What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-11-04 compared with 2022-08-01 · 189 added, 168 removed, 456 unchanged (44% of the section changed)

35 unchanged sentences

• disruption, failure or cyber security breaches affecting or targeting computers and infrastructure used by us or our business partners may adversely impact our business and operations

• the impact of the ongoing COVID-19 pandemic on the global economy and financial markets, as well as on our business and our suppliers, and the response of governments and of our company to the outbreak, including variants of the virus and associated containment, remediation and vaccination efforts;

• the impact of the COVID-19 pandemic on the global economy and financial markets, as well as on our business and our suppliers, and the response of governments and of our company to the outbreak, including variants of the virus and associated containment, remediation and vaccination efforts;

• other factors set forth in Part I, “Item 1A.

Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021, as supplemented by “Item 1A, Risk Factors” in our quarterly report on Form 10-Q for the quarter ended March 31, 2022, as updated in “Item 1A, Risk Factors” in our quarterly report on Form 10-Q for the quarter ended June 30, 2022.

Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021, as supplemented by “Item 1A, Risk Factors” in our quarterly reports on Form 10-Q for the quarters ended March 31, 2022 and June 30, 2022.

The forward-looking statements included herein are made only as of the date hereof.

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We believe that our products, which are predominantly inorganic, and services contribute to improving the sustainability of the environment.

We conduct operations through two repor ting segments:

We conduct operations through two reporting segments:

(1) Ecoservices and (2) Catalyst Technologies (including our 50% interest in the Zeolyst Joint Venture).

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We are continuing to monitor the developments in Russia and Ukraine, as well as the related economic sanctions and export controls imposed on certain industry sectors.

Although the current conflict may create global economic and political uncertainties and potential supply chain disruptions, we do not believe we have significant exposure in those countries.

Although the current conflict has created global economic and political uncertainties and affected certain supply chain disruptions, we do not believe we have significant exposure in those countries.

We have no operations in Russia or Ukraine.

We had no sales to customers in Ukraine and our sales to a customer in Russia were immaterial for the six months ended June 30, 2022 and 2021, respectively.

We had no sales to customers in Ukraine and our sales to a customer in Russia were immaterial for the nine months ended September 30, 2022 and 2021, respectively.

We also did not make any purchases from suppliers in Russia or Ukraine.

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The repurchase program does not obligate us to acquire any number of shares in any specific period or at all and may be amended, suspended or discontinued at any time at our discretion.

From the announcement date of the program through June 30, 2022, the Company repurchased 893,123 shares on the open market at an average price of $9.88 per share, for a total of $8.8 million, of which $1.7 million was accrued as of June 30, 2022.

As of June 30, 2022, $441.2 million 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 $10.6 million as part of the approved stock repurchase program, which reduced availability for additional share repurchases under the program to $430.6 million.

On August 16, 2022, the Inflation Reduction Act of 2022, or IRA, was signed into law.

Among other things, the IRA imposes a 15% corporate alternative minimum tax for certain large corporations with average annual adjusted financial statement income in excess of $1 billion for tax years beginning after December 31, 2022, levies a 1% excise tax on net stock repurchases after December 31, 2022, and provides tax incentives to promote clean energy.

Historically, during the year we have made discretionary share repurchases.

Beginning in 2023, these purchases would be subject to the excise tax.

Based on the historical net repurchase activity the excise tax and the other provisions of the IRA are not expected to have a material impact on our results of operations or financial position.

However, we are still in the process of analyzing the provisions of the IRA.

From the announcement date of the program through September 30, 2022, the Company repurchased 1,970,763 shares of its common stock on the open market at an average price of $9.82 per share, for a total of $19.4 million.

Additionally, in connection with a secondary offering of the Company’s common stock in August 2022, the Company repurchased 6,500,000 shares of its common stock sold in the offering from the underwriters at a price of $8.36 per share simultaneous with the closing of the offering, for a total of $54.3 million.

As of September 30, 2022, $376.3 million was available for additional share repurchases under the program.

There were no repurchases during September 2022.

Key Performance Indicators

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Key Factors and Trends Affecting Operating Results and Financial Condition

Overall, our Ecoservices and Catalyst Technologies segments' sales have grown despite delays in shipments from supply chain constraints.

Demand for our products continued to grow from the lows experienced due to the impact of the COVID-19 global pandemic and extreme weather experienced in the Gulf region in 2021.

Overall, our Ecoservices and Catalyst Technologies segments' sales have grown as high demand for our products continue from the lows experienced due to the impact of the COVID-19 global pandemic and extreme weather experienced in the Gulf region in 2021.

Polyethylene demand has remained strong, driven by the growing consumer demand for stronger and lighter weighted plastics.

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As a global business, we are subject to the impact of gains and losses on currency translations, which occur when the financial statements of foreign operations are translated into U.S.

We operate in various geographies with approximately 5% of our sales for the six months ended June 30, 2022 and 6% for the year ended December 31, 2021 in currencies other than the U.S.

We operate in various geographies with approximately 6% of our sales for the nine months ended September 30, 2022 and for the year ended December 31, 2021 in currencies other than the U.S.

Because our consolidated financial results are reported in U.S.

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Results of Operations

Three Months Ended June 30, 2022 Compared to the Three Months Ended June 30, 2021

The following is a summary of our financial performance for the three months ended June 30, 2022 compared with the three months ended June 30, 2021.

Three Months Ended September 30, 2022 Compared to the Three Months Ended September 30, 2021

The following is a summary of our financial performance for the three months ended September 30, 2022 compared with the three months ended September 30, 2021.

• Sales increased $65.1 million to $232.5 million.

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• Gro ss profit increased $14.1 million to $67.7 million.

The increase in gross profit was primarily due t o higher sales volumes and favorable pricing, partially offset by higher manufacturing costs.

The increase in gross profit was primarily due t o higher sales volumes and favorable pricing, partially offset by increased manufacturing costs.

Operating Income

• Operating income increased by $16.0 million to $38.5 million.

The increase in operating income was due to an increase in gross profit, which was partially offset by higher other operating expenses.

The increase in operating income was due to an increase in gross profit and lower selling, general and administrative expenses, partially offset by higher other operating expenses.

Equity in Net Income of Affiliated Companies

• Equity in net income of affiliated companies for the three months ended June 30, 2022 was $8.5 million, compared to $6.8 million for the three months ended June 30, 2021.

The increase of $1.7 million was due to higher earnings generated by the Zeolyst Joint Venture for the three months ended June 30, 2022, driven by higher sales within the joint venture.

The following is our unaudited condensed consolidated statements of income and a summary of financial results for the three months ended June 30, 2022 and 2021:

• Equity in net income of affiliated companies for the three months ended September 30, 2022 was $3.2 million, compared to $8.8 million for the three months ended September 30, 2021.

The decrease of $5.6 million was due to lower earnings generated by the Zeolyst Joint Venture for the three months ended September 30, 2022, driven by lower sales volumes within the joint venture.

The following is our unaudited condensed consolidated statements of income and a summary of financial results for the three months ended September 30, 2022 and 2021:

Three months ended

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Debt extinguishment costs — 15.2 (15.2) (100.0) %

Other expense (income), net 0.5 (1.8) 2.3 (127.8) %

Income (loss) before income taxes and noncontrolling interest 26.5 (0.2) 26.7 NM

Other expense (income), net 1.9 (0.2) 2.1 NM

Income before income taxes and noncontrolling interest 30.3 7.3 23.0 315.1 %

Provision for income taxes 9.0 2.6 6.4 246.2 %

Effective tax rate 29.6 % 35.6 %

Net income (loss) from continuing operations 19.2 (7.9) 27.1 (343.0) %

Net income from discontinued operations, net of tax — 6.5 (6.5) (100.0) %

Net income (loss) 19.2 (1.4) 20.6 NM

Net income from continuing operations 21.3 4.7 16.6 353.2 %

Net loss from discontinued operations, net of tax — (75.9) 75.9 (100.0) %

Net income (loss) 21.3 (71.2) 92.5 (129.9) %

Net income attributable to the noncontrolling interest—discontinued operations — 0.1 (0.1) (100.0) %

Net income (loss) attributable to Ecovyst Inc.

$ 19.2 $ (1.5) $ 20.7 NM

$ 21.3 $ (71.3) $ 92.6 (129.9) %

Three months ended

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Total sales $ 232.5 $ 167.4 $ 65.1 38.9 %

Sales in Ecoservices for the three months ended June 30, 2022 were $193.0 million, an increase of $72.2 million, or 59.8%, compared to sales of $120.8 million for the three months ended June 30, 2021.

The increase in sales was due to higher average selling prices of $56.0 million and an increase in volumes of $16.2 million.

Sales in Ecoservices for the three months ended September 30, 2022 were $195.7 million, an increase of $58.2 million, or 42.3%, compared to sales of $137.5 million for the three months ended September 30, 2021.

The increase in sales was due to higher average selling prices of $53.3 million and a $4.9 million contribution from higher sales volumes.

Higher average selling prices were primarily a result of the pass-through of higher sulfur costs of $28.3 million within our virgin sulfuric acid product group and the pass-through of other raw material costs within our regenerations services product group.

The increase in volumes was primarily driven by strong demand for virgin sulfuric acid and regeneration services.

The increase in volumes was primarily driven by strong demand for regeneration services during the quarter.

Catalyst Technologies:

Sales in Catalyst Technologies for the three months ended June 30, 2022 were $32.2 million, an increase of $6.0 million, or 22.9%, compared to sales of $26.2 million for the three months ended June 30, 2021.

The increase in sales was due to an increase in volumes of $3.4 million, driven by demand for our polyethylene catalysts, and an increase in price of $3.5 million, primarily driven by price increases implemented late in 2021.

Gross profit for the three months ended June 30, 2022 was $59.9 million, an increase of $21.4 million, or 55.6%, compared with $38.5 million for the thre e months ended June 30, 2021.

The increase in gross profit was due to higher sales volumes of $14.6 million, favorable customer pricing of $96.1 million, which was partially offset by unfavorable manufacturing costs of $87.2 million and product mix of $2.1 million.

The favorable change in volumes was a result of increased demand for our high-margin polyethylene catalysts, virgin sulfuric acid, and regeneration services.

Sales in Catalyst Technologies for the three months ended September 30, 2022 were $36.8 million, an increase of $6.9 million, or 23.1%, compared to sales of $29.9 million for the three months ended September 30, 2021.

Of the increase in sales, $9.9 million was associated with higher sales volumes, driven by demand for our polyethylene catalysts, partially offset by price of $0.3 million and unfavorable foreign exchange of $2.7 million.

Gross profit for the three months ended September 30, 2022 was $67.7 million, an increase of $14.1 million, or 26.3%, compared with $53.6 million for the thre e months ended September 30, 2021.

The increase in gross profit was due to higher sales volumes, which accounted for $13.6 million of the increase, and higher average selling prices of $53.0 million, which were partially offset by unfavorable manufacturing costs of $47.8 million and a $4.7 million impact associated with a less-favorable sales mix.

The favorable change in volumes was a result of increased demand for our polyethylene catalysts, niche custom catalysts, and regeneration services.

Favorable customer pricing was primarily driven by increased prices to cover rising variable costs, including the pass-through of sulfur, labor index and energy costs within our Ecoservices business.

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Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three months ended June 30, 2022 were $22.8 million, an increase of $0.9 million compared with $21.9 million for the three months ended June 30, 2021.

The increase in selling, general and administrative expenses was due to an increase in compensation-related expenses.

For the three months ended June 30, 2021, selling, general, and administrative expenses included income generated from the transition service agreement entered into as part of the sale of the Performance Materials and Performance Chemicals businesses.

Selling, general and administrative expenses for the three months ended September 30, 2022 were $21.5 million, a decrease of $3.3 million compared with $24.8 million for the three months ended September 30, 2021.

The decrease in selling, general and administrative expenses was primarily due to a decrease in stock-based compensation expense of $5.5 million, which consisted of $4.0 million of incremental cost recognized during the three months ended September 30, 2021 in connection with the modifications of our equity incentive awards and stock options associated with the special dividend and sale of the Performance Chemicals business in August 2021, with the remaining decrease driven by forfeitures of equity incentive awards in 2022 by former Company executives and employees of the Performance Chemicals business.

This was partially offset by higher other compensation-related expenses of $1.2 million and net increases in other costs of $1.0 million.

Other Operating Expense, Net

Other operating expense, net for the three months ended June 30, 2022 was $9.7 million, an increase of $4.7 million, compared with $5.0 million for the three months ended June 30, 2021.

The increase in other operating expense, net, was a result of severance charges under the contracts associated with former executives incurred in the current period.

Other operating expense, net for the three months ended September 30, 2022 was $7.7 million, an increase of $1.4 million, compared with $6.3 million for the three months ended September 30, 2021.

The increase in other operating expense, net was mainly driven by severance charges incurred from contracts associated with former executives incurred in the current period $1.2 million.

Equity in Net Income of Affiliated Companies

Equity in net income of affiliated comp anies for the three months ended June 30, 2022 was $8.5 million, compared to $6.8 million for the three months ended June 30, 2021.

The increase was primarily due to $1.7 million of higher earnings from the Zeolyst Joint Venture during the three months ended June 30, 2022 as compared to the three months ended June 30, 2021.

The increase in earnings from the Zeolyst Joint Venture was due to increased demand for our hydrocracking and specialty catalysts.

Equity in net income of affiliated comp anies for the three months ended September 30, 2022 was $3.2 million, compared to $8.8 million for the three months ended September 30, 2021.

The decrease was primarily due to $5.7 million of lower earnings from the Zeolyst Joint Venture during the three months ended September 30, 2022 as compared to the three months ended September 30, 2021.

The decrease in earnings from the Zeolyst Joint Venture was due to lower sales volumes for our hydrocracking and specialty catalysts.

Interest Expense, Net

Interest expense, net for the three month s ended June 30, 2022 was $8.9 million, an increase of $0.2 million, as compared with $8.7 million for the three months ended June 30, 2021.

The increase in interest expense, net was primarily due to the year over year increase in variable rate debt, which was partially offset by lower outstanding debt during the three months ended June 30, 2022 as compared to the three months ended June 30, 2021.

Interest expense, net for the three month s ended September 30, 2022 was $9.5 million, an increase of $0.5 million, as compared with $9.0 million for the three months ended September 30, 2021.

The increase in interest expense, net was primarily due to the year over year increase in variable rate debt, which was partially offset by lower outstanding debt during the three months ended September 30, 2022 as compared to the three months ended September 30, 2021.

Debt Extinguishment Costs

Debt extinguishment costs for the three months ended June 30, 2021 were $11.7 million.

In June 2021, we entered into an agreement for a new senior secured term loan facility and used the proceeds to repay portions of our existing term loan facilities.

As a result of this transaction, we recorded $5.7 million of new creditor and third-party financing costs as debt extinguishment costs during the three months ended June 30, 2021.

In addition, previous unamortized deferred financing costs of $1.7 million and original issue discount of $3.7 million associated with the previously outstanding debt were written off as debt extinguishment costs.

In June 2021, we amended our ABL Credit Agreement to decrease the aggregate amount of revolving loan commitments and extend the maturity date.

As a result of the amendment, we wrote off $0.6 million of unamortized deferred financing costs as debt extinguishment costs.

Debt extinguishment costs for the three months ended September 30, 2021 were $15.2 million.

Concurrent with, and using a portion of the net cash proceeds from, the divestiture of the Performance Chemicals business in August 2021, we repaid the remaining balance on our 2016 Term Loan Facility and redeemed the Senior Notes.

In connection with the redemption of the Senior Notes, we paid a redemption premium of $8.5 million, which was recorded as debt extinguishment costs during the three months ended September 30, 2021.

We wrote off $0.8 million of unamortized deferred financing costs and $2.4 million of original issue discount related to the 2016 Term Loan Facility and $2.3 million of unamortized deferred financing costs and $1.2 million of original issue discount related to the Senior Notes as debt extinguishment costs during the three months ended September 30, 2021.

Other Expense (Income), Net

Other income, net for the three months ended June 30, 2022 was income of $0.5 million, a decrease of $2.3 million, as compared with income of $1.8 million for the three months ended June 30, 2021.

The change in other expense, net primarily consisted of a decrease in foreign currency gains related to the non-permanent intercompany debt denominated in local currency and translated to the U.S.

Other expense (income), net for the three months ended September 30, 2022 was expense of $1.9 million, a change of $2.1 million, as compared with income of $0.2 million for the three months ended September 30, 2021.

The change in other expense, net primarily consisted of a lower net periodic benefit for the defined benefit pension and postretirement plans of $0.9 million and increases in other net costs of $1.2 million.

Provision for Income Taxes

The provision for income taxes for the three months ended June 30, 2022 was $7.3 million compared to a $7.7 million provision for the three months ended June 30, 2021.

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 provision for income taxes for the three months ended September 30, 2022 was $9.0 million compared to a $2.6 million provision for the three months ended September 30, 2021.

The effective income tax rate for the three months ended September 30, 2022 was 29.6% compared to 35.6% for the three months ended September 30, 2021.

The difference between the U.S.

federal statutory income tax rate and the Company’s effective income tax rate for the three 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.

federal statutory income tax rate and the Company’s effective income tax rate for the three months ended September 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.

Net Income (Loss) Attributable to Ecovyst

For the foregoing reasons and after the effect of the non-controlling interest in earnings of subsidiaries for each period presented, net loss attributable to Ecovyst was $19.2 million for the three months ended June 30, 2022 compared with net income of $1.5 million for the three months ended June 30, 2021.

After the effect of the non-controlling interest in earnings of subsidiaries for each period presented, net income attributable to Ecovyst was $21.3 million for the three months ended September 30, 2022 compared with net loss of $71.3 million for the three months ended September 30, 2021.

Adjusted EBITDA

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Three months ended

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

(2) The Adjusted EBITDA from the Zeolyst Joint Venture included in the Catalyst Technologies segment was $14.1 million for the three months ended June 30, 2022, which includes $8.5 million of equity in net income, excluding $1.6 million of amortization of investment in affiliate step-up plus $4.0 million of joint venture depreciation, amortization and interest.

The Adjusted EBITDA from the Zeolyst Joint Venture included in the Catalyst Technologies segment was $12.1 million for the three months ended June 30, 2021, which includes $6.8 million of equity in net income, excluding $1.6 million of amortization of investment in affiliate step-up plus $3.7 million of joint venture depreciation, amortization and interest.

Adjusted EBITDA for the three months ended June 30, 2022 was $60.0 million, an increase of $19.5 million, or 48.1%, compared with $40.5 million for the three months ended June 30, 2021.

The increase in Adjusted EBITDA was a result of favorable regeneration services and virgin sulfuric acid pricing and volumes, offset b y higher raw material and operating costs.

(2) The Adjusted EBITDA from the Zeolyst Joint Venture included in the Catalyst Technologies segment was $8.7 million for the three months ended September 30, 2022, which includes $3.2 million of equity in net income, excluding $1.6 million of amortization of investment in affiliate step-up plus $3.9 million of joint venture depreciation, amortization and interest.

The Adjusted EBITDA from the Zeolyst Joint Venture included in the Catalyst Technologies segment was $14.5 million for the three months ended September 30, 2021, which includes $8.8 million of equity in net income, excluding $1.6 million of amortization of investment in affiliate step-up plus $4.1 million of joint venture depreciation, amortization and interest.

Adjusted EBITDA for the three months ended September 30, 2022 was $64.1 million, an increase of $12.2 million, or 23.5%, compared with $51.9 million for the three months ended September 30, 2021.

The increase in Adjusted EBITDA was a result of favorable regeneration services and virgin sulfuric acid pricing that more than covered higher variable costs, along with increased demand for regeneration services during the quarter.

Catalyst Technologies:

Adjusted EBITDA for the three months ended June 30, 2022 was $21.4 million, an increase of $0.7 million, or 3.4%, compared with $20.7 million for the three months ended June 30, 2021.

The slight increase in Adjusted EBITDA was primarily a result of higher sales volumes and higher average selling prices, partially offset by unfavorable product mix and higher production costs.

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

Adjusted EBITDA for the three months ended September 30, 2022 was $19.3 million, a decrease of $6.2 million, or 24.3%, compared with $25.5 million for the three months ended September 30, 2021.

The decrease in Adjusted EBITDA was primarily a result of unfavorable product mix and higher production costs, partially offset by higher sales volumes.

A reconciliation of net income from continuing operations to Adjusted EBITDA is as follows:

Three months ended

September 30,

(in millions)

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

Net income (loss) from continuing operations $ 19.2 $ (7.9)

Reconciliation of net income from continuing operations to Adjusted EBITDA

Net income from continuing operations $ 21.3 $ 4.7

Provision for income taxes 9.0 2.6

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Net loss on asset disposals (c)

Foreign currency exchange loss (gain) (d)

LIFO expense (benefit) (e)

Foreign currency exchange loss (d)

LIFO benefit (e)

Transaction and other related costs (f)

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Restructuring, integration and business optimization expenses (g)

Defined benefit pension benefit (h)

Defined benefit pension expense (benefit) (h)

Adjusted EBITDA $ 75.4 $ 69.4

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(b) Represents the amortization of the fair value adjustments associated with the equity affiliate investment in the Zeolyst Joint Venture as a result of the combination of the businesses of PQ Holdings Inc.

and Eco Services Operations LLC in May 2016 (the “Business Combination”).

and Eco Services Operations LLC in May 2016.

We determined the fair value of the equity affiliate investment and the fair value step-up was then attributed to the underlying assets of the Zeolyst Joint Venture.

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Adjusted Net Income

Summarized adjusted net income (loss) information is shown below in the following table:

Three months ended June 30,

Summarized adjusted net income information is shown below in the following table:

Three months ended September 30,

Pre-tax Tax expense (benefit) After-tax Pre-tax Tax expense (benefit) After-tax

(in millions)

Reconciliation of net income (loss) from continuing operations to Adjusted Net Income (1)(2)

Net income (loss) attributable to Ecovyst Inc.

Reconciliation of net income from continuing operations to Adjusted Net Income (1)(2)

Net income attributable to Ecovyst Inc.

$ 30.3 $ 9.0 $ 21.3 $ 7.3 $ 2.6 $ 4.7

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0.5 0.2 0.3 2.2 0.5 1.7

Foreign currency exchange loss (gain) (d)

Foreign currency exchange loss (d)

1.0 0.2 0.8 0.9 0.2 0.7

LIFO expense (benefit) (e)

LIFO benefit (e)

(0.4) (0.1) (0.3) (1.3) (0.4) (0.9)

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1.3 0.4 0.9 0.1 0.1 —

Defined benefit pension plan benefit (h)

Defined benefit pension plan expense (benefit) (h)

0.3 0.1 0.2 (1.0) (0.3) (0.7)

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The adjustments to net income attributable to Ecovyst Inc.

are shown net of applicable tax rates as determined by the calculation of our quarterly tax provision under interim financial reporting for the three months ended June 30, 2022 and June 30, 2021, except for the foreign currency exchange loss, impacts of tax rate changes and the effects of the sale of assets for which the taxes are calculated as discrete items using the applicable statutory income tax rates.

are shown net of applicable tax rates as determined by the calculation of our quarterly tax provision under interim financial reporting for the three months ended September 30, 2022 and September 30, 2021, except for the foreign currency exchange loss, impacts of tax rate changes and the effects of the sale of assets for which the taxes are calculated as discrete items using the applicable statutory income tax rates.

Results of Operations

Six Months Ended June 30, 2022 Compared to the Six Months Ended June 30, 2021

The following is a summary of our financial performance for the six months ended June 30, 2022 compared with the six months ended June 30, 2021.

Nine Months Ended September 30, 2022 Compared to the Nine Months Ended September 30, 2021

The following is a summary of our financial performance for the nine months ended September 30, 2022 compared with the nine months ended September 30, 2021.

• Sales increased $196.4 million to $637.4 million.

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• Gross profit increased $53.1 million to $175.3 million.

The increase in gross profit was primarily due to the higher sales volume and favorable pricing, partially offset by higher manufacturing costs.

The increase in gross profit was primarily due to the higher sales volume and favorable pricing, partially offset by increased manufacturing costs.

Operating Income

• Operating income increased by $45.8 million to $82.4 million.

The increase in operating income was due to an increase in gross profit, partially offset by higher selling, general, and administrative expenses and other operating expenses.

The increase in operating income was due to an increase in gross profit and lower selling, general and administrative expenses, partially offset by higher other operating expenses.

Equity in Net Income of Affiliated Companies

• Equity in net income of affiliated companies for the six months ended June 30, 2022 was $14.3 million, compared with $12.0 million for the six months ended June 30, 2021.

The increase was primarily due to $2.3 million of higher earnings from the Zeolyst Joint Ventur e during the six months ended June 30, 2022, driven by higher sales within the joint venture.

The following is our unaudited condensed consolidated statements of income and a summary of financial results for the six months ended June 30, 2022 and 2021:

Six months ended

June 30, Change

• Equity in net income of affiliated companies for the nine months ended September 30, 2022 was $17.4 million, compared with $20.7 million for the nine months ended September 30, 2021.

The decrease of $3.3 million was due to lower earnings generated by the Zeolyst Joint Ventur e during the nine months ended September 30, 2022, driven by lower sales volumes within the joint venture.

The following is our unaudited condensed consolidated statements of income and a summary of financial results for the nine months ended September 30, 2022 and 2021:

Nine months ended

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Other expense, net 2.5 3.1 (0.6) (19.4) %

Income before income taxes and noncontrolling interest 40.1 (8.1) 48.2 (595.1) %

Provision (benefit) for income taxes 13.0 2.5 10.5 420.0 %

Income (loss) before income taxes and noncontrolling interest 70.4 (0.9) 71.3 NM

Provision for income taxes 22.0 5.1 16.9 331.4 %

Effective tax rate 31.2 % (610.9) %

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$ 48.4 $ (165.4) $ 213.8 (129.3) %

Six months ended

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Ecoservices :

Sales in Ecoservices for the six months ended June 30, 2022 were $347.0 million, an increase of $126.0 million, or 57.0%, compared to sales of $221.0 million for the six months ended June 30, 2021.

The increase in sales was due to higher average selling price of $93.2 million and an increase in sales volumes of $32.8 million.

Sales in Ecoservices for the nine months ended September 30, 2022 were $542.7 million, an increase of $184.2 million, or 51.4%, compared to sales of $358.5 million for the nine months ended September 30, 2021.

The increase in sales reflects a $146.5 million increase associated with higher average selling prices and a $37.7 million contribution from higher sales volumes.

Higher average selling prices benefited from favorable pricing, including the pass-through of higher freight, labor, and energy indexed costs, as well as the pass-through of higher sulfur costs of $87.2 million.

Sales volumes increased in both regeneration services and virgin sulfuric acid which was driven by demand recovery.

Sales volumes increased in both regeneration services and virgin sulfuric acid driven in large part by demand recovery.

Catalyst Technologies:

Sales in Catalyst Technologies for the six months ended June 30, 2022 were $57.9 million, an increase of $5.3 million, or 10.1%, compared to sales of $52.6 million for the six months ended June 30, 2021.

The increase in sales was driven by price increases implemented late in 2021.

Gross profit for the six months ended June 30, 2022 was $107.6 million, an increase of $39.0 million, or 56.9%, compared with $68.6 million for the six mon ths ended June 30, 2021.

The increase in gross profit was due to favorable volumes of $26.3 million, higher pricing of $158.5 million, partially offset by higher manufacturing costs of $139.9 million and product mix of $5.9 million.

The increase in gross profit was driven by favorable pricing and pass through of higher variable and sulfur costs along with higher volume demand in both the Ecoservices and Catalyst Technologies businesses.

Sales in Catalyst Technologies for the nine months ended September 30, 2022 were $94.7 million, an increase of $12.2 million, or 14.8%, compared to sales of $82.5 million for the nine months ended September 30, 2021.

The increase in sales was driven by demand for our polyethylene catalysts and higher average selling prices.

Gross profit for the nine months ended September 30, 2022 was $175.3 million, an increase of $53.1 million, or 43.5%, compared with $122.2 million for the nine mon ths ended September 30, 2021.

The increase in gross profit reflects a $39.6 million contribution associated with higher sales volumes, and higher average selling prices of $151.9 million, which were partially offset by higher manufacturing costs of $127.9 million and a $10.5 million impact associated with less favorable product mix.

The increase in gross profit was driven by favorable pricing, including the pass through of higher variable and sulfur costs, along with higher volume demand in both the Ecoservices and Catalyst Technologies businesses.

Rising inflation costs on raw materials, energy, and transportation primarily drove the higher manufacturing costs that were more than offset in price.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the six months ended June 30, 2022 was $46.3 million, an increase of $2.3 million as compared to $44.0 million for the six months ended June 30, 2021.

The increase in selling, general and administrative expenses was due to an increase in compensation-related expenses.

For the six months ended June 30, 2021, selling, general, and administrative expenses included income generated from the transition service agreement entered into as part of the sale of the Performance Materials and Performance Chemicals businesses.

Selling, general and administrative expenses for the nine months ended September 30, 2022 was $67.8 million, a decrease of $1.0 million as compared to $68.8 million for the nine months ended September 30, 2021.

The decrease in selling, general and administrative expenses was due to a decrease in stock-based compensation expense of $5.4 million, which consisted of $4.0 million of incremental cost recognized during the nine months ended September 30, 2021 in connection with the modifications of our equity incentive awards and stock options associated with the special dividend and sale of the Performance Chemicals business in August 2021, with the remaining decrease driven by forfeitures of equity incentive awards in 2022 by former Company executives and employees of the Performance Chemicals business.

This was mostly offset by $3.4 million of income generated during the nine months ended September 30, 2021 from the transition service agreements entered into as part of the sales of the Performance Materials and Performance Chemicals businesses, and net decreases in other costs of $1.0 million.

Other Operating Expense, Net

Other operating expense, net for the six months e nded June 30, 2022 was $17.4 million, an increase of $6.9 million, compared with $10.5 million for the six months ended June 30, 2021.

The increase in other operating expense, net, was a result of severance charges under the contracts associated with former executives incurred in the current period.

Other operating expense, net for the nine months e nded September 30, 2022 was $25.1 million, an increase of $8.3 million, compared with $16.8 million for the nine months ended September 30, 2021.

The increase in other operating expense, net was mainly driven by increases of $3.4 million in severance charges associated with former executives and $5.9 million in residual costs from the Performance Chemicals divestiture and other transactions costs.

Equity in Net Income of Affiliated Companies

Equity in net income of affiliated companies for the six months ended June 30, 2022 was $14.3 million, compared to $12.0 million for the six months ended June 30, 2021.

The increase was primarily due to $2.3 million of higher earnings from the Zeolyst Joint Ventur e during the six months ended June 30, 2022 .

Equity in net income of affiliated companies for the nine months ended September 30, 2022 was $17.4 million, compared to $20.7 million for the nine months ended September 30, 2021.

The decrease was primarily due to $3.3 million of lower earnings from the Zeolyst Joint Ventur e during the nine months ended September 30, 2022 .

Interest Expense, Net

Interest expense, net for the six months ended June 30, 2022 was $17.3 million, a decrease of $1.9 million, as compared with $19.2 million for the six months ended June 30, 2021.

Interest expense, net for the nine months ended September 30, 2022 was $26.9 million, a decrease of $1.3 million, as compared with $28.2 million for the nine months ended September 30, 2021.

The decrease in interest expense, net was primarily due to lower debt balances, partially offset by rising variable interest rates.

Debt Extinguishment Cost s

Debt extinguishment costs were $11.7 million for the six months ended June 30, 2021.

Debt extinguishment costs were $26.9 million for the nine months ended September 30, 2021.

In connection with the redemption of the Senior Notes, we paid a redemption premium of $8.5 million, which was recorded as debt extinguishment costs during the nine months ended September 30, 2021.

In June 2021, we entered into an agreement for a new senior secured term loan facility and used the proceeds to repay a portion of our existing term loan facilities.

As a result of this transaction, we recorded $5.7 million of new creditor and third-party financing costs as debt extinguishment costs during the three months ended June 30, 2021.

As a result of this transaction, we recorded $5.7 million of new creditor and third-party financing costs as debt extinguishment costs during the three months ended September 30, 2021.

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Other Expense, Net

Other expense, net for the six months ended June 30, 2022 was $0.8 million, a decrease of $2.5 million, as compared with income of $3.3 million for the six months ended June 30, 2021.

The decrease in other expense, net primarily consisted of smaller foreign currency gain in the current year as compared to the prior year related to the non-permanent intercompany debt denominated in local currency and translated to the U.S.

dollar, offset by net periodic benefit for the defined benefit pension and postretirement plans.

Provision (Benefit) for Income Taxes

The provision for income taxes for the six months ended June 30, 2022 was $13.0 million compared to a $2.5 million benefit for the six 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.

Other expense, net for the nine months ended September 30, 2022 was $2.5 million, a decrease of $0.6 million, as compared to $3.1 million for the nine months ended September 30, 2021.

The decrease in other expense, net primarily consisted of foreign currency exchange of $2.6 million related to the non-permanent intercompany debt denominated in local currency and translated to the U.S.

dollar, partially offset by a lower net periodic benefit of $1.1 million for the defined benefit pension and postretirement plans.

Provision for Income Taxes

The provision for income taxes for the nine months ended September 30, 2022 was $22.0 million compared to a $5.1 million for the nine months ended September 30, 2021.

The effective income tax rate for the nine months ended September 30, 2022 was 31.2% compared to (610.9)% for the nine months ended September 30, 2021.

The Company’s effective income tax rate fluctuates primarily due to GILTI, discrete impacts of the divestiture of the Performance Chemicals business, and tax rate changes.

The difference between the U.S.

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.

federal statutory income tax rate and the Company’s effective income tax rate for the nine months ended September 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.

Net Income (Loss) Attributable to Ecovyst

For the foregoing reasons and after the effect of the non-controlling interest in earnings of subsidiaries for the period ending June 30, 2021, net income attributable to Ecovyst was $27.1 million for the six months ended June 30, 2022 compared with net loss of $94.2 million for the six months ended June 30, 2021.

After the effect of the non-controlling interest in earnings of subsidiaries for the period ending September 30, 2021, net income attributable to Ecovyst was $48.4 million for the nine months ended September 30, 2022 compared with net loss of $165.4 million for the nine months ended September 30, 2021.

Adjusted EBITDA

Summarized Adjusted EBITDA information is shown below in the following table:

Six months ended

June 30, Change

Nine months ended

September 30, Change

2022 2021 $ %

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

(2) The Adjusted EBITDA from the Zeolyst Joint Venture included in the Catalyst Technologies segment is $25.6 million for the six months ended June 30, 2022, which includes $14.3 million of equity in net income, excluding $3.2 million of amortization of investment in affiliate step-up plus $8.1 million of joint venture depreciation, amortization and interest.

The Adjusted EBITDA from the Zeolyst Joint Venture included in the Catalyst Technologies segment is $22.6 million for the six months ended June 30, 2021, which includes $12.0 million of equity in net income, excluding $3.3 million of amortization of investment in affiliate step-up plus $7.3 million of joint venture depreciation, amortization and interest.

Adjusted EBITDA for the six months ended June 30, 2022 was $109.3 million, an increase of $35.8 million, or 48.7%, compared with $73.5 million for the six mo nths ended June 30, 2021.

(2) The Adjusted EBITDA from the Zeolyst Joint Venture included in the Catalyst Technologies segment is $34.3 million for the nine months ended September 30, 2022, which includes $17.5 million of equity in net income, excluding $4.8 million of amortization of investment in affiliate step-up plus $12.0 million of joint venture depreciation, amortization and interest.

The Adjusted EBITDA from the Zeolyst Joint Venture included in the Catalyst Technologies segment is $37.1 million for the nine months ended September 30, 2021, which includes $20.8 million of equity in net income, excluding $4.9 million of amortization of investment in affiliate step-up plus $11.4 million of joint venture depreciation, amortization and interest.

Adjusted EBITDA for the nine months ended September 30, 2022 was $173.4 million, an increase of $48.0 million, or 38.3%, compared with $125.4 million for the nine mo nths ended September 30, 2021.

The increase in Adjusted EBITDA was a result of higher volumes, favorable pricing covering rising input costs, including the pass-through of higher sulfur costs, higher raw material and maintenance costs.

Catalyst Technologies:

Adjusted EBITDA for the six months ended June 30, 2022 was $38.4 million, a decrease of $0.8 million, or 2.0%, compared with $39.2 million for the six months ended June 30, 2021.

The slight decrease in Adjusted EBITDA was due to unfavorable product mix, as well as higher input and energy production costs, partially offset by higher sales volumes and price increases.

Adjusted EBITDA for the nine months ended September 30, 2022 was $57.7 million, a decrease of $6.9 million, or 10.7%, compared with $64.6 million for the nine months ended September 30, 2021.

The decrease in Adjusted EBITDA was due to a less-favorable product mix, as well as higher input and energy production costs, partially offset by higher sales volumes and average selling prices.

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

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(in millions)

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Foreign currency exchange loss (d)

LIFO expense (benefit) (e)

LIFO benefit (e)

Transaction and other related costs (f)

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Summarized adjusted net income information is shown below in the following table:

Six months ended June 30,

Nine months ended September 30,

Pre-tax Tax expense (benefit) After-tax Pre-tax Tax expense (benefit) After-tax

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2.2 0.4 1.8 4.8 1.3 3.5

LIFO expense (benefit) (e)

LIFO benefit (e)

— — — (2.0) (0.6) (1.4)

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The adjustments to net income attributable to Ecovyst Inc.

are shown net of applicable tax rates of 26.0% and 27.7% for the six months ended June 30, 2022 and 2021, respectively, except for the foreign currency exchange loss, equity-based compensation, transactions and other related costs, and discrete impacts of the divestiture of the Performance Chemicals business.

are shown net of applicable tax rates of 27.7% and 28.0% for the nine months ended September 30, 2022 and 2021, respectively, except for the foreign currency exchange loss, equity-based compensation, transactions and other related costs, and discrete impacts of the divestiture of the Performance Chemicals business.

Financial Condition, Liquidity and Capital Resources

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We may, from time to time, increase borrowings under our asset based lending revolving credit facility to meet our future cash needs.

As of June 30, 2022, we had cash and cash equivalents of $151.2 million and availability of $84.8 million under our asset based lending revolving credit facility, after giving effect to $8.3 million of outstanding letters of credit, for a total available liquidity of $236.0 million.

We did not have any revolving credit facility borrowings as of June 30, 2022.

As of June 30, 2022, we were in compliance with all covenants under our debt agreements.

We held an immaterial balance of cash and cash equivalents in foreign jurisdictions as of June 30, 2022.

As of September 30, 2022, we had cash and cash equivalents of $121.4 million and availability of $77.6 million under our asset based lending revolving credit facility, after giving effect to $4.0 million of outstanding letters of credit, for a total available liquidity of $199.0 million.

We did not have any revolving credit facility borrowings as of September 30, 2022.

As of September 30, 2022, we were in compliance with all covenants under our debt agreements.

We held an immaterial balance of cash and cash equivalents in foreign jurisdictions as of September 30, 2022.

We continue to repatriate cash held outside of the United States from certain foreign subsidiaries in order to meet domestic liquidity needs.

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Our liquidity requirements include interest payments related to our debt structure.

As reported, our cash interest paid for the six months ended June 30, 2022 and 2021 wa s approximately $15.8 million and $28.8 million, respectively.

As reported, our cash interest paid for the nine months ended September 30, 2022 and 2021 wa s approximately $24.4 million and $43.1 million, respectively.

Before any impact of hedges, a one percent change in assumed interest rates for our variable interest credit facilities would have an annual impact of approximately $8.9 million on interest expense.

We hedge the interest rate fluctuations on debt obligations through interest rate cap agreements.

As of June 30, 2022, we had interest rate caps on $500.0 million of notional variable-rate debt with a cap rate of 0.84% through July 2022, $400.0 million of notional variable-rate debt with a cap rate of 1.00% through August 2023, $250.0 million of notional variable-rate debt with a cap rate of 1.00% through October 2024, and $250.0 million of notional variable-rate debt with a cap rate of 1.00% through October 2025.

The Company’s off-balance sheet arrangements include $8.3 million of outstanding letters of credit on our ABL Facility as of June 30, 2022.

Six months ended

As of September 30, 2022, we had a $400.0 million of notional variable-rate debt with a cap rate of 1.00% through August 2023, a $250.0 million of notional variable-rate debt with a cap rate of 1.00% through October 2024 and a $250.0 million of notional variable-rate debt with a cap rate of 1.00% through October 2025.

The Company’s off-balance sheet arrangements include $4.0 million of outstanding letters of credit on our ABL Facility as of September 30, 2022.

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(in millions)

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Discontinued Operations

Net cash provided by (used in):

Net cash used in:

Operating activities — (7.4)

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Effect of exchange rate changes on cash, cash equivalents and restricted cash (2.6) (4.7)

Net change in cash, cash equivalents and restricted cash 10.3 (62.1)

Cash, cash equivalents and restricted cash at beginning of period 140.9 137.2

Cash, cash equivalents and restricted cash at end of period 151.2 75.1

cash, cash equivalents and restricted cash of discontinued operations — (17.6)

Net change in cash and cash equivalents (19.5) (32.4)

Cash and cash equivalents at beginning of period 140.9 137.2

Cash, cash equivalents and restricted cash at end of period of continuing operations $ 121.4 $ 104.8

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(in millions)

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(1) Includes depreciation, amortization, amortization of deferred financing costs and original issue discount, foreign currency exchange gains and losses, deferred income tax provision (benefit), net (gains) losses on asset disposals, stock compensation expense and equity in net income and dividends received from affiliated companies.

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Continuing Operations

Working capital changes that provided (used) cash:

Working capital changes that (used) provided cash:

Receivables $ (28.4) $ (33.8)

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$ (42.5) $ (18.5)

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September 30,

(in millions)

1 unchanged sentence

Purchases of property, plant and equipment $ (39.5) $ (44.6)

Payments for business divestiture (3.7) —

Proceeds from business divestiture, net of cash — 980.4

Payments for business divestiture, net of cash (3.7) —

Business combinations, net of cash acquired (0.5) (42.8)

Net cash used in investing activities, continuing operations $ (29.5) $ (70.0)

Six months ended

Other, net 0.1 (0.1)

Net cash (used in) provided by investing activities, continuing operations $ (43.6) $ 892.9

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(in millions)

1 unchanged sentence

Net cash borrowings (repayments) on debt obligations $ (6.8) $ (532.1)

Proceeds from failed sale lease-back — 14.6

Dividends paid to stockholders — (435.6)

Repurchases of common shares (73.7) —

Tax withholdings on equity award vesting (0.3) (1.5)

Repayment of financing obligations (1.8) (0.5)

Other — (8.4)

Net cash used in financing activities, continuing operations $ (82.6) $ (963.5)

The following discussions related to our cash flows are presented on a continuing operations basis, which excludes the cash flows from our Performance Materials and Performance Chemicals businesses accounted for as discontinued operations during the six months ended June 30, 2021.

Net cash provided by operating activities was $52.8 million for the six months ended June 30, 2022, compared to $37.2 million provided for the six months ended June 30, 2021.

Cash generated by operating activities, other than changes in working capital, was higher during the six months ended June 30, 2022 by $52.2 million compared to the same period in the prior year.

The change in working capital during the six months ended June 30, 2022 was unfavorable compared to the six months ended June 30, 2021.

Cash used to fund working capital was $51.7 million and $15.2 million for the six months ended June 30, 2022 and 2021, respectively.

Net cash provided by operating activities was $109.3 million for the nine months ended September 30, 2022, compared to $92.3 million provided for the nine months ended September 30, 2021.

Cash generated by operating activities, other than changes in working capital, was higher during the nine months ended September 30, 2022 by $41.1 million compared to the same period in the prior year.

The change in working capital during the nine months ended September 30, 2022 was unfavorable compared to the nine months ended September 30, 2021.

Cash used to fund working capital was $42.5 million and $18.5 million for the nine months ended September 30, 2022 and 2021, respectively.

The increase in cash generated by operating activities, other than changes in working capital, was higher by $41.1 million as compared to the prior year period primarily due to an increase in operating profit and an increase in dividends received from affiliated companies.

Prior year cash generated by operating activities includes debt extinguishment costs.

The decrease in cash from working capital of $36.5 million as compared to the prior year was primarily due to unfavorable changes in accounts receivable, inventories, and accrued liabilities which were partially offset by favorable changes in accounts payable and prepaids and other current assets.

The unfavorable change in accounts receivable was driven by the timing of sales as well as increased sales volume.

The decrease in cash from working capital of $24.0 million as compared to the prior year was primarily due to unfavorable changes in inventories, accounts payable, and accrued liabilities which were partially offset by favorable changes in accounts receivables and prepaids and other current assets.

The favorable change in accounts receivable was driven by the timing of sales as well as decreased sales volume.

The unfavorable change in inventory was due to the inflation costs on raw materials and finished goods, where as cash provided in prior period was due to the timing of sales orders and inventory build.

The favorable change in accounts payable is due to the timing of vendor payments as well as lower capital spending.

The unfavorable change in accounts payable is due to the timing of vendor payments as well as higher capital spending.

The unfavorable change in accrued liabilities relates to changes in various expense accruals.

Net cash used in investing activities was $29.5 million for the six months ended June 30, 2022, compared to cash used of $70.0 million during the same period in 2021.

Cash used in investing activities consisted of utilizing $25.8 million and $28.0 million to fund capital expenditures during the six months ended June 30, 2022 and 2021, respectively.

During the six months ended June 30, 2021, we acquired Chem32, LLC for $42.0 million.

During the six months ended June 30, 2022, we made an additional payment related to our divestiture of our Performance Chemicals business representing the final adjustments to the sale price of $3.7 million.

Net cash used in financing activities was $11.9 million for the six months ended June 30, 2022, compared to net cash used of $5.0 million during the same period in 2021.

Net cash used in financing activities was primarily driven by $4.5 million of debt repayment charges and repurchases of common stock of $7.1 million for the six months ended June 30, 2022.

Net cash used in investing activities was $43.6 million for the nine months ended September 30, 2022, compared to cash provided of $892.9 million during the same period in 2021.

Cash used in investing activities consisted of utilizing $39.5 million and $44.6 million to fund capital expenditures during the nine months ended September 30, 2022 and 2021, respectively.

During the nine months ended September 30, 2021, we divested our Performance Chemicals business and received $980.4 million in net proceeds and acquired Chem32, LLC for $42.8 million.

During the nine months ended September 30, 2022, we made an additional payment related to our divestiture of our Performance Chemicals business representing the final adjustments to the sale price of $3.7 million.

Net cash used in financing activities was $82.6 million for the nine months ended September 30, 2022, compared to net cash used of $963.5 million during the same period in 2021.

Net cash used in financing activities was primarily driven by $6.8 million of debt repayment charges, repurchases of common stock of $73.7 million, and repayments of financing obligation principal of $1.8 million for the nine months ended September 30, 2022.

During the nine months ended September 30, 2021, we used the proceeds from the divestiture of the Performance Chemicals business to repay approximately $526.4 million of outstanding debt, pay a special dividend of $435.6 million and pay a redemption premium on our debt of $8.5 million.

September 30,

2022 December 31,

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Total long-term debt, excluding current portion $ 867.7 $ 872.8

As of June 30, 2022, our total debt was $891.0 million, excluding the original issue discount of $8.1 million and deferred financing fees of $4.5 million for our senior secured credit facilities.

Our net debt as of June 30, 2022 was $739.8 million, including cash and cash equivalents of $151.2 million.

As of September 30, 2022, our total debt was $888.8 million, excluding the original issue discount of $7.8 million and deferred financing fees of $4.3 million for our senior secured credit facilities.

Our net debt as of September 30, 2022 was $767.4 million, including cash and cash equivalents of $121.4 million.

We may seek, subject to market conditions and other factors, opportunities to repurchase, refinance or otherwise reprice our debt.

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These capital expenditures represent our “book” capital expenditures for which the company has recorded, but not necessarily paid for the capital expenditures.

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(in millions)

3 unchanged sentences

Capital expenditures remained at a level sufficient for required maintenance and certain expansion growth initiatives during these periods.

Maintenance capital expenditures were lower in the six months ended June 30, 2022 compared to the six months ended June 30, 2021 due to lower turnaround expenditures.

Growth capital expenditures were lower in the six months ended June 30, 2022 compared to the six months ended June 30, 2021, due to the completion of several expansion projects in 2021.

Maintenance capital expenditures were slightly higher in the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 due to higher turnaround expenditures.

Growth capital expenditures were slightly lower in the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021, due to the completion of several expansion projects in 2021.

Critical Accounting Policies and Estimates

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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 2. Management’s Discussion and Analysis