the impact of the new guidance, which would only be applied prospectively to business combinations upon the adoption of the guidance.

In March 2020 and January 2021, the FASB issued guidance to address certain accounting consequences from the anticipated transition from the use of the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates.

The new guidance contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts.

The guidance is optional and may be elected over time as reference rate reform activities occur.

The Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index of the corresponding derivatives.

During the year ended December 31, 2020, the Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index of the corresponding derivatives.

Application of these expedients preserves the presentation of derivatives consistent with past presentation.

During the year ended December 31, 2021, the FASB extended the guidance adoption date to June 30, 2023.

The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.

1 unchanged sentence

Performance Materials Divestiture

On December 14, 2020, the Company completed the sale of its Performance Materials business for $ 650,000 .

In the fourth quarter of 2020, the Performance Materials business met the criteria set forth in Accounting Standards Codification 205-20, Presentation of Financial Statements - Discontinued Operations (“ASC 205-20”), as the sale represented a strategic shift that had a major effect on the Company’s operations and financial results.

As a result, the Company’s condensed consolidated financial statements for the three and nine months ended September 30, 2020 reflect the Performance Materials business as a discontinued operation.

The divested business historically represented a reportable segment of the Company, including certain Australian operations that were historically reported in the Performance Chemicals reportable segment.

The following table summarizes the results of discontinued operations related to the Performance Materials divestiture:

Three months ended

September 30, 2020 Nine months ended

September 30, 2020

Sales $ 106,777 $ 280,663

Cost of goods sold 80,449 208,854

Selling, general and administrative expenses 8,710 26,337

Other operating expense, net 3,879 16,585

Operating income 13,739 28,887

Interest expense, net (1)

Other income, net ( 1,126 ) ( 961 )

Income from discontinued operations before income tax 10,971 17,038

(Benefit) provision for income taxes ( 420 ) 3,085

Income from discontinued operations, net of tax $ 11,391 $ 13,953

(1) The closing of the transaction triggered the Company’s obligation to provide partial repayment under its Amended and Restated Term Loan Credit Agreement, dated May 4, 2016 and its New Term Loan Credit Agreement, dated as of July 22, 2020.

As such, interest expense has been allocated to discontinued operations on the basis of the Company’s mandatory repayment of $ 275,787 of the Sen ior Secured Term Loan Facility due February 2027 and its mandatory repayment of $ 188,722 of the new Senior Secured Term Loan Facility due February 2027.

During the three months ended September 30, 2021, the Company incurred transaction costs of $ 264 and stock-based compensation expense of $ 1,194 , and an associated tax benefit of $ 339 related to the Performance Materials divestiture which is included in loss from discontinued operations, net of tax.

During the nine months ended September 30, 2021, the Company incurred transaction costs of $ 1,794 and stock-based compensation expense of $ 2,477 , and an associated tax benefit of $ 1,045 related to the Performance Materials divestiture which is included in loss from discontinued operations, net of tax.

Net income attributable to the noncontrolling interest related to the Perf ormance Materials business, net of tax was $ 97 and $ 219 for the three and nine months ended September 30, 2020, respectively.

Net income attributable to Ecovyst Inc., related to the Performance Materials business, net of tax was $ 11,294 and $ 13,734 for the three and nine months ended September 30, 2020, respectively.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

Upon the close of the transaction, the Company entered into a Transition Services Agreement with the buyer pursuant to which the buyer is receiving certain services to provide for the orderly transition of various functions and processes after the closing of the transaction.

The services under the Transition Services Agreement include information technology, accounting, tax, financial services, human resources, facilities, and ot her administrative support services.

Upon the close of the transaction on December 14, 2020, the Company entered into a Transition Services Agreement with the buyer pursuant to which the buyer received certain services to provide for the orderly transition of various functions and processes after the closing of the transaction.

The services under the Transition Services Agreement included information technology, accounting, tax, financial services, human resources, facilities, and other administrative support services.

These services were provided for a period of nine months, with three 30-day extensions available.

The Company billed $ 253 and $ 3,314 under the Transition Services Agreement to the buyer during the three and nine months ended September 30, 2021, respectively.

Those billings are included in selling, general and administrative expenses on the condensed consolidated financial statements for the three and nine months ended September 30, 2021.

The Company billed $ 1,571 under the Transition Services Agreement to the buyer during the three months ended March 31, 2021.

Those billings were included in selling, general and administrative expenses on the condensed consolidated financial statements for the three months ended March 31, 2021.

During the three months ended March 31, 2021, the Company incurred transaction costs of $ 1,446 and stock-based compensation expense of $ 653 , and an associated tax benefit of $ 514 related to the Performance Materials divestiture which is included in loss from discontinued operations, net of tax.

Performance Chemicals Divestiture

2 unchanged sentences

The Company completed the sale of the Performance Chemicals business on August 1, 2021.

In the first quarter of 2021, the Performance Chemicals business met the discontinued operations criteria set forth in ASC 205-20, as the sale represents a strategic shift that will have a major effect on the Company’s operations and financial results.

As a result, the Company’s condensed consolidated financial statements for all periods presented reflect the Performance Chemicals business as a discontinued operation.

The Performance Chemicals business historically represented a reportable segment of the Company.

Prior to the closing of the transaction, the disposal group was tested for recoverability as of each of the balance sheet dates since meeting the discontinued operations criteria, and the Company recognized an estimated disposal loss of $ 13,990 and $ 109,584 during the three and six months ended June 30, 2021, respectively, which was included in net loss from discontinued operations, net of tax on the condensed consolidated statements of income for the respective periods.

The final loss on the sale of the Performance Chemicals business was $ 157,539 , which is included in net (loss) income from discontinued operations, net of tax in the Company’s condensed consolidated statements of income for the nine months ended September 30, 2021.

The following is a reconciliation of the loss recorded on the sale:

Net proceeds received from the sale of the Performance Chemicals business $ 980,350

Transaction costs ( 35,402 )

Net assets derecognized ( 1,102,487 )

Loss on sale of the Performance Chemicals business $ ( 157,539 )

In connection with the sale of the Performance Chemicals business and the related loss, as noted above, the Company has recognized a tax benefit of $ 33,052 within net loss from discontinued operations, net of tax on the condensed consolidated statement of income.

During the year ended December 31, 2021, the net cash proceeds to the Company from the sale were $ 978,449 after certain customary adjustments for indebtedness, working capital and cash at the closing of the transaction.

During the three months ended March 31, 2022, the Company made a payment to the buyer for $ 3,744 , representing the final adjustments to the sale price.

The Company classified the payment within net cash used in investing activities – continuing operations in the condensed consolidated statements of cash flows.

Prior to the close of the transaction, the disposal group was tested for recoverability at each of the balance sheet dates subsequent to meeting the discontinued operations criteria, and the Company recognized an estimated disposal loss of $ 95,594 during the three months ended March 31, 2021 which was included in net loss from discontinued operations, net of tax on the condensed consolidated statement of income.

AND SUBSIDIARIES

1 unchanged sentence

(Dollars in thousands, except share and per share amounts)

The following table summarizes the results of discontinued operations related to the Performance Chemicals business for the periods presented:

The following table summarizes the results of discontinued operations related to the Performance Chemicals business for the three months ended March 31, 2021:

Three months ended

September 30, Nine months ended

September 30,

2021 2020 2021 2020

March 31, 2021

Sales $ 164,523

1 unchanged sentence

Selling, general and administrative expenses 11,716

Other operating (income) expense, net (1)

( 18,993 ) 5,075 10,337 19,154

Other operating expense, net 17,480

Goodwill impairment charge

Loss on sale of the Performance Chemicals business 123,035 — 157,539 —

Operating income (loss) ( 95,203 ) 14,558 ( 167,064 ) 42,128

Operating loss ( 86,120 )

Equity in net (income) from affiliated companies ( 38 )

Interest expense, net (1)

1,916 4,318 10,730 11,698

Other expense (income), net 153 334 ( 6,210 ) ( 3,100 )

(Loss) income from discontinued operations before income tax ( 97,247 ) 9,955 ( 171,473 ) 33,658

(Benefit) provision for income taxes ( 22,494 ) ( 9,125 ) ( 15,576 ) 31,354

(Loss) income from discontinued operations, net of tax $ ( 74,753 ) $ 19,080 $ ( 155,897 ) $ 2,304

(1) The Company reclassified transaction costs that were previously recorded to this line item and included those charges in the line item Loss on sale of the Performance Chemicals business during the three months ended September 30, 2021 .

Other income, net ( 5,523 )

Loss from discontinued operations before income tax ( 83,774 )

Provision for income taxes 4,411

Loss from discontinued operations, net of tax $ ( 88,185 )

(1) Upon the close of the transaction, the Company used a portion of the net proceeds to repay a portion of its outstanding debt amounting to $ 526,363 .

Refer to Note 13 for additional details on the repayment of outstanding debt.

Prior to the Company’s debt refinancing in June 2021, the Company’s outstanding term loan facilities had mandatory repayment provisions.

As a result, interest expense has been allocated to discontinued operations on the basis of the Company’s total repayment of $ 526,363 .

Net income attributable to the noncontrolling interest related to the Performance Chemicals business, net of tax was $ 76 and $ 200 for the three months ended September 30, 2021 and 2020, respectively.

Net income (loss) income attributable to Ecovyst Inc., related to the Performance Chemicals business, net of tax was $( 74,829 ) and $ 18,880 for the three months ended September 30, 2021 and 2020, respectively.

Net income attributable to the noncontrolling interest related to the Performance Chemicals business, net of tax was $ 333 and $ 685 for the nine months ended September 30, 2021 and 2020, respectively.

Net (loss) income attributable to Ecovyst Inc., related to the Performance Chemicals business, net of tax was $( 156,230 ) and $ 1,619 for the nine months ended September 30, 2021 and 2020, respectively.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

The following table summarizes the assets and liabilities of discontinued operations related to the divestiture of the Performance Chemicals business as of December 31, 2020.

Cash and cash equivalents $ 22,153

Accounts receivables, net 87,202

Inventories, net 74,647

Prepaid and other current assets 21,088

Current assets held for sale $ 205,090

Investments in affiliated companies $ 324

Property, plant and equipment, net 391,524

Goodwill 326,173

Other intangible assets, net 388,857

Right-of-use lease assets 19,296

Other long-term assets 23,269

Long-term assets held for sale $ 1,149,443

Accounts payable $ 74,728

Operating lease liabilities—current 8,479

Accrued liabilities 25,330

Current liabilities held for sale $ 108,537

Deferred income taxes $ 49,690

Operating lease liabilities—noncurrent 10,047

Other long-term liabilities 95,617

Long-term liabilities held for sale $ 155,354

In connection with the divestiture of the Performance Chemicals business, the Company entered into a contract manufacturing agreement effective on August 2, 2021 with PQ Silicas UK Ltd., a subsidiary of the Buyer, related to a facility in Warrington, United Kingdom.

Pursuant to this agreement, the Buyer will manufacture and sell silica catalyst finished good products to the Company, which are finished good products sold within the Company’s Catalyst Technologies segment.

Additionally, certain machinery, equipment, and other tangible personal property assets identified in the Agreement (“Catalyst Production Assets”) owned by the Buyer will be used exclusively in the manufacture of silica catalyst products for the Company.

The Company does not meet the requirements for a sale-leaseback transaction as described in Accounting Standards Codification 842-40, Leases - Sale-Leaseback Transactions.

Under the failed-sale-leaseback accounting model, the Company is deemed under GAAP to still own the Catalyst Production Assets, which the Company must continue to reflect in its consolidated balance sheet and depreciate over the assets’ remaining useful lives.

Based on the estimated fair market values of the Catalyst Production Assets, the failed-sale-leaseback accounting treatment resulted in a loss of $ 14,104 due to the requirement to treat a certain amount of the pre-tax cash proceeds from the divestiture as though it were the result of a financing obligation.

The agreement has an initial term of five years, with an option to renew, as well as an “Option Bill of Sale” which provides for the transfer from the Buyer to the Company of the Catalyst Production Assets upon the Company’s exercise of a one-dollar purchase option.

Payments made to the Buyer under the contact manufacturing agreement were $ 1,351 for the three and nine months ended September 30, 2021.

Net income attributable to the noncontrolling interest related to the Performance Chemicals business, net of tax was $ 117 for the three months ended March 31, 2021.

Net loss attributable to Ecovyst Inc., related to the Performance Chemicals business, net of tax was $ 88,302 for the three months ended March 31, 2021.

AND SUBSIDIARIES

1 unchanged sentence

(Dollars in thousands, except share and per share amounts)

In addition to the contract manufacturing agreement noted above, the Company also entered into certain supply agreements with the Buyer, as well as a Transition Services Agreement, pursuant to which the Buyer is receiving and performing certain services to provide for the orderly transition of various functions and processes after the closing of the transaction.

The services under the Transition Services Agreement include information technology, accounting, tax, financial services, human resources, facilities, and other administrative support services.

These services are provided for a period of six months.

Billings under the Transition Services Agreement to the Buyer during the three and nine months ended September 30, 2021 were immaterial.

Those billings are included in selling, general and administrative expenses on the condensed consolidated financial statements for the three and nine months ended September 30, 2021.

Revenue from Contracts with Customers:

5 unchanged sentences

• Treatment services

Fuels & emission control • Refining catalysts

Fuels & emission control • Refining hydrocracking catalysts

• Emission control catalysts

• Catalyst recycling services

• Catalyst recycling regeneration services

Packaging & engineered plastics • Catalysts for high-density polyethylene and chemicals syntheses

• Antiblock for film packaging

• Antiblocks for film packaging

• Sulfur derivatives for nylon production

Natural resources • Sulfur derivatives for mining

The following tables disaggregate the Company’s sales, by segment and end use, for the three and nine months ended September 30, 2021 and 2020:

Three months ended September 30, 2021

Ecoservices Catalyst Technologies Total

Industrial & process chemicals $ 23,297 $ 5 $ 23,302

Fuels & emission control (1)

67,644 — 67,644

Packaging & engineered plastics 23,315 29,873 53,188

Natural resources 23,294 — 23,294

Total segment sales $ 137,550 $ 29,878 $ 167,428

Three months ended September 30, 2020

Ecoservices Catalyst Technologies Total

Industrial & process chemicals $ 17,447 $ 51 $ 17,498

Fuels & emission control (1)

60,022 — 60,022

Packaging & engineered plastics 10,941 23,020 33,961

Natural resources 19,194 — 19,194

Total segment sales $ 107,604 $ 23,071 $ 130,675

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

Nine months ended September 30, 2021

The following tables disaggregate the Company’s sales, by segment and end use, for the three months ended March 31, 2022 and 2021:

Three months ended March 31, 2022

Ecoservices Catalyst Technologies Total

5 unchanged sentences

Total segment sales $ 154,060 $ 25,654 $ 179,714

Nine months ended September 30, 2020

Three months ended March 31, 2021

Ecoservices Catalyst Technologies Total

6 unchanged sentences

(1) As described in Note 1, the Company experiences seasonal s ales fluctuations to customers in the fuels & emission control end use.

Contract Assets and Liabilities

A contract asset is a right to consideration in exchange for goods that the Company has transferred to a customer when that right is conditional on something other than the passage of time.

A contract liability exists when the Company receives consideration in advance of performance obligations being satisfied.

The Company has no contract assets or liabilities on its condensed consolidated balance sheets as of September 30, 2021 and December 31, 2020.

For the three and nine months ended September 30, 2021 and 2020, revenue recognized from performance obligations related to prior periods was not material.

Fair Value Measurements:

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In instances where there is little or no market activity for the same or similar instruments, the Company estimates fair values using methods, models and assumptions that management believes a hypothetical market participant would use to determine a current transaction price.

These valuation techniques involve some level of management estimation and judgment that becomes significant with increasingly complex instruments or pricing models.

These valuation techniques involve some level of management estimation and judgment that

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

becomes significant with increasingly complex instruments or pricing models.

Where appropriate, adjustments are included to reflect the risk inherent in a particular methodology, model or input used.

8 unchanged sentences

Such inputs include market interest rates and volatilities, spreads and yield curves.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

• Level 3—Certain inputs are unobservable (supported by little or no market activity) and significant to the fair value measurement.

Unobservable inputs reflect the Company’s best estimate of what hypothetical market participants would use to determine a transaction price for the asset or liability at the reporting date.

The following table presents information about the Company’s assets and liabilities that were measured at fair value on a recurring basis as of September 30, 2021 and December 31, 2020, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.

September 30,

The following table presents information about the Company’s assets and liabilities that were measured at fair value on a recurring basis as of March 31, 2022 and December 31, 2021, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.

2022 Quoted Prices in

4 unchanged sentences

Unobservable Inputs

Derivative contracts (Note 14) $ 189 $ — $ 189 $ —

Derivative contracts (Note 14) $ 1,937 $ — $ 1,937 $ —

Derivative assets:

Interest rate caps (Note 14) $ 18,151 $ — $ 18,151 $ —

Derivative liabilities:

Interest rate caps (Note 14) $ 304 $ — $ 304 $ —

2021 Quoted Prices in

4 unchanged sentences

Unobservable Inputs

Derivative contracts (Note 14) $ 3,704 $ — $ 3,704 $ —

Derivative assets:

Interest rate caps (Note 14) $ 1,080 $ — $ 1,080 $ —

Derivative liabilities:

Interest rate caps (Note 14) $ 1,288 $ — $ 1,288 $ —

Derivative contracts

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For OTC derivatives that trade in liquid markets, such as forward contracts, swaps and options, model inputs can generally be corroborated by observable market data by correlation or other means, and model selection does not involve significant management judgment.

As of September 30, 2021, th e Company had interest rate c aps th at were fair valued using Level 2 inputs.

In March 2021, the Company settled its cross-currency swaps, which were used as a hedging instrument of its net investment in foreign assets in its Performance Chemicals segment.

Refer to Note 14 of these condensed consolidated financial statements for additional information.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

As of March 31, 2022, th e Company had interest rate c aps th at were fair valued using Level 2 inputs.

In addition, the Company applies a credit valuation adjustment to reflect credit risk which is calculated based on credit default swaps.

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The credit valuation adjustment is added to the discounted fair value to reflect the exit price that a market participant would be willing to receive to assume the Company’s liabilities or that a market participant would be willing to pay for the Company’s assets.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

Stockholders' Equity:

Accumulated Other Comprehensive Income (Loss)

The following tables present the tax effects of each component of other comprehensive income (loss) for the three and nine months ended September 30, 2021 and 2020:

Three months ended September 30,

amount Tax benefit/

(expense) After-tax amount Pre-tax

amount Tax benefit/

(expense) After-tax amount

Defined benefit and other postretirement plans:

Amortization of net gains $ 1 $ — $ 1 $ 28 $ ( 9 ) $ 19

Amortization of prior service cost ( 58 ) 14 ( 44 ) ( 52 ) 13 ( 39 )

Settlement gain 1,507 ( 374 ) 1,133 — — —

Benefit plans, net 1,450 ( 360 ) 1,090 ( 24 ) 4 ( 20 )

Net gain from hedging activities 613 ( 153 ) 460 1,260 ( 315 ) 945

Foreign currency translation (1)

( 1,555 ) 4,507 2,952 17,596 ( 4,024 ) 13,572

Other comprehensive income $ 508 $ 3,994 $ 4,502 $ 18,832 $ ( 4,335 ) $ 14,497

Nine months ended September 30,

The following tables present the tax effects of each component of other comprehensive income (loss) for the three months ended March 31, 2022 and 2021:

Three months ended March 31,

amount Tax benefit/

5 unchanged sentences

Amortization of prior service cost ( 53 ) 13 ( 40 ) ( 58 ) 14 ( 44 )

Settlement gain 1,507 ( 374 ) 1,133 — — —

Benefit plans, net ( 52 ) 13 ( 39 ) ( 57 ) 14 ( 43 )

3 unchanged sentences

Other comprehensive income (loss) $ 15,939 $ ( 4,561 ) $ 11,378 $ ( 5,345 ) $ 2,206 $ ( 3,139 )

(1) The income tax benefit or expense included in other comprehensive income is attributed to the portion of foreign currency translation associated with the Company’s cross-currency interest rate swaps, for which the tax effect is based on the applicable U.S.

(1) The income tax benefit or expense included in other comprehensive income is attributed to the portion of foreign currency translation associated with the Company’s cross-currency interest rate swaps for the three months ended March 31, 2021, for which the tax effect is based on the applicable U.S.

deferred income tax rate.

See Note 14 to these condensed consolidated financial statements for information regarding the Company’s cross-currency interest rate swaps.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

The following table presents the changes in accumulated other comprehensive income (loss), net of tax, by component for the nine months ended September 30, 2021 and 2020:

See Note 14 to these condensed consolidated financial statements for information regarding the Company’s cross-currency interest rate swaps, which were settled in March 2021.

The following table presents the changes in accumulated other comprehensive income (loss), net of tax, by component for the three months ended March 31, 2022 and 2021:

Defined benefit

4 unchanged sentences

December 31, 2021 $ 11,072 $ 2,254 $ ( 19,118 ) $ ( 5,792 )

Other comprehensive income before reclassifications 877 1,425 11,474 13,776

Other comprehensive income (loss) before reclassifications ( 78 ) 13,208 ( 2,305 ) 10,825

Amounts reclassified from accumulated other comprehensive income (1)

128 213 — 341

Disposal of business 3,743 — ( 11,779 ) ( 8,036 )

September 30, 2021 $ 10,026 $ 978 $ ( 20,188 ) $ ( 9,184 )

March 31, 2022 $ 11,033 $ 15,976 $ ( 21,423 ) $ 5,586

December 31, 2020 $ 5,278 $ ( 660 ) $ ( 19,883 ) $ ( 15,265 )

Other comprehensive loss before reclassifications — ( 28 ) ( 18,041 ) ( 18,069 )

Other comprehensive income (loss) before reclassifications ( 86 ) 683 ( 3,467 ) ( 2,870 )

Amounts reclassified from accumulated other comprehensive income (1)

( 48 ) 939 — 891

September 30, 2020 $ 3,520 $ ( 927 ) $ ( 35,119 ) $ ( 32,526 )

March 31, 2021 $ 5,235 $ 105 $ ( 23,350 ) $ ( 18,010 )

(1) See the following table for details about these reclassifications.

Amounts in parentheses indicate debits.

The following table presents the reclassifications out of accumulated other comprehensive income for the three and nine months ended September 30, 2021 and 2020:

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

The following table presents the reclassifications out of accumulated other comprehensive income for the three months ended March 31, 2022 and 2021:

Details about Accumulated Other Comprehensive

4 unchanged sentences

Three months ended

September 30, Nine months ended

September 30,

2021 2020 2021 2020

Amortization of defined benefit and other postretirement items:

6 unchanged sentences

Interest rate caps $ ( 683 ) $ ( 109 ) Interest expense

Natural gas swaps — ( 467 ) — ( 1,229 ) Cost of goods sold

( 104 ) 144 ( 283 ) ( 1,247 ) Total before tax

169 27 Tax benefit

7 unchanged sentences

Treasury Stock Repurchases

Stock Repurchase Program

The Company records repurchases of its common stock for treasury at cost.

1 unchanged sentence

If no such credits exist, the differences are charged to retained earnings.

2020 Stock Repurchase Program

On March 12, 2020, the Company’s Board of Directors (the “Board”) approved a plan to purchase up to $ 50,000 of Ecovyst Inc.

common stock under a stock repurchase program approved by the Board.

The Company may repurchase shares from time to time for cash in open market transactions or in privately negotiated transactions in accordance with applicable federal securities laws.

Under the plan, the Company could repurchase shares from time to time for cash in open market transactions or in privately negotiated transactions in accordance with applicable federal securities laws.

The Company determined the timing and the amount of any repurchases based on its evaluation of market conditions, share price and other factors.

The stock repurchase program expired in March 2022, with no repurchases made during the three months ended March 31, 2022 and 2021.

2022 Stock Repurchase Program

On April 27, 2022, the Board approved a plan to purchase up to $ 450,000 of Ecovyst Inc.

common stock over the next four years under a stock repurchase program.

Under the plan, the Company can repurchase shares from time to time for cash in open market transactions or in privately negotiated transactions in accordance with applicable federal securities laws.

The Company will determine the timing and the amount of any repurchases based on its evaluation of market conditions, share price and other factors.

The stock repurchase program is valid until March 2022.

During the three months ended March 31, 2020, the Company repurchased 211,700 shares on the open market at an average price of $ 9.73 , for a total of $ 2,059 .

The Company has no t made any additional repurchases under the program through September 30, 2021.

As of September 30, 2021, $ 47,941 was available for additional share repurchases under the program.

No repurchases have been made under the repurchase program since the announcement date of the program.

Tax Withholdings on Equity Award Vesting

1 unchanged sentence

These transactions when they occur are accounted for as stock repurchases by the Company, with the shares returned to treasury stock at a cost representing the payment by the Company of the tax obligations on behalf of the employees in lieu of shares for the vesting unit.

The fair value of the shares withheld to cover tax payments were $ 1,470 and $ 1,992 for the nine months ended September 30, 2021 and 2020, respectively.

Dividends Paid

On August 4, 2021, the Board declared a special cash dividend of $ 3.20 per share, using after tax cash proceeds from the sale of the Performance Chemicals business.

The dividend was paid on August 23, 2021 to the Company’s stockholders of record at the close of business on August 12, 2021.

Refer to Note 3 of these condensed consolidated financial statements for additional details.

The fair value of the shares withheld to cover tax payments were $ 332 and $ 1,470 for the three months ended March 31, 2022 and 2021, respectively.

On March 1, 2021 (the “Closing Date”), the Company completed the acquisition of Chem32, LLC (“Chem32”) as part of a stock transaction (the “Acquisition”) for $ 44,000 in cash.

The net cash paid on the Closing Date by the Company was $ 41,994 , after certain customary adjustments for indebtedness, working capital, cash and a holdback amount pursuant to the agreement.

Based in Orange, Texas, Chem32 is a leader in ex situ pre-sulfiding and pre-activation for hydro-processing catalysts.

The Acquisition was accounted for using the acquisition method of accounting.

Under the acquisition method, the purchase price was allocated to the identifiable net assets acquired based on the fair values of the identifiable assets acquired and liabilities assumed as of the Closing Date.

The excess of the purchase price over fair values of the identifiable net assets acquired was recorded to goodwill.

The net cash paid on the Closing Date by the Company was $ 41,994 , after certain customary adjustments for indebtedness, working capital, cash and a holdback amount pursuant to the agreement.

A portion of the holdback was settled in July 2021 for a payment of $ 645 , with $ 1,000 of the holdback remaining as of March 31, 2022.

Chem32 is reported as part of the Ecoservices segment.

The Company believes that the Acquisition enables it to offer a more robust portfolio of services within the refining industry leveraging the Company’s existing relationships, therefore contributing to a total purchase price that resulted in the recognition of $ 14,778 of goodwill, which was deductible for tax purposes.

During the three months ended March 31, 2022, the Company recorded an immaterial adjustment between goodwill and deferred tax liabilities related to the final tax purchase price allocation.

See Note 8 to these condensed consolidated financial statements for further information.

AND SUBSIDIARIES

1 unchanged sentence

(Dollars in thousands, except share and per share amounts)

The following table sets forth the calculation of the purchase price to the identifiable net assets acquired with respect to the Acquisition, which was substantially complete as of September 30, 2021 :

Provisional Purchase

Price Allocation Adjustments Purchase

The following table sets forth the calculation of the purchase price to the identifiable net assets acquired with respect to the Acquisition, which was complete as of December 31, 2021 :

Price Allocation

14 unchanged sentences

Goodwill 14,778

$ 43,994 $ ( 212 ) $ 43,782

In accordance with the requirements of the purchase method of accounting for acquisitions, accounts receivable and inventories were recorded at fair market value.

1 unchanged sentence

The gross contractual amount of accounts receivable at the Closing Date was $ 1,368 , of which there was no amount deemed uncollectible.

Fair value of inventory is defined as estimated selling prices less the sum of (a) costs of disposal and (b) a reasonable profit allowance for the selling effort of the acquiring entity, which the Company determined acquired cost equalled fair value of the inventory acquired.

The Company’s cost of goods sold for the three and nine months ended September 30, 2021 includes a pre-tax charge of $ 148 of additional amortization expense related to identified intangible assets, which would have been recorded during the reporting period if the adjustments to the provisional amounts had been recognized as of the Closing Date.

The Company’s other operating expense, net for the three and nine months ended September 30, 2021 includes a pre-tax charge of $ 1,108 of additional amortization expense related to identified intangible assets, which would have been recorded during the reporting period if the adjustments to the provisional amounts had been recognized as of the Closing Date.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

The valuation of intangibles assets acquired and the related weighted-average amortization periods are as follows:

The valuation of intangibles assets acquired and the related weighted-average amortization periods were as follows:

Amount Weighted-Average

6 unchanged sentences

Total intangible assets subject to amortization $ 22,100

The Company’s condensed consolidated financial statements include Chem32’s results of operations from the Closing Date through September 30, 2021.

Net sales and net income attributable to Chem32 during this period are included in the Company’s condensed consolidated statement of income and are immaterial for the periods presented.

Pro forma financial information has not been presented as it is immaterial for the three and nine months ended September 30, 2021 and 2020 .

The Company believes that the Acquisition will enable it to offer a more robust portfolio of services within the refining industry leveraging the Company’s existing relationships, which contributed to a total purchase price that resulted in the recognition of goodwill.

The Company assigned all of the goodwill to the Ecoservices segment.

The goodwill associated with the Acquisition is deductible for tax purposes.

The change in the carrying amount of goodwill for the nine months ended September 30, 2021 is summarized as follows:

Net sales and net income attributable to Chem32 during the period from the Closing Date through March 31, 2021 were immaterial.

Pro forma financial information has not been presented as it is immaterial for the three months ended March 31, 2021.

Acquisition and integration costs was immaterial for the three months ended March 31, 2021 and are included in other operating expense, net in the Company’s consolidated statement of income.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

The change in the carrying amount of goodwill for the three months ended March 31, 2022 is summarized as follows:

Ecoservices Catalyst Technologies Total

Balance as of December 31, 2021 $ 326,670 $ 79,469 $ 406,139

Goodwill recognized (Note 7) 14,917 — 14,917

Goodwill adjustments (1)

( 81 ) — ( 81 )

Foreign exchange impact — ( 754 ) ( 754 )

Balance as of September 30, 2021 $ 326,809 $ 79,319 $ 406,128

Balance as of March 31, 2022 $ 326,589 $ 78,715 $ 405,304

(1) During the three months ended March 31, 2022, the Company recorded an adjustment of $ 81 between goodwill and deferred tax liabilities related to the final tax purchase price allocation for the Chem32 acquisition.

Other Operating Expense, Net:

1 unchanged sentence

Three months ended

September 30, Nine months ended

September 30,

2021 2020 2021 2020

Amortization expense $ 2,656 $ 2,186

1 unchanged sentence

Restructuring, integration and business optimization costs (1)

78 250 2,408 1,441

Net loss on asset disposals 133 778

1 unchanged sentence

$ 7,763 $ 5,507

(1) During the nine months ended September 30, 2021, the Company’s results were impacted by costs associated with severance charges for certain executives and employees.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(1) During the three months ended March 31, 2021, the Company’s results were impacted by costs associated with severance charges for certain executives and employees.

Inventories, Net:

Inventories, net are classified and valued as follows:

September 30,

2022 December 31,

7 unchanged sentences

$ 54,748 $ 53,813

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

Investments in Affiliated Companies:

The Company accounts for investments in affiliated companies under the equity method.

Affiliated companies accounted for on the equity basis as of September 30, 2021 are as follows:

Affiliated companies accounted for on the equity basis as of March 31, 2022 are as follows:

Company Country Percent

3 unchanged sentences

Three months ended

September 30, Nine months ended

September 30,

2021 2020 2021 2020

Sales $ 66,683 $ 66,205

4 unchanged sentences

the Company’s share of the net assets and net income of affiliates is calculated based on the percent ownership specified in the table above.

The Company’s investments in affiliated companies balance as of September 30, 2021 and December 31, 2020 includes net purchase accounting fair value adjustments of $ 239,020 and $ 243,899 , respectively, related to the series of transactions consummated on May 4, 2016 to reorganize and combine the businesses of PQ Holdings Inc.

and Eco Services Operations LLC, consisting primarily of goodwill and intangible assets such as customer relationships, technical know-how and trade names.

Consolidated equity in net income from affiliates is net of $ 1,601 and $ 4,879 of amortization expense related to purchase accounting fair value adjustments for the three and nine months ended September 30, 2021, respectively.

Consolidated equity in net income from affiliates is net of $ 1,659 and $ 4,975 of amortization expense related to purchase accounting fair value adjustments for the three and nine months ended September 30, 2020, respectively.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

The Company’s investments in affiliated companies balance as of March 31, 2022 and December 31, 2021 includes net purchase accounting fair value adjustments of $ 235,819 and $ 237,419 , respectively, related to a prior business combination, consisting primarily of goodwill and intangible assets such as customer relationships, technical know-how and trade names.

Consolidated equity in net income from affiliates is net of $ 1,601 and $ 1,658 of amortization expense related to purchase accounting fair value adjustments for the three months ended March 31, 2022 and 2021, respectively.

Property, Plant and Equipment:

A summary of property, plant and equipment, at cost, and related accumulated depreciation is as follows:

September 30,

2022 December 31,

$ 96,946 $ 97,047

77,366 76,010

Buildings and improvements 77,953 77,851

Machinery and equipment

6 unchanged sentences

$ 588,733 $ 596,231

Depreciation expense was $ 16,369 and $ 16,222 for the three months ended September 30, 2021 and 2020, respectively.

Depreciation expense was $ 49,902 and $ 47,857 for the nine months ended September 30, 2021 and 2020, respectively.

Depreciation expense was $ 16,011 and $ 16,526 for the three months ended March 31, 2022 and 2021, respectively.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

Long-term Debt:

The summary of long-term debt is as follows:

September 30,

2022 December 31,

Senior Secured Term Loan Facility due February 2027 (the "2016 Term Loan Facility") $ — $ 671,710

Senior Secured Term Loan Facility due February 2027 (the "2020 Term Loan Facility") — 459,653

Senior Secured Term Loan Facility due June 2028 (the "2021 Term Loan Facility") 897,750 —

5.750% Senior Notes due 2025 — 295,000

Senior Secured Term Loan Facility due June 2028 $ 893,250 $ 895,500

ABL Facility — —

6 unchanged sentences

The fair value of a financial instrument is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants.

As of September 30, 2021 and December 31, 2020, the fair value of the term loan facilities and unsecured notes was $ 898,872 and $ 1,427,123 , respectively.

As of March 31, 2022 and December 31, 2021, the fair value of the senior secured term loan facility was $ 882,084 and $ 894,381 , respectively.

The fair value is classified as Level 2 based upon the fair value hierarchy (see Note 5 to these condensed consolidated financial statements for further information on fair value measurements).

2021 Term Loan Facility

In June 2021, PQ Corporation (“PQ Corp”), an indirect, wholly owned subsidiary of Ecovyst prior to the closing of the sale of the Performance Chemicals business, and Ecovyst Catalyst Technologies LLC (“Ecovyst LLC” and, following the closing of the sale of the Performance Chemicals business, the “Borrower”), an indirect, wholly owned subsidiary of the Company, entered into an agreement for a new senior secured term loan facility in an aggregate principal amount of $ 900,000 with an original issue discount of 0.25 % and interest at a floating rate of LIBOR (with a 0.5 % minimum LIBOR floor) plus 2.75 % per annum (or, depending on the Borrower’s first lien net leverage ratio, 2.5 %).

The proceeds were used to pay in full the 2020 Term Loan Facility, partially pay the 2016 Term Loan Facility and pay the associated fees and expenses.

The new senior secured term loan facility requires scheduled quarterly amortization payments, each equal to 0.25 % of the original principal amount of the loans under the new senior secured term loan facility.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

As a result of amending the term loan facilities during the nine months ended September 30, 2021, the Company recorded $ 5,736 of new creditor and third-party financing costs as debt extinguishment costs.

In addition, previous unamortized deferred financing costs of $ 1,725 and original issue discount of $ 3,664 associated with the previously outstanding debt were written off as debt extinguishment costs during the nine months ended September 30, 2021.

In June 2021, PQ Corp also entered into a third amendment agreement (the “ABL Amendment”), which amended its ABL Credit Agreement, dated as of May 4, 2016 (the “ABL Credit Agreement” and, as amended by the ABL Amendment, the “Amended ABL Credit Agreement”).

The ABL Amendment amended the ABL Credit Agreement to, among other things, following the sale of the Performance Chemicals business, decrease the aggregate amount of revolving loan commitments available to the borrowers thereunder by an aggregate amount of $ 150,000 to $ 100,000 , consisting of $ 90,000 in U.S.

commitments and $ 10,000 on in European commitments and extended the maturity date with respect to borrowings under the Amended ABL Credit Agreement to August 2, 2026.

As a result of the ABL Amendment, unamortized deferred financing costs of $ 485 and original issue discount of $ 107 associated with the ABL Credit Agreement were written off as debt extinguishment costs during the three and nine months ended September 30, 2021.

2016 Term Loan Facility - Repaid in 2021

Concurrent with, and using a portion of the net cash proceeds from, the divestiture of the Performance Chemicals business in August 2021, the Company repaid the remaining principal balance of $ 231,363 on the 2016 Term Loan Facility.

The Company wrote off $ 849 of unamortized deferred financing costs and $ 2,395 of original issue discount as debt extinguishment costs during the three and nine months ended September 30, 2021.

5.750% Senior Notes due 2025 - Redeemed in 2021

Concurrent with, and using a portion of the net proceeds from, the divestiture of the Performance Chemicals business in August 2021, the Company redeemed the remaining principal balance of $ 295,000 of its 5.750% Senior Notes due 2025.

In connection with the redemption of the 5.750% Senior Notes due 2025, the Company paid a redemption premium of $ 8,481 which was recorded as debt extinguishment costs during the three and nine months ended September 30, 2021.

In addition, previous unamortized deferred financing costs of $ 2,262 and original issue discount of $ 1,198 associated with the previously outstanding debt were written off as debt extinguishment costs during the three and nine months ended September 30, 2021.

Financial Instruments:

16 unchanged sentences

As the derivatives are designated and qualify as cash flow hedges, the gains or losses on the interest rate cap agreements are recorded in stockholders’ equity as a component of OCI, net of tax.

Reclassifications of the gains and losses on the interest rate cap agreements into earnings are recorded as part of interest expense in the condensed consolidated statements of income as the Company makes its interest payments

Fair value is determined based on estimated amounts that would be received or paid to terminate the contracts at the reporting date based on quoted market prices.

In November 2018, the Company entered into interest rate cap agreements to mitigate interest volatility from July 2020 through July 2022, with a cap rate of 3.50 % on $ 500,000 of notional variable-rate debt and a $ 3,380 premium annuitized during the effective period.

In February 2020, the Company restructured these agreements to lower the interest cap rate to 2.50 % with an incremental $ 130 premium annuitized during the effective period.

In March 2020, the Company again amended such interest rate cap agreements to lower the cap rate to 0.84 % and paid an additional $ 900 premium annuitized during the effective period.

The term and notional amount remained unchanged, and the total cumulative annuitized premium on the $ 500,000 of notional variable-rate debt is $ 4,410 .

The cap rate in effect at March 31, 2022 was 0.84 % associated with the $ 500,000 of notional variable-rate debt.

AND SUBSIDIARIES

1 unchanged sentence

(Dollars in thousands, except share and per share amounts)

on the hedged portion of its senior secured credit facilities.

Fair value is determined based on estimated amounts that would be received or paid to terminate the contracts at the reporting date based on quoted market prices.

In February 2020, the Company restructured its $ 500,000 of notional variable-rate debt interest rate cap agreements from July 2020 through July 2022, to lower the interest cap rate to 2.50 % with an incremental $ 130 premium annuitized during the effective period.

In March 2020, the Company again amended such interest rate cap agreements to lower the cap rate to 0.84 % from 2.50 % on $ 500,000 of notional variable-rate debt and paid an additional incremental $ 900 premium annuitized during the effective period.

The term remains unchanged from July 2020 through July 2022.

The total cumulative annuitized premium on the $ 500,000 of notional variable-rate debt is $ 4,410 .

The cap rate in effect at September 30, 2021 was 0.84 % associated with the $ 500,000 of notional variable-rate debt.

In July 2020, the Company entered into additional interest rate cap agreements to mitigate interest rate volatility from August 2020 to August 2023, with a cap rate of 1.00 % on $ 400,000 of notional variable-rate debt.

The cap rate in effect at September 30, 2021 was 1.00 % associated with the $ 400,000 of notional variable-rate debt.

Upon the expiration of the July 2016 interest rate cap agreements in July 2020, the Company entered into additional interest rate cap agreements to mitigate interest rate volatility from August 2020 to August 2023, with a cap rate of 1.00 % on $ 400,000 of notional variable-rate debt.

The cap rate in effect at March 31, 2022 was 1.00 % associated with the $ 400,000 of notional variable-rate debt.

The total annuitized premium on the $ 400,000 of notional variable-rate debt is $ 137 .

In August 2021, PQ Corporation novated $ 900,000 of its interest rate caps to Ecovyst Catalyst Technologies LLC.

Other than the novation, there were no other changes to the interest rate cap.

In January 2022, the Company entered into two new interest rate cap agreements, with notional amounts of $ 250,000 each and cap rates of 1.00 %.

The total cumulative annuitized premium is $ 4,450 .

The term for one of the interest rate caps is August 2022 through October 2024 and the term for the other is September 2023 through October 2025.

Use of Derivative Financial Instruments to Manage Foreign Currency Risk.

7 unchanged sentences

At the date of settlement, the total notional value of the cross-currency swaps was $ 311,380 .

The Company paid $ 13,170 in cash to settle the swaps, which is included in n et cash used in investing activities, discontinued operations in the Company’s condensed consolidated statement of cash flows for the nine months ended September 30, 2021, as the underlying subsidiary subject to the net investment hedging relationship is part of the Performance Chemicals business.

The fair values of derivative instruments held as of September 30, 2021 and December 31, 2020 are shown below:

Balance sheet location September 30,

The Company paid $ 13,170 in cash to settle the swaps, which is included in n et cash used in investing activities, discontinued operations in the Company’s condensed consolidated statement of cash flows for the three months ended March 31, 2021, as the underlying subsidiary subject to the net investment hedging relationship is part of the Performance Chemicals business.

The fair values of derivative instruments held as of March 31, 2022 and December 31, 2021 are shown below:

Balance sheet location March 31,

2022 December 31,

1 unchanged sentence

Derivatives designated as cash flow hedges:

Interest rate caps Prepaid and other current assets 2,982 —

Interest rate caps Other long-term assets $ 15,169 $ 1,080

3 unchanged sentences

Interest rate caps Accrued liabilities $ 304 $ 1,288

Interest rate caps Other long-term liabilities — 1,750

Total derivative liabilities $ 304 $ 1,288

The following tables show the effect of the Company’s derivative instruments designated as cash flow hedges on AOCI for the three months ended March 31, 2022 and 2021:

Three months ended March 31,

Location of gain (loss) reclassified from AOCI into income Amount of gain (loss) recognized in OCI on derivatives Amount of gain (loss) reclassified from AOCI into income Amount of gain (loss) recognized in OCI on derivatives Amount of gain (loss) reclassified from AOCI into income

Interest rate caps Interest (expense) income $ 17,612 $ ( 683 ) $ 912 $ ( 109 )

AND SUBSIDIARIES

1 unchanged sentence

(Dollars in thousands, except share and per share amounts)

The following tables show the effect of the Company’s derivative instruments designated as cash flow hedges on AOCI for the three and nine months ended September 30, 2021 and 2020:

Three months ended September 30,

Interest rate caps Interest (expense) income $ 510 $ ( 104 ) $ 573 $ 506

Nine months ended September 30,

Interest rate caps Interest (expense) income $ 1,901 $ ( 283 ) $ ( 347 ) $ ( 18 )

The following tables show the effect of the Company’s cash flow hedge accounting on the condensed consolidated statements of income for the three and nine months ended September 30, 2021 and 2020:

Location and amount of gain (loss) recognized in income on cash flow hedging relationships

Three months ended September 30,

Cost of goods sold Interest (expense)

income Cost of goods sold Interest (expense)

Total amounts of income and expense line items presented in the statement of income in which the effects of cash flow hedges are recorded $ ( 113,784 ) $ ( 9,005 ) $ ( 89,844 ) $ ( 10,430 )

The effects of cash flow hedging:

Gain (loss) on cash flow hedging relationships:

Interest contracts:

Amount of gain (loss) reclassified from AOCI into income — ( 104 ) — 506

The following tables show the effect of the Company’s cash flow hedge accounting on the condensed consolidated statements of income for the three months ended March 31, 2022 and 2021:

Location and amount of gain (loss) recognized in income on cash flow hedging relationships

Nine months ended September 30,

Cost of goods sold Interest (expense)

income Cost of goods sold Interest (expense)

Three months ended March 31,

Interest (expense)

income Interest (expense)

Total amounts of income and expense line items presented in the statement of income in which the effects of cash flow hedges are recorded $ ( 8,450 ) $ ( 10,456 )

3 unchanged sentences

Amount of gain (loss) reclassified from AOCI into income ( 683 ) ( 109 )

The amount of unrealized losses in AOCI related to the Company’s cash flow hedges that is expected to be reclassified to the condensed consolidated statement of income over the next twelve months is $ 805 as of September 30, 2021.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

The following tables show the effect of the Company’s net investment hedges on AOCI and the condensed consolidated statements of income for the three and nine months ended September 30, 2021 and 2020:

Amount of gain (loss) recognized in OCI on derivative Location of gain (loss) reclassified from AOCI into income Amount of gain (loss) reclassified from AOCI into income Location of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing) Amount of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing)

Three months ended

September 30, Three months ended

September 30,

2021 2020 2021 2020 2021 2020

Cross-currency interest rate swaps $ — $ ( 5,206 ) Net (loss) income from discontinued operations, net of tax $ 9,754 $ — Interest (expense) income $ — $ 1,552

The following table shows the effect of the Company’s net investment hedges on AOCI and the condensed consolidated statements of income for the three months ended March 31, 2021:

Amount of pre-tax gain (loss) recognized in OCI on derivative Location of gain (loss) reclassified from AOCI into income Amount of gain (loss) reclassified from AOCI into income Location of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing) Amount of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing)

Nine months ended

September 30, Nine months ended

September 30,

2021 2020 2021 2020 2021 2020

Cross-currency interest rate swaps $ 9,787 Net (loss) income from discontinued operations, net of tax $ — Interest (expense) income $ 545

Income Taxes:

The effective income tax rate for the three months ended September 30, 2021 was 35.6 % compared to ( 1,579.7 )% for the three months ended September 30, 2020.

The effective income tax rate for the nine months ended September 30, 2021 was ( 610.9 )% compared to ( 149.9 )% for the nine months ended September 30, 2020.

The effective income tax rate for the three months ended March 31, 2022 was 42.1 % compared to 65.4 % for the three months ended March 31, 2021.

The Company’s effective income tax rate has fluctuated primarily due to changes in income mix, the impacts of the Global Intangible Low Taxed Income (“GILTI”) tax rules, discrete impacts related to intraperiod allocation revaluation of deferred tax assets and liabilities as a result of the divestiture of the Performance Chemicals business, tax rate changes and changes in foreign exchange gains and losses, which create permanent differences in certain jurisdictions.

The difference between the U.S.

federal statutory income tax rate and the Company’s effective income tax rate for the nine months ended September 30, 2021 was mainly due to state and local taxes, discrete tax impacts related to intraperiod allocation revaluation of deferred tax assets and liabilities as a result of the divestiture of the Performance Chemicals business, tax rate changes and the tax effect of permanent differences related to foreign currency exchange gain or loss.

federal statutory income tax rate and the Company’s effective income tax rate for the three months ended March 31, 2022 was mainly due to state and local taxes, a discrete shortfall tax expense related to stock compensation, and a discrete tax expense associated with the Employee Retention Credit.

The difference between the U.S.

federal statutory income tax rate and the Company’s effective income tax rate for the nine months ended September 30, 2020 was mainly due to state and local taxes, GILTI and the impact of intra-period allocation as a result of the Performance Chemicals and Performance Materials businesses being classified as held for sale.

federal statutory income tax rate and the Company’s effective income tax rate for the three months ended March 31, 2021 was mainly due to state and local taxes, discrete tax impacts related to intra-period allocation revaluation of deferred tax assets and liabilities as a result of the Performance Chemicals divestiture, and the tax effect of permanent differences related to foreign currency exchange gain or loss.

AND SUBSIDIARIES

2 unchanged sentences

Benefit Plans:

The following information is provided for (1) the Company-sponsored defined benefit pension plans covering employees in the U.S.

and certain employees at its foreign subsidiaries and (2) the Company-sponsored unfunded plans to provide certain health care benefits to retired employees in the U.S.

Components of net periodic expense (benefit) are as follows:

The following tables present the components of net periodic cost (benefit) for the Company-sponsored defined benefit pension and postretirement plans, which cover certain employees and retirees located in the U.S.

Defined Benefit Pension Plans

Three months ended

September 30, Three months ended

September 30,

2021 2020 2021 2020

Service cost $ — $ 192 $ — $ 280

Interest cost 604 551

Expected return on plan assets ( 1,110 ) ( 1,094 )

Amortization of net loss — — — 24

Settlement (gain) recognized ( 26 ) — — —

Net periodic expense (benefit) $ ( 568 ) $ ( 103 ) $ — $ 308

Nine months ended

September 30, Nine months ended

September 30,

2021 2020 2021 2020

Service cost $ — $ 577 $ — $ 798

Interest cost 1,652 2,026 193 221

Expected return on plan assets ( 3,280 ) ( 2,910 ) ( 193 ) ( 212 )

Amortization of net loss — — — 70

Settlement (gain) recognized ( 26 ) — — —

Net periodic (benefit) expense $ ( 1,654 ) $ ( 307 ) $ — $ 877

Other Postretirement Benefit Plan

Three months ended

September 30, Nine months ended

September 30,

2021 2020 2021 2020

Interest cost 4 4

3 unchanged sentences

Commitments and Contingent Liabilities:

There is a risk of environmental impact in chemical manufacturing operations.

There is a risk of environmental impact in the Company’s manufacturing operations.

The Company’s environmental policies and practices are designed to comply with existing laws and regulations and to minimize the possibility of significant environmental impact.

8 unchanged sentences

Three months ended

September 30, Nine months ended

September 30,

2021 2020 2021 2020

Ecoservices $ 154,060 $ 100,222

2 unchanged sentences

Total $ 179,714 $ 126,624

Segment Adjusted EBITDA:

Adjusted EBITDA:

Ecoservices $ 49,341 $ 33,002

1 unchanged sentence

16,975 18,469

Total Segment Adjusted EBITDA (4)

$ 77,361 $ 56,034 $ 189,995 $ 176,192

Unallocated corporate expenses ( 7,076 ) ( 9,167 )

Total $ 59,240 $ 42,304

(1) Excludes the Company’s proportionate share of sales from the Zeolyst International and Zeolyst C.V.

joint ventures (collectively, the “Zeolyst Joint Venture”) accounted for using the equity method (see Note 11 to these condensed consolidated financial statements for further information).

The proportionate share of sales is $ 32,820 and $ 26,552 for the three months ended September 30, 2021 and 2020, respectively.

The proportionate share of sales is $ 94,984 and $ 99,695 for the nine months ended September 30, 2021 and 2020, respectively.

The proportionate share of sales is $ 28,977 and $ 28,978 for the three months ended March 31, 2022 and 2021, respectively.

(2) The Company defines Adjusted EBITDA as EBITDA adjusted for certain items as noted in the reconciliation below.

2 unchanged sentences

Adjusted EBITDA as defined by the Company may not be comparable with EBITDA or Adjusted EBITDA as defined by other companies.

(3) The Adjusted EBITDA from the Zeolyst Joint Venture included in the Catalyst Technologies segment is $ 14,493 for the three months ended September 30, 2021, which includes $ 8,780 of equity in net income plus $ 1,601 of amortization of investment in affiliate step-up and $ 4,112 of joint venture depreciation, amortization and interest.

The Adjusted EBITDA from the Zeolyst Joint Venture included in the Catalyst Technologies segment is $ 5,331 for the three months ended September 30, 2020, which includes $ 76 of equity in net income plus $ 1,658 of amortization of investment in affiliate step-up and $ 3,597 of joint venture depreciation, amortization and interest.

The Adjusted EBITDA from the Zeolyst Joint Venture included in the Catalyst Technologies segment is $ 37,085 for the nine months ended September 30, 2021, which includes $ 20,794 of equity in net income plus $ 4,879 of amortization of investment in affiliate step-up and $ 11,412 of joint venture depreciation, amortization and interest.

The Adjusted EBITDA from the Zeolyst Joint Venture included in the Catalyst Technologies segment is $ 35,911 for the nine months ended September 30, 2020, which includes $ 19,882 of equity in net income plus $ 4,975 of amortization of investment in affiliate step-up and $ 11,054 of joint venture depreciation, amortization and interest.

(4) Total Segment Adjusted EBITDA differs from the Company’s consolidated Adjusted EBITDA due to unallocated corporate expenses.

(3) The Adjusted EBITDA from the Zeolyst Joint Venture included in the Catalyst Technologies segment is $ 11,474 for the three months ended March 31, 2022, which includes $ 5,787 of equity in net income plus $ 1,601 of amortization of investment in affiliate step-up and $ 4,087 of joint venture depreciation, amortization and interest.

The Adjusted EBITDA from the Zeolyst Joint Venture included in the Catalyst Technologies segment is $ 10,537 for the three months ended March 31, 2021, which includes $ 5,237 of equity in net income plus $ 1,658 of amortization of investment in affiliate step-up and $ 3,645 of joint venture depreciation, amortization and interest.

AND SUBSIDIARIES

1 unchanged sentence

(Dollars in thousands, except share and per share amounts)

A reconciliation of net income (loss) from continuing operations to Segment Adjusted EBITDA is as follows:

A reconciliation of net income (loss) to Ecovyst to Adjusted EBITDA is as follows:

Three months ended

September 30, Nine months ended

September 30,

2021 2020 2021 2020

Reconciliation of net income (loss) from continuing operations to Segment Adjusted EBITDA

Reconciliation of net income (loss) from continuing operations to Adjusted EBITDA

Net income (loss) from continuing operations $ 7,875 $ ( 2,748 )

5 unchanged sentences

Amortization of investment in affiliate step-up 1,601 1,658

Debt extinguishment costs 15,185 14,004 26,902 16,517

Net loss on asset disposals 133 778

Foreign exchange losses (gains) 922 ( 4,286 ) 4,803 ( 577 )

LIFO benefit ( 1,295 ) ( 1,261 ) ( 1,998 ) ( 4,902 )

Foreign exchange losses 647 5,101

LIFO expense (benefit) 245 ( 253 )

Transaction and other related costs 4,281 472

4 unchanged sentences

Adjusted EBITDA $ 59,240 $ 42,304

Unallocated corporate expenses 7,986 8,013 25,641 29,496

Segment Adjusted EBITDA $ 77,361 $ 56,034 $ 189,995 $ 176,192

AND SUBSIDIARIES

2 unchanged sentences

Stock-Based Compensation:

The Company is authorized to issue shares for common stock awards to employees, directors and affiliates of the Company in connection with the Ecovyst Inc.

(formerly PQ Group Holdings Inc.) 2017 Omnibus Incentive Plan, as Amended and Restated (the “2017 Plan”).

During the nine months ended September 30, 2021, the Company granted 1,697,623 restricted stock units and 211,985 performance stock units (at target) under the 2017 Plan as part of its equity incentive compensation program.

Each restricted stock unit provides the recipient with the right to receive a share of common stock subject to graded vesting terms based on service, which for the awards granted during the nine months ended September 30, 2021, generally requires approximately one year of service for members of the Company’s board of directors and approximately three years of service for employees.

The performance stock units granted during the nine months ended September 30, 2021 provide the recipients with the right to receive shares of common stock dependent on the achievement of a total shareholder return (“TSR”) goal, and are generally subject to the provision of service through the vesting date of the award.

The Company has an equity incentive plan under which it grants common stock awards to employees, directors and affiliates of the Company.

At March 31, 2022, 8,594,638 shares of common stock were available for issuance under the plan.

The Company settles these awards through the issuance of new shares.

Restricted Stock Units and Performance Stock Units

Restricted Stock Units

During the three months ended March 31, 2022, the Company granted 2,645,758 restricted stock units under its equity incentive plan.

Each restricted stock unit provides the recipient with the right to receive a share of common stock subject to graded vesting terms based on service, which for the awards granted during the three months ended March 31, 2022, generally requires approximately one year of service for members of the Company’s board of directors and approximately three years of service for employees.

The awards granted during the three months ended March 31, 2022 also included a special grant for certain employees based on service which cliff vests on July 1, 2023.

The value of the restricted stock units granted during the three months ended March 31, 2022 was based on the average of the high and low trading prices of the Company’s common stock on the NYSE on the preceding trading day, in accordance with the Company’s policy for valuing such awards.

Compensation expense related to the restricted stock units is recognized on a straight-line basis over the respective vesting period.

Performance Stock Units

During the three months ended March 31, 2022, the Company granted 245,380 performance stock units (at target) under its equity incentive plan.

The performance stock units granted during the three months ended March 31, 2022 provide the recipients with the right to receive shares of common stock dependent on the achievement of a total shareholder return (“TSR”) goal, and are generally subject to the provision of service through the vesting date of the award.

The performance period for the TSR goal is measured based on a three-year performance period from January 1, 2022 through December 31, 2024.

The TSR goal is based on the Company’s actual TSR percentage increase over the performance period.

Depending on the Company’s performance relative to the TSR goal, each performance stock unit award recipient is eligible to earn a percentage of the target number of shares granted to the recipient, ranging from zero to 200 %.

The performance stock units, to the extent earned, will vest on the date the Company’s compensation and governance committee certifies the achievement of the performance metric for the three-year period ending December 31, 2023, which will occur subsequent to the end of the performance period but before the Company files its annual consolidated financial statements for the year ending December 31, 2023.

The value of the restricted stock units granted during the nine months ended September 30, 2021 was based on the average of the high and low trading prices of the Company’s common stock on the NYSE on the preceding trading day, in accordance with the Company’s policy for valuing such awards.

Compensation expense related to the restricted stock units is recognized on a straight-line basis over the respective vesting period.

The TSR goal of the performance stock units granted during the nine months ended September 30, 2021 is considered a market condition as opposed to a vesting condition.

Depending on the Company’s performance relative to the TSR goal, each performance stock unit award recipient is eligible to receive a percentage of the target number of shares granted to the recipient, ranging from zero to 200 %.

The performance stock units, to the extent earned, will vest on the date the Company’s compensation and governance committee certifies the achievement of the performance metric for the three-year period ending December 31, 2024, which will occur subsequent to the end of the performance period and after the Company files its annual consolidated financial statements for the year ending December 31, 2024.

The TSR goal is considered a market condition as opposed to a vesting condition.

Because a market condition is not considered a vesting condition, it is reflected in the grant date fair value of the award and the associated compensation cost based on the fair value of the award is recognized over the performance period, regardless of whether the Company actually achieves the market condition or the level of achievement, as long as service is provided by the recipient.

The Company used a Monte Carlo simulation to estimate the fair value of the portion of the awards subject to the TSR goal.

The following table provides the assumptions used to determine the grant date fair value of the market condition-dependent / TSR goal-based portion of the Company’s performance stock units granted during the nine months ended September 30, 2021 using a Monte Carlo simulation:

The Company used a Monte Carlo simulation to estimate the fair value of the awards, with the following assumptions:

Expected dividend yield — %

2 unchanged sentences

Expected term (in years) 2.96

Grant date fair value $ 13.21

Stock price $ 10.41

AND SUBSIDIARIES

1 unchanged sentence

(Dollars in thousands, except share and per share amounts)

The following table summarizes the activity for the Company’s restricted stock units and performance stock units for the nine months ended September 30, 2021:

During the three months ended March 31, 2022, the Company’s compensation and governance committee certified the achievement of the performance metrics for the three-year period ended December 31, 2021, related to the performance stock units granted during the year ended December 31, 2019.

These awards provided the recipients with the right to receive shares of common stock dependent on the achievement of two Company-specific financial performance targets and the provision of service through the vesting date, with each award holder eligible to earn a percentage of the target number of shares granted to the holder, ranging from zero to 200%.

The awards vested during the three months ended March 31, 2022 at 100% of target.

Award Activity

The following table summarizes the activity for the Company’s restricted stock units and performance stock units for the three months ended March 31, 2022:

Restricted Stock Units Performance Stock Units

5 unchanged sentences

Forfeited ( 268,567 ) $ 14.96 ( 14,664 ) $ 12.08

Nonvested as of September 30, 2021 2,695,266 $ 15.71 1,162,510 $ 16.92

2021 Modifications

As more fully described in Note 6 to these condensed consolidated financial statements, the Company’s Board of Directors declared a special cash dividend of $ 3.20 per share to stockholders of record as of the close of business on August 12, 2021.

The dividend declaration also included a dividend equivalent for all unvested restricted stock units, performance stock units and restricted stock awards (collectively, the “awards”) as of August 23, 2021 equal to $ 3.20 per award.

Additionally, the Company’s Board of Directors approved a reduction in the strike price on all outstanding vested and unvested stock options by the amount of the dividend payment.

Further, with respect to stock options and awards held by employees of Performance Chemicals at the time of the sale (see Note 3 to these condensed consolidated financial statements), the Company’s Board of Directors approved modifications to the post-termination stock option exercise, and stock option and award vesting periods.

The modifications provide that all stock options held by Performance Chemicals employees that were vested as of the date of the sale are eligible to be exercised for a period of one year from the date of the sale.

Additionally, modifications to unvested stock options and awards allow holders to continue to vest in those instruments under the original terms of the instruments for a period of one year from the date of sale.

The terms of the modifications to the Performance Chemicals awards are contingent upon the employee providing continued service to the Buyer.

The modifications impacted all holders of the Company’s stock options and awards and resulted in incremental stock-based compensation expense of $6,667 recognized during the three and nine months ended September 30, 2021.

Of this amount, $2,635 was included in loss from discontinued operations, net of tax on the Company’s consolidated statements of income for the three and nine months ended September 30, 2021.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

Total Stock-Based Compensation Expense

Stock-based compensation expense for the Company is as follows:

Three months ended

September 30, Nine months ended

September 30,

2021 2020 2021 2020

Continuing operations 10,193 4,355 $ 22,837 $ 13,324

Discontinued operations 4,375 1,782 8,066 5,099

Nonvested as of March 31, 2022 3,567,909 $ 11.74 851,829 $ 15.50

Stock-Based Compensation Expense

Continuing operations ( 2,494 ) ( 1,079 ) ( 5,589 ) ( 3,301 )

Discontinued operations ( 1,071 ) ( 442 ) ( 1,974 ) ( 1,264 )

Income tax benefit ( 3,565 ) ( 1,521 ) ( 7,563 ) ( 4,565 )

Continuing operations 7,699 3,276 17,248 10,023

Discontinued operations 3,304 1,340 6,092 3,835

Stock-based compensation expense, net of income tax benefit $ 11,003 $ 4,616 $ 23,340 $ 13,858

With the new grants of restricted stock units and performance stock units during the nine months ended September 30, 2021, unrecognized compensation cost at September 30, 2021 was $ 31,800 for restricted stock units and $ 8,991 for performance stock units considered probable of vesting.

The weighted-average period over which these costs are expected to be recognized at September 30, 2021 is 1.54 years for the restricted stock units and 1.16 years for the performance stock units.

Activity related to the Company’s stock options and restricted stock awards was not material for the nine months ended September 30, 2021.

For the three months ended March 31, 2022 and 2021, stock-based compensation expense for the Company was $ 7,294 and $ 6,305 , respectively.

The associated income tax benefit recognized in the statements of income for the three months ended March 31, 2022 and 2021 was $ 1,788 and $ 1,543 , respectively.

With the new grants of restricted stock units and performance stock units during the three months ended March 31, 2022, unrecognized compensation cost at March 31, 2022 was $ 39,583 for restricted stock units and $ 7,414 for performance stock units considered probable of vesting.

The weighted-average period over which these costs are expected to be recognized at March 31, 2022 is 1.96 years for the restricted stock units and 1.72 years for the performance stock units.

Activity related to the Company’s stock options and restricted stock awards was not material for the three months ended March 31, 2022.

Earnings per Share:

3 unchanged sentences

Potential common shares reflect (1) unvested restricted stock awards and restricted stock units with service vesting conditions, (2) performance stock units with vesting conditions considered probable of achievement and (3) options to purchase common stock, all of which have been included in the diluted earnings per share calculation using the treasury stock method.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

The reconciliation from basic to diluted weighted average shares outstanding is as follows:

Three months ended

September 30, Nine months ended

September 30,

2021 2020 2021 2020

Weighted average shares outstanding – Basic 137,684,773 136,006,082

1 unchanged sentence

Weighted average shares outstanding – Diluted 138,749,065 136,006,082

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

Basic and diluted loss per share are calculated as follows:

Basic and diluted income (loss) per share are calculated as follows:

Three months ended

September 30, Nine months ended

September 30,

Income (loss) from continuing operations attributable to Ecovyst Inc.

$ 7,875 $ ( 2,748 )

Loss from discontinued operations attributable to Ecovyst Inc.

Net income (loss) attributable to Ecovyst Inc.

3 unchanged sentences

Net loss per share:

Basic (loss) income per share $ ( 0.52 ) $ 0.06 $ ( 1.22 ) $ 0.17

Diluted (loss) income per share $ ( 0.52 ) $ 0.06 $ ( 1.22 ) $ 0.17

Basic income (loss) per share - continuing operations 0.06 ( 0.02 )

Diluted income (loss) per share - continuing operations 0.06 ( 0.02 )

Basic loss per share - discontinued operations — ( 0.66 )

Diluted loss per share - discontinued operations — ( 0.66 )

Basic income (loss) per share $ 0.06 $ ( 0.68 )

Diluted income (loss) per share $ 0.06 $ ( 0.68 )

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

The table below presents the details of the Company’s weighted average equity-based awards outstanding during each respective period that were excluded from the calculation of diluted earnings per share:

Three months ended

September 30, Nine months ended

September 30,

2021 2020 2021 2020

Restricted stock awards with performance only targets not yet achieved 613,903 883,380

3 unchanged sentences

Restricted stock awards and stock options with performance only vesting conditions were not included in the dilution calculation, as the performance targets have not been achieved nor were probable of achievement as of the end of the respective periods.

On a weighted average basis, options to purchase 603,159 shares of common stock at the historical exercise price of $ 16.97 per share and 241,316 shares of common stock at the historical exercise price of $ 17.50 per share for the three months ended September 30, 2020, were excluded from the computation of diluted earnings per share, because the combination of the options’ exercise price and remaining unamortized stock-based compensation expense was greater than the average market price of the common shares.

On a weighted average basis, options to purchase 605,262 shares of common stock at the historical exercise price of $ 16.97 per share and 241,316 shares of common stock at the historical exercise price of $ 17.50 per share for the nine months ended September 30, 2020, were excluded from the computation of diluted earnings per share, because the combination of the options’ exercise price and remaining unamortized stock-based compensation expense was greater than the average market price of the common shares.

The stock options with a historical exercise price of $ 16.97 per share expire on October 2, 2027, while the stock options with a historical exercise price of $ 17.50 per share expire on August 9, 2028.

Certain stock options to purchase shares of common stock were excluded from the computation of diluted earnings per share for the respective periods, because the combination of the options’ exercise price and remaining unamortized stock-based compensation expense was greater than the average market price of the common shares.

Anti-dilutive awards are not included in the dilution calculation, as their inclusion would have the effect of increasing diluted income per share.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

Supplemental Cash Flow Information:

With the exception of operating leases, the following table presents supplemental cash flow information for the consolidated Company:

Nine months ended

September 30,

Three months ended

Cash paid during the period for:

Income taxes, net of refunds $ 10,662 $ 4,248

43,115 75,345

Non-cash investing activity:

2 unchanged sentences

Operating leases 2,955 4,738

(1) Cash paid for interest is shown net of capitalized interest for the periods presented and excludes $ 2,307 and $ 4,622 of net interest proceeds on swaps designated as net investment hedges for the nine months ended September 30, 2021 and 2020, respectively, which are included within cash flows from investing activities, discontinued operations in the Company’s condensed consolidated statements of cash flows.

The followin g table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets as of September 30, 2021 and 2020 to the total of the same amounts shown in the condensed consolidated statements of cash flows for the nine months then ended:

September 30,

(1) Cash paid for interest is shown net of capitalized interest for the periods presented and excludes $ 2,307 of net interest proceeds on swaps designated as net investment hedges for the three months ended March 31, 2021, which are included within cash flows from investing activities, discontinued operations in the Company’s condensed consolidated statements of cash flows.

The followin g table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets as of March 31, 2022 and 2021 to the total of the same amounts shown in the condensed consolidated statements of cash flows for the three months then ended:

Cash and cash equivalents $ 129,748 $ 55,171

2 unchanged sentences

Subsequent Events:

T he Company has evaluated subsequent events since the balance sheet date and determined that there are no additional items to disclose.

On April 27, 2022, the Board approved a plan to purchase up to $ 450,000 of Ecovyst Inc.

common stock over the next four years under a stock repurchase program.

See Note 6 to these condensed consolidated financial statements for further information.

Other than this item, the Company has evaluated subsequent events since the balance sheet date and determined that there are no additional items to disclose.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements