What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-08-01 compared with 2022-05-03 · 263 added, 154 removed, 680 unchanged (38% of the section changed)

4 unchanged sentences

Three months ended

June 30, Six months ended

2022 2021 2022 2021

Sales $ 225,172 $ 146,952 $ 404,886 $ 273,576

6 unchanged sentences

Interest expense, net 8,888 8,741 17,338 19,197

Other expense, net 140 5,174

Debt extinguishment costs — 11,717 — 11,717

Other expense (income), net 485 ( 1,875 ) 625 3,299

Income (loss) from continuing operations before income taxes and noncontrolling interest 26,542 ( 176 ) 40,137 ( 8,114 )

Provision (benefit) for income taxes 5,720 ( 5,190 )

Provision for income taxes 7,297 7,694 13,017 2,504

Net income (loss) from continuing operations 19,245 ( 7,870 ) 27,120 ( 10,618 )

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

Net income (loss) from discontinued operations, net of tax — 6,520 — ( 83,250 )

Net income (loss) 19,245 ( 1,350 ) 27,120 ( 93,868 )

4 unchanged sentences

$ 19,245 $ ( 7,870 ) $ 27,120 $ ( 10,618 )

Loss from discontinued operations attributable to Ecovyst Inc.

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

— 6,380 — ( 83,507 )

Net income (loss) attributable to Ecovyst Inc.

15 unchanged sentences

Three months ended

June 30, Six months ended

2022 2021 2022 2021

Net income (loss) $ 19,245 $ ( 1,350 ) $ 27,120 $ ( 93,868 )

3 unchanged sentences

Foreign currency translation ( 7,994 ) 12,163 ( 10,299 ) 8,302

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

Total other comprehensive (loss) income ( 3,276 ) 12,534 8,102 9,395

Comprehensive income (loss) 15,969 11,184 35,222 ( 84,473 )

Comprehensive loss attributable to noncontrolling interests — ( 277 )

Comprehensive income attributable to noncontrolling interests — 593 — 316

Comprehensive income (loss) attributable to Ecovyst Inc.

30 unchanged sentences

authorized shares 450,000,000 ;

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

issued shares 139,624,577 and 137,820,971 on June 30, 2022 and December 31, 2021, respectively;

outstanding shares 137,817,183 and 136,938,758 on June 30, 2022 and December 31, 2021, respectively

Preferred stock ($ 0.01 par);

authorized shares 50,000,000 ;

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

no shares issued or outstanding on June 30, 2022 and December 31, 2021

Additional paid-in capital 1,084,790 1,073,409

1 unchanged sentence

Treasury stock, at cost;

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

shares 1,807,394 and 882,213 on June 30, 2022 and December 31, 2021, respectively

( 21,725 ) ( 12,551 )

17 unchanged sentences

Stock compensation expense — 5,946 — — — — 5,946

— 5,946 — — — — 5,946

Shares issued under equity incentive plan, net of forfeitures 18 9 — — — — 27

18 9 — — — — 27

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

Net income — — 19,245 — — — 19,245

Other comprehensive loss — — — — ( 3,276 ) — ( 3,276 )

Repurchases of common shares — — — ( 8,842 ) — — ( 8,842 )

Stock compensation expense — 5,409 — — — — 5,409

Shares issued under equity incentive plan, net of forfeitures — 17 — — — — 17

Balance, June 30, 2022 $ 1,396 $ 1,084,790 $ ( 288,587 ) $ ( 21,725 ) $ 2,310 $ — $ 778,184

stock Additional

4 unchanged sentences

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

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

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

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

1 unchanged sentence

Distributions to noncontrolling interests — — — — — ( 516 ) ( 516 )

— — — — — ( 516 ) ( 516 )

Stock compensation expense — 6,877 — — — — 6,877

— 6,877 — — — — 6,877

Shares issued under equity incentive plan, net of forfeitures 7 63 — — — — 70

7 63 — — — — 70

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

Net (loss) income — — ( 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

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

Three months ended

Six months ended

Cash flows from operating activities:

5 unchanged sentences

Amortization of deferred financing costs and original issue discount 1,002 730

Debt extinguishment costs — 5,981

Foreign currency exchange loss 1,148 3,882

24 unchanged sentences

Cash flows from financing activities:

Issuance of long-term debt, net of discount — 897,750

Debt issuance costs — ( 1,293 )

Repayments of long-term debt ( 4,500 ) ( 900,000 )

Repurchases of common shares ( 7,127 ) —

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

19 unchanged sentences

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

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.

On December 14, 2020, the Company completed the sale of its Performance Materials business for $ 650,000 , and on August 1, 2021, the Company completed the sale of its Performance Chemicals business.

The financial results of these businesses are presented as discontinued operations in the condensed consolidated financial statements for the 2021 period presented.

See Note 3 for more information on these transactions.

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 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.

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 help produce renewable fuels, 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.

33 unchanged sentences

Performance Materials Divestiture

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.

Upon the close of the Performance Materials divestiture 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 $ 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.

The Company billed $ 1,401 and $ 3,061 under the Transition Services Agreement to the buyer during the three and six months ended June 30, 2021.

Those billings were included in selling, general and administrative expenses on the condensed consolidated financial statements for the six months ended June 30, 2021.

During the three months ended June 30, 2021, the Company incurred transaction costs of $ 84 and stock-based compensation expense of $ 630 , and an associated tax benefit of $ 192 related to the Performance Materials divestiture, which was included in loss from discontinued operations, net of tax.

During the six months ended June 30, 2021, the Company incurred transaction costs of $ 1,530 and stock-based compensation expense of $ 1,283 , and an associated tax benefit of $ 706 related to the Performance Materials divestiture, which was included in loss from discontinued operations, net of tax.

Performance Chemicals Divestiture

3 unchanged sentences

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.

During the six months ended June 30, 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.

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 $ 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 statement of income.

In the condensed consolidated balance sheet as of June 30, 2021, the Company recorded the disposal loss to goodwill and a valuation allowance of approximately $ 75,080 and $ 34,504 , respectively, which was included in long-term assets held for sale.

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 three months ended March 31, 2021:

The following table summarizes the results of discontinued operations related to the Performance Chemicals business for the three and six months ended June 30, 2021:

Three months ended

March 31, 2021

June 30, 2021 Six months ended

June 30, 2021

Sales $ 170,374 $ 334,897

1 unchanged sentence

Selling, general and administrative expenses 11,490 23,206

Other operating expense, net 17,480

Goodwill impairment charge

Operating loss ( 86,120 )

Other operating expense, net 11,850 29,330

Loss on sale of the Performance Chemicals business 13,990 34,504

Operating income (loss) 14,259 ( 71,861 )

Equity in net (income) from affiliated companies ( 48 ) ( 86 )

1 unchanged sentence

Other income, net ( 840 ) ( 6,363 )

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

Income (loss) from discontinued operations before income tax 9,548 ( 74,226 )

Provision for income taxes 2,507 6,918

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

Income (loss) from discontinued operations, net of tax $ 7,041 $ ( 81,144 )

(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 .

1 unchanged sentence

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 $ 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

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Net income attributable to the noncontrolling interest related to the Performance Chemicals business, net of tax was $ 140 and $ 257 for the three and six months ended June 30, 2021 .

Net income (loss) attributable to Ecovyst Inc., related to the Performance Chemicals business, net of tax was $ 6,901 and $( 81,401 ) for the three and six months ended June 30, 2021 .

Revenue from Contracts with Customers:

7 unchanged sentences

• Emission control catalysts

• Catalyst recycling regeneration services

• Regeneration services for alkylate production

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

2 unchanged sentences

Natural resources • Sulfur derivatives for mining

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

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

The following tables disaggregate the Company’s sales, by segment and end use, for the three and six months ended June 30, 2022 and 2021:

Three months ended June 30, 2022

Ecoservices Catalyst Technologies (2)

Industrial & process chemicals $ 42,141 $ — $ 42,141

4 unchanged sentences

Total segment sales $ 192,968 $ 32,204 $ 225,172

Three months ended March 31, 2021

Ecoservices Catalyst Technologies Total

Three months ended June 30, 2021

Ecoservices Catalyst Technologies (2)

Industrial & process chemicals $ 18,341 $ — $ 18,341

4 unchanged sentences

Total segment sales $ 120,741 $ 26,215 $ 146,956

Eliminations ( 4 ) — ( 4 )

Total $ 120,737 $ 26,215 $ 146,952

Six months ended June 30, 2022

Ecoservices Catalyst Technologies (2)

Industrial & process chemicals $ 74,995 $ — $ 74,995

Fuels & emission control (1)

154,836 — 154,836

Packaging & engineered plastics 58,093 57,858 115,951

Natural resources 59,104 — 59,104

Total segment sales $ 347,028 $ 57,858 $ 404,886

Six months ended June 30, 2021

Ecoservices Catalyst Technologies (2)

Industrial & process chemicals $ 35,288 $ — $ 35,288

Fuels & emission control (1)

123,987 — 123,987

Packaging & engineered plastics 25,600 52,617 78,217

Natural resources 36,088 — 36,088

Total segment sales $ 220,963 $ 52,617 $ 273,580

Eliminations ( 4 ) — ( 4 )

Total segment sales $ 220,959 $ 52,617 $ 273,576

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

(2) 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).

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Fair Value Measurements:

2 unchanged sentences

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

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.

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

10 unchanged sentences

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 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.

The following table presents information about the Company’s assets and liabilities that were measured at fair value on a recurring basis as of June 30, 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

18 unchanged sentences

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

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Derivative contracts

6 unchanged sentences

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.

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.

As of June 30, 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.

4 unchanged sentences

Accumulated Other Comprehensive Income (Loss)

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,

The following tables present the tax effects of each component of other comprehensive income (loss) for the three and six months ended June 30, 2022 and 2021:

Three months ended June 30,

amount Tax benefit/

9 unchanged sentences

( 7,994 ) — ( 7,994 ) 12,163 — 12,163

Other comprehensive income $ ( 1,703 ) $ ( 1,573 ) $ ( 3,276 ) $ 12,658 $ ( 124 ) $ 12,534

Six months ended June 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 $ 3 $ ( 1 ) $ 2

Amortization of prior service cost ( 105 ) 26 ( 79 ) ( 116 ) 29 ( 87 )

Benefit plans, net ( 104 ) 26 ( 78 ) ( 113 ) 28 ( 85 )

Net gain from hedging activities 24,639 ( 6,160 ) 18,479 1,571 ( 393 ) 1,178

Foreign currency translation (1)

( 10,299 ) — ( 10,299 ) 5,855 2,447 8,302

Other comprehensive income (loss) $ 14,236 $ ( 6,134 ) $ 8,102 $ 7,313 $ 2,082 $ 9,395

(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.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(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 six months ended June 30, 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, 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:

The following table presents the changes in accumulated other comprehensive income (loss), net of tax, by component for the six months ended June 30, 2022 and 2021:

Defined benefit

6 unchanged sentences

Amounts reclassified from accumulated other comprehensive income (1)

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

June 30, 2022 $ 10,994 $ 20,733 $ ( 29,417 ) $ 2,310

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

1 unchanged sentence

Amounts reclassified from accumulated other comprehensive income (1)

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

June 30, 2021 $ 5,193 $ 518 $ ( 11,640 ) $ ( 5,929 )

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

Amounts in parentheses indicate debits.

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:

The following table presents the reclassifications out of accumulated other comprehensive income for the three and six months ended June 30, 2022 and 2021:

Details about Accumulated Other Comprehensive

4 unchanged sentences

Three months ended

June 30, Six months ended

2022 2021 2022 2021

Amortization of defined benefit and other postretirement items:

19 unchanged sentences

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.

On March 12, 2020, the Company’s Board of Directors (the “Board”) approved a plan to purchase up to $ 50,000 of the Company’s common stock under a stock repurchase program approved by the Board.

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.

The stock repurchase program expired in March 2022, with no repurchases made in 2022 through the expiration of the program, no r during the three or six months ended June 30, 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.

On April 27, 2022, the Board approved a stock repurchase program that permits the Company to purchase up to $ 450,000 of the Company’s common stock over the next four years .

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.

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

During the three and six months ended June 30, 2022, the Company repurchased 893,123 shares on the open market at an average price of $ 9.88 , for a total of $ 8,842 (of which $ 1,715 was accrued at June 30, 2022).

As of June 30, 2022, $ 441,158 was available for additional share repurchases under the program.

In July 2022, the Company repurchased 1,077,640 shares on the open market at an average price of $ 9.77 , for a total of $ 10,553 as part of the approved stock repurchase program, which reduced availability for additional share repurchases under the program to $ 430,605 .

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 $ 332 and $ 1,470 for the three months ended March 31, 2022 and 2021, respectively.

There were no shares delivered to the Company to cover tax payments for the three months ended June 30, 2022 and 2021 , and the fair value of the shares withheld to cover tax payments were $ 332 and $ 1,470 for the six months ended June 30, 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.

1 unchanged sentence

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.

A portion of the holdback was settled in July 2021 for a payment of $ 645 , with $ 1,000 of the holdback remaining as of June 30, 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.

The Company believes that the Acquisition will offer a more robust portfolio of services within the refining industry by 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 six months ended June 30, 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.

32 unchanged sentences

Total intangible assets subject to amortization $ 22,100

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.

Net sales and net income attributable to Chem32 during the period from the Closing Date through June 30, 2021 were immaterial.

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

Acquisition and integration costs was immaterial for the six months ended June 30, 2021 and are included in other operating expense, net in the Company’s consolidated statement of income.

AND SUBSIDIARIES

1 unchanged sentence

(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:

The change in the carrying amount of goodwill for the six months ended June 30, 2022 is summarized as follows:

Ecoservices Catalyst Technologies Total

3 unchanged sentences

Foreign exchange impact — ( 2,847 ) ( 2,847 )

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.

Balance as of June 30, 2022 $ 326,589 $ 76,622 $ 403,211

(1) During the six months ended June 30, 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

June 30, Six months ended

2022 2021 2022 2021

Amortization expense $ 2,644 $ 2,189 $ 5,299 $ 4,374

1 unchanged sentence

Restructuring, integration and business optimization costs (1)

4,746 71 5,099 2,330

Net loss on asset disposals 573 1,601 706 2,379

1 unchanged sentence

$ 9,665 $ 4,965 $ 17,428 $ 10,472

(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.

(1) During the three and six months ended June 30, 2022 and the six months ended June 30, 2021, the Company’s results were impacted by costs associated with severance charges for certain executives and employees.

Inventories, Net:

14 unchanged sentences

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

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

Affiliated companies accounted for on the equity basis as of June 30, 2022 are as follows:

Company Country Percent

3 unchanged sentences

Three months ended

June 30, Six months ended

2022 2021 2022 2021

Sales $ 84,663 $ 76,060 $ 151,346 $ 142,265

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 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.

The Company’s investments in affiliated companies balance as of June 30, 2022 and December 31, 2021 includes net purchase accounting fair value adjustments of $ 234,218 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 $ 3,201 of amortization expense related to purchase accounting fair value adjustments for the three and six months ended June 30, 2022, respectively.

Consolidated equity in net income from affiliates is net of $ 1,620 and $ 3,278 of amortization expense related to purchase accounting fair value adjustments for the three and six months ended June 30, 2021, respectively.

Property, Plant and Equipment:

11 unchanged sentences

$ 583,636 $ 596,231

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

Depreciation expense was $ 16,142 and $ 32,153 for the three and six months ended June 30, 2022, respectively.

Depreciation expense was $ 17,529 and $ 33,533 for the three and six months ended June 30, 2021, respectively.

AND SUBSIDIARIES

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

As of June 30, 2022 and December 31, 2021, the fair value of the senior secured term loan facility was $ 850,905 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).

23 unchanged sentences

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.

The cap rate in effect at June 30, 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)

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.

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 June 30, 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 %.

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

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

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

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 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,

The Company paid $ 13,170 in cash to settle the swaps, which is included in net cash used in investing activities, discontinued operations in the Company’s condensed consolidated statement of cash flows for the six months ended June 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 June 30, 2022 and December 31, 2021 are shown below:

Balance sheet location June 30,

2022 December 31,

8 unchanged sentences

Total derivative liabilities $ 16 $ 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 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

Three months ended March 31,

Interest (expense)

income Interest (expense)

The following tables show the effect of the Company’s derivative instruments designated as cash flow hedges on AOCI for the three and six months ended June 30, 2022 and 2021:

Three months ended June 30,

Interest rate caps Interest (expense) income $ 5,985 $ ( 359 ) $ 479 $ ( 70 )

Six months ended June 30,

Interest rate caps Interest (expense) income $ 24,041 $ ( 598 ) $ 1,391 $ ( 179 )

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 six months ended June 30, 2022 and 2021:

Three months ended June 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 $ ( 165,313 ) $ ( 8,888 ) $ ( 108,479 ) $ ( 8,741 )

The effects of cash flow hedging:

Gain (loss) on cash flow hedging relationships:

Interest contracts:

Amount of gain (loss) reclassified from AOCI into income — ( 359 ) — ( 70 )

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 $ 545 as of March 31, 2022.

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:

Six months ended June 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 $ ( 297,292 ) $ ( 17,338 ) $ ( 204,984 ) $ ( 19,197 )

Interest contracts:

Amount of gain (loss) reclassified from AOCI into income — ( 598 ) — ( 179 )

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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 and six months ended June 30, 2021:

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

June 30, Three months ended

September 30, Three months ended

September 30,

2022 2021 2022 2021 2022 2021

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

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)

Six months ended

June 30, Six months ended

2022 2021 2022 2021 2022 2021

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 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 effective income tax rate for the three months ended June 30, 2022 was 27.5 % compared to ( 4,371.6 )% for the three months ended June 30, 2021.

The effective income tax rate for the six months ended June 30, 2022 was 32.4 % compared to ( 30.9 )% for the six months ended June 30, 2021.

The Company’s effective income tax rate has fluctuated primarily due to changes in income mix, 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 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.

federal statutory income tax rate and the Company’s effective income tax rate for the six months ended June 30, 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 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.

federal statutory income tax rate and the Company’s effective income tax rate for the six months ended June 30, 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, tax rate changes, and the tax effect of permanent differences related to foreign currency exchange gain or loss.

AND SUBSIDIARIES

5 unchanged sentences

Three months ended

June 30, Six months ended

2022 2021 2022 2021

Interest cost 604 551 1,207 1,102

3 unchanged sentences

Three months ended

June 30, Six months ended

2022 2021 2022 2021

Interest cost 5 4 9 8

14 unchanged sentences

Three months ended

June 30, Six months ended

2022 2021 2022 2021

Ecoservices $ 192,968 $ 120,741 $ 347,028 $ 220,963

1 unchanged sentence

32,204 26,215 57,858 52,617

Eliminations (2)

— ( 4 ) — ( 4 )

Total $ 225,172 $ 146,952 $ 404,886 $ 273,576

7 unchanged sentences

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 $ 28,977 and $ 28,978 for the three months ended March 31, 2022 and 2021, respectively.

The proportionate share of sales is $ 35,906 and $ 64,883 for the three and six months ended June 30, 2022, respectively.

The proportionate share of sales is $ 33,186 and $ 62,164 for the three and six months ended June 30, 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 $ 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.

(3) The Adjusted EBITDA from the Zeolyst Joint Venture included in the Catalyst Technologies segment is $ 14,128 for the three months ended June 30, 2022, which includes $ 8,526 of equity in net income plus $ 1,600 of amortization of investment in affiliate step-up and $ 4,001 of joint venture depreciation, amortization and interest.

The Adjusted EBITDA from the Zeolyst Joint Venture included in the Catalyst Technologies segment is $ 25,602 for the six months ended June 30, 2022, which includes $ 14,313 of equity in net income plus $ 3,201 of amortization of investment in affiliate step-up and $ 8,087 of joint venture depreciation, amortization and interest.

The Adjusted EBITDA from the Zeolyst Joint Venture included in the Catalyst Technologies segment is $ 12,055 for the three months ended June 30, 2021, which includes $ 6,779 of equity in net income plus $ 1,620 of amortization of investment in affiliate step-up and $ 3,656 of joint venture depreciation, amortization and interest.

The Adjusted EBITDA from the Zeolyst Joint Venture included in the Catalyst Technologies segment is $ 22,592 for the six months ended June 30, 2021, which includes $ 12,014 of equity in net income plus $ 3,278 of amortization of investment in affiliate step-up and $ 7,300 of joint venture depreciation, amortization and interest.

AND SUBSIDIARIES

3 unchanged sentences

Three months ended

June 30, Six months ended

2022 2021 2022 2021

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

Net income (loss) from continuing operations $ 19,245 $ ( 7,870 ) $ 27,120 $ ( 10,618 )

Provision (benefit) for income taxes 5,720 ( 5,190 )

Provision for income taxes 7,297 7,694 13,017 2,504

Interest expense, net 8,888 8,741 17,338 19,197

3 unchanged sentences

Amortization of investment in affiliate step-up 1,601 1,620 3,201 3,278

Debt extinguishment costs — 11,717 — 11,717

Net loss on asset disposals 573 1,601 706 2,379

Foreign exchange losses 647 5,101

Foreign exchange losses (gains) 502 ( 1,219 ) 1,148 3,882

LIFO expense (benefit) 187 ( 450 ) 432 ( 703 )

5 unchanged sentences

Adjusted EBITDA $ 72,891 $ 52,683 $ 132,131 $ 94,987

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Stock-Based Compensation:

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.

At June 30, 2022, 9,327,270 shares of common stock were available for issuance under the plan.

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

1 unchanged sentence

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.

During the six months ended June 30, 2022, the Company granted 2,750,234 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 six months ended June 30, 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 six months ended June 30, 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 six months ended June 30, 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.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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.

During the six months ended June 30, 2022, the Company granted 295,132 performance stock units (at target) under its equity incentive plan.

The performance stock units granted during the six months ended June 30, 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.

4 unchanged sentences

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 awards, with the following assumptions:

The Company used a Monte Carlo simulation to estimate the $ 8.82 weighted average fair value of the awards granted during the six months ended June 30, 2022, with the following weighted average assumptions:

Expected dividend yield — %

2 unchanged sentences

Expected term (in years) 2.91

Stock price $ 10.41

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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.

During the six months ended June 30, 2022, the Compensation Committee of the Company’s Board 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.

The awards vested during the six months ended June 30, 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:

The following table summarizes the activity for the Company’s restricted stock units and performance stock units for the six months ended June 30, 2022:

Restricted Stock Units Performance Stock Units

5 unchanged sentences

Forfeited ( 945,212 ) $ 12.64 ( 165,807 ) $ 12.46

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

Nonvested as of June 30, 2022 2,986,789 $ 11.68 750,438 $ 15.70

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Stock-Based Compensation Expense

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.

For the three months ended June 30, 2022 and 2021, stock-based compensation expense for the Company was $ 5,385 and $ 6,339 , respectively.

The associated income tax benefit recognized in the statements of income for the three months ended June 30, 2022 and 2021 was $ 1,321 and $ 1,552 , respectively.

For the six months ended June 30, 2022 and 2021, stock-based compensation expense for the Company was $ 12,679 and $ 12,644 , respectively.

The associated income tax benefit recognized in the statements of income for the six months ended June 30, 2022 and 2021 was $ 3,109 and $ 3,095 , respectively.

As of June 30, 2022, unrecognized compensation cost was $ 28,229 for restricted stock units and $ 4,353 for performance stock units considered probable of vesting.

The weighted-average period over which these costs are expected to be recognized at June 30, 2022 was 1.70 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 six months ended June 30, 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

June 30, Six months ended

2022 2021 2022 2021

Weighted average shares outstanding – Basic 138,035,764 136,095,060 137,876,185 136,072,165

1 unchanged sentence

Weighted average shares outstanding – Diluted 139,149,560 136,095,060 139,175,659 136,072,165

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

Three months ended

June 30, Six months ended

2022 2021 2022 2021

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

$ 19,245 $ ( 7,870 ) $ 27,120 $ ( 10,618 )

Loss from discontinued operations attributable to Ecovyst Inc.

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

— 6,380 — ( 83,507 )

Net income (loss) attributable to Ecovyst Inc.

2 unchanged sentences

Weighted average shares outstanding – Diluted 139,149,560 136,095,060 139,175,659 136,072,165

Net loss per share:

Net income (loss) per share:

Basic income (loss) per share - continuing operations $ 0.14 $ ( 0.06 ) $ 0.20 $ ( 0.08 )

4 unchanged sentences

Diluted income (loss) per share $ 0.14 $ ( 0.01 ) $ 0.19 $ ( 0.69 )

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

June 30, Six months ended

2022 2021 2022 2021

Restricted stock awards with performance only targets not yet achieved 603,993 846,715 608,921 864,946

5 unchanged sentences

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:

Three months ended

Six months ended

Cash paid during the period for:

Income taxes, net of refunds $ 19,843 $ 12,269

15,818 28,794

Non-cash investing activity:

Capital expenditures acquired on account but unpaid as of the period end 2,943 9,230

Non-cash financing activity:

Accrued share repurchases (Note 6) 1,715 —

Right-of-use assets obtained in exchange for new lease liabilities (non-cash):

Operating leases 4,370 5,933

(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:

(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 six months ended June 30, 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 June 30, 2022 and 2021 to the total of the same amounts shown in the condensed consolidated statements of cash flows for the six months then ended:

Cash and cash equivalents $ 151,228 $ 55,757

2 unchanged sentences

Subsequent Events:

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.

In July 2022, the Company repurchased 1,077,640 shares on the open market at an average price of $ 9.77 , for a total of $ 10,553 as part of the approved stock repurchase program .

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

1 unchanged sentence

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