What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-08-08 compared with 2023-05-05 · 230 added, 136 removed, 549 unchanged (40% of the section changed)

4 unchanged sentences

Three months ended

June 30, Six months ended

2023 2022 2023 2022

Sales $ 184,110 $ 225,172 $ 344,984 $ 404,886

6 unchanged sentences

Interest expense, net 9,168 8,888 19,000 17,338

Other (income) expense, net ( 427 ) 140

(Loss) income before income taxes ( 524 ) 13,595

Other expense, net 610 485 182 625

Income before income taxes 34,909 26,542 34,385 40,137

Provision for income taxes 8,787 7,297 9,734 13,017

Net (loss) income attributable to Ecovyst Inc.

$ ( 1,471 ) $ 7,875

Net (loss) income per share:

Basic (loss) income per share $ ( 0.01 ) $ 0.06

Diluted (loss) income per share $ ( 0.01 ) $ 0.06

Net income $ 26,122 $ 19,245 $ 24,651 $ 27,120

Net income per share:

Basic income per share $ 0.22 $ 0.14 $ 0.20 $ 0.20

Diluted income per share $ 0.22 $ 0.14 $ 0.20 $ 0.19

Weighted average shares outstanding:

6 unchanged sentences

Three months ended

Net (loss) income attributable to Ecovyst Inc.

June 30, Six months ended

2023 2022 2023 2022

Net income $ 26,122 $ 19,245 $ 24,651 $ 27,120

Other comprehensive income (loss), net of tax:

Pension and postretirement benefits 465 ( 39 ) 441 ( 78 )

Net (loss) gain from hedging activities ( 7,920 ) 13,722

Net gain (loss) from hedging activities 5,399 4,757 ( 2,521 ) 18,479

Foreign currency translation 828 ( 7,994 ) 3,013 ( 10,299 )

Total other comprehensive (loss) income ( 5,759 ) 11,378

Comprehensive (loss) income attributable to Ecovyst Inc.

$ ( 7,230 ) $ 19,253

Total other comprehensive income (loss) 6,692 ( 3,276 ) 933 8,102

Comprehensive income $ 32,814 $ 15,969 $ 25,584 $ 35,222

See accompanying notes to condensed consolidated financial statements.

29 unchanged sentences

authorized shares 450,000,000 ;

issued shares 140,604,563 and 139,571,272 on March 31, 2023 and December 31, 2022, respectively;

outstanding shares 120,124,260 and 122,186,238 on March 31, 2023 and December 31, 2022, respectively

issued shares 140,744,045 and 139,571,272 on June 30, 2023 and December 31, 2022, respectively;

outstanding shares 116,263,742 and 122,186,238 on June 30, 2023 and December 31, 2022, respectively

Preferred stock ($ 0.01 par);

authorized shares 50,000,000 ;

no shares issued or outstanding on March 31, 2023 and December 31, 2022

no shares issued or outstanding on June 30, 2023 and December 31, 2022

Additional paid-in capital 1,101,285 1,091,475

1 unchanged sentence

Treasury stock, at cost;

shares 20,480,303 and 17,385,034 on March 31, 2023 and December 31, 2022, respectively

shares 24,480,303 and 17,385,034 on June 30, 2023 and December 31, 2022, respectively

( 224,494 ) ( 149,624 )

18 unchanged sentences

Balance, March 31, 2023 $ 1,406 $ 1,096,333 $ ( 243,481 ) $ ( 180,340 ) $ 233 $ 674,151

Net income — — 26,122 — — 26,122

Other comprehensive income — — — — 6,692 6,692

Repurchases of common shares — — — ( 43,524 ) — ( 43,524 )

Excise tax on repurchases of common shares — — — ( 630 ) — ( 630 )

Stock compensation expense — 4,739 — — — 4,739

Shares issued under equity incentive plan, net of forfeitures 1 213 — — — 214

Balance, June 30, 2023 $ 1,407 $ 1,101,285 $ ( 217,359 ) $ ( 224,494 ) $ 6,925 $ 667,764

stock Additional

10 unchanged sentences

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

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

Three months ended

Six months ended

Cash flows from operating activities:

Net (loss) income attributable to Ecovyst Inc.

$ ( 1,471 ) $ 7,875

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

Net income $ 24,651 $ 27,120

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

Depreciation 34,147 32,153

2 unchanged sentences

Foreign currency exchange (gain) loss ( 632 ) 1,148

Pension and postretirement healthcare benefit 8 ( 553 )

Deferred income tax provision 1,283 11,285

17 unchanged sentences

Cash flows from financing activities:

Draw down of revolving credit facilities 14,500 —

Repayments of revolving credit facilities ( 14,500 ) —

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

29 unchanged sentences

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

Correction of an Error

During the preparation of the condensed consolidated financial statements for the period ended June 30, 2023, the Company identified a presentation error in the components of accumulated other comprehensive income (loss) that originated in the year ended December 31, 2021 and remained uncorrected through the quarter ended March 31, 2023.

As a result, the presentation of accumulated other comprehensive income (loss) in Note 5 was corrected by revising the opening balances as follows:

Defined benefit and other postretirement plans Net gain (loss) from hedging activities Foreign currency translation

As reported, December 31, 2021 $ 14,808 $ 2,254 $ ( 22,854 )

Correction to opening balances ( 12,640 ) ( 1,964 ) 14,604

Revised, December 31, 2021 $ 2,168 $ 290 $ ( 8,250 )

As reported, December 31, 2022 $ 12,132 $ 26,636 $ ( 32,776 )

Correction to opening balances ( 12,640 ) ( 1,964 ) 14,604

Revised, December 31, 2022 $ ( 508 ) $ 24,672 $ ( 18,172 )

This classification error within accumulated other comprehensive income (loss) did not impact total accumulated other comprehensive income (loss) for the periods included in these condensed consolidated financial statements.

Additionally, there was no impact on the condensed consolidated statements of income and other comprehensive income (loss), condensed consolidated balance sheets and condensed consolidated statements of cash flows for the periods included in these condensed consolidated financial statements.

The Company assessed the materiality of this presentation error and concluded it was not material to the Company’s previously issued financial statements.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Net income for the six months ended June 30, 2023 increased by $ 1,390 from adjustments for the Company’s interest rate cap agreements related to prior year interest expense amortization.

The impact of this adjustment was not material to the consolidated financial statements for any prior quarterly or annual periods, and is not expected to be material to the current annual period.

New Accounting Standards:

6 unchanged sentences

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

In February 2023, the Company amended the 2021 Term Loan Facility, the ABL Facility and all existing interest rate caps agreements to replace LIBOR with a secured overnight financing rate (“SOFR”) as the benchmark interest rate.

See Notes 11 and 12 to these condensed consolidated financial statements for additional information.

In February 2023, the Company amended the 2021 Term Loan Facility (as defined below), the ABL Facility (as defined below) and all existing interest rate caps agreements to replace LIBOR with a secured overnight financing rate (“SOFR”) as the benchmark interest rate.

See Note 11 and Note 12 to these condensed consolidated financial statements for additional information.

The Company utilized the practical expedients under the guidance with respect to the transition of its debt facilities and interest rate hedging arrangements to SOFR, with no impact to its condensed consolidated financial statements.

26 unchanged sentences

• Sulfuric derivatives for nylon production

The following tables disaggregate the Company’s sales, by segment and end uses, for the three months ended March 31, 2023 and 2022, respectively:

Three months ended March 31, 2023

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 uses, for the three and six months ended June 30, 2023 and 2022, respectively:

Three months ended June 30, 2023

Ecoservices Catalyst Technologies (2)

5 unchanged sentences

Total segment sales $ 158,065 $ 26,045 $ 184,110

Three months ended March 31, 2022

Three months ended June 30, 2022

Ecoservices Catalyst Technologies (2)

5 unchanged sentences

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

Six months ended June 30, 2023

Ecoservices Catalyst Technologies (2)

Clean fuels, emission control & other $ 13,166 $ — $ 13,166

Polymers & engineered plastics — 49,179 49,179

Regeneration and treatment services (1)

186,838 — 186,838

Industrial, mining & automotive 95,801 — 95,801

Total segment sales $ 295,805 $ 49,179 $ 344,984

Six months ended June 30, 2022

Ecoservices Catalyst Technologies (2)

Clean fuels, emission control & other $ 14,482 $ — $ 14,482

Polymers & engineered plastics — 57,858 57,858

Regeneration and treatment services (1)

161,116 — 161,116

Industrial, mining & automotive 171,430 — 171,430

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

(1) As described in Note 1 to these condensed consolidated financial statements, the Company experiences seasonal s ales fluctuations to customers in the regeneration services product group.

21 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 tables present information about the Company’s assets and liabilities that were measured at fair value on a recurring basis as of March 31, 2023 and December 31, 2022, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.

The following tables present information about the Company’s assets and liabilities that were measured at fair value on a recurring basis as of June 30, 2023 and December 31, 2022, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.

2023 Quoted Prices in

29 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.

As of March 31, 2023, th e Company had interest rate c aps th at were fair valued using Level 2 inputs.

As of June 30, 2023, 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 table presents the tax effects of each component of other comprehensive (loss) income for the three months ended March 31, 2023 and 2022, respectively:

Three months ended March 31,

The following table presents the tax effects of each component of other comprehensive income (loss) for the three and six months ended June 30, 2023 and 2022, respectively:

Three months ended June 30,

amount Tax benefit/

3 unchanged sentences

Defined benefit and other postretirement plans:

Amortization of net loss $ ( 1 ) $ — $ ( 1 ) $ 1 $ — $ 1

Amortization of prior service credit ( 31 ) 8 ( 23 ) ( 53 ) 13 ( 40 )

Net prior service credit (cost) $ ( 31 ) $ 7 $ ( 24 ) $ ( 52 ) $ 13 $ ( 39 )

Net gain (loss) 651 ( 162 ) 489 — — —

Benefit plans, net 620 ( 155 ) 465 ( 52 ) 13 ( 39 )

Net (loss) gain from hedging activities ( 10,303 ) 2,383 ( 7,920 ) 18,296 ( 4,574 ) 13,722

Net gain (loss) from hedging activities 7,059 ( 1,660 ) 5,399 6,343 ( 1,586 ) 4,757

Foreign currency translation 828 — 828 ( 7,994 ) — ( 7,994 )

Other comprehensive (loss) income $ ( 8,150 ) $ 2,391 $ ( 5,759 ) $ 15,939 $ ( 4,561 ) $ 11,378

Other comprehensive income (loss) $ 8,507 $ ( 1,815 ) $ 6,692 $ ( 1,703 ) $ ( 1,573 ) $ ( 3,276 )

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:

Net prior service credit (cost) $ ( 62 ) $ 15 $ ( 47 ) $ ( 105 ) $ 26 $ ( 79 )

Net gain (loss) 650 ( 162 ) 488 1 — 1

Benefit plans, net 588 ( 147 ) 441 ( 104 ) 26 ( 78 )

Net gain (loss) from hedging activities ( 3,244 ) 723 ( 2,521 ) 24,639 ( 6,160 ) 18,479

Foreign currency translation 3,013 — 3,013 ( 10,299 ) — ( 10,299 )

Other comprehensive income (loss) $ 357 $ 576 $ 933 $ 14,236 $ ( 6,134 ) $ 8,102

AND SUBSIDIARIES

1 unchanged sentence

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

The following table presents the changes in accumulated other comprehensive income, net of tax, by component for the three months ended March 31, 2023 and 2022, respectively:

The following table presents the changes in accumulated other comprehensive income, net of tax, by component for the six months ended June 30, 2023 and 2022, respectively:

Defined benefit

4 unchanged sentences

December 31, 2022 $ ( 508 ) $ 24,672 $ ( 18,172 ) $ 5,992

Other comprehensive (loss) income before reclassifications ( 48 ) ( 7,394 ) 2,185 ( 5,257 )

Other comprehensive income (loss) before reclassifications 412 6,392 3,013 9,817

Amounts reclassified from accumulated other comprehensive income (1)

29 ( 8,913 ) — ( 8,884 )

Net current period other comprehensive (loss) income ( 24 ) ( 7,920 ) 2,185 ( 5,759 )

March 31, 2023 $ 12,108 $ 18,716 $ ( 30,591 ) $ 233

Net current period other comprehensive income (loss) 441 ( 2,521 ) 3,013 933

June 30, 2023 $ ( 67 ) $ 22,151 $ ( 15,159 ) $ 6,925

December 31, 2021 $ 2,168 $ 290 $ ( 8,250 ) $ ( 5,792 )

1 unchanged sentence

Amounts reclassified from accumulated other comprehensive income (1)

Net current period other comprehensive (loss) income ( 39 ) 13,722 ( 2,305 ) 11,378

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

Net current period other comprehensive income (loss) ( 78 ) 18,479 ( 10,299 ) 8,102

June 30, 2022 $ 2,090 $ 18,769 $ ( 18,549 ) $ 2,310

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

Amounts in parentheses indicate debits.

The following table presents the reclassifications out of accumulated other comprehensive income for the three months ended March 31, 2023 and 2022, respectively:

The following table presents the reclassifications out of accumulated other comprehensive income for the three and six months ended June 30, 2023 and 2022, respectively:

Details about Accumulated Other Comprehensive

4 unchanged sentences

Three months ended

June 30, Six months ended

2023 2022 2023 2022

Amortization of defined benefit and other postretirement items:

Prior service credit $ ( 31 ) $ ( 53 ) Other expense (2)

Actuarial gains ( 1 ) 1 Other (expense) income (2)

Net prior service (credit) cost $ ( 31 ) $ ( 53 ) $ ( 62 ) $ ( 105 ) Other expense (2)

Net (gain) loss 29 1 28 2 Other (expense) income (2)

( 2 ) ( 52 ) ( 34 ) ( 103 ) Total before tax

13 unchanged sentences

2022 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 four -year period from the date of approval.

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.

During the three months ended March 31, 2023, in connection with a secondary offering of the Company’s common stock in March 2023 , the Company repurchased 3,000,000 shares of its common stock sold in the offering from the underwriter at a price of $ 9.95 per share concurrently with the closing of the offering, for a total of $ 29,850 .

As of March 31, 2023, $ 283,448 was available for additional share repurchases under the program.

On April 27, 2022, the Board approved a stock repurchase program that authorized the Company to purchase up to $ 450,000 of the Company’s common stock over the four -year period from the date of approval.

Under the plan, the Company is permitted to repurchase shares from time to time for cash in open market transactions or in privately negotiated transactions in accordance with applicable federal securities laws, with the Company determining the timing and the amount of any repurchases based on its evaluation of market conditions, share price and other factors.

During the six months ended June 30, 2023, in connection with secondary offerings of the Company’s common stock in March and May 2023 , the Company repurchased 7,000,000 shares of its common stock sold in the offerings from the underwriters at a weighted average price of $ 10.48 per share concurrently with the closing of the offerings, for a total of $ 73,373 , excluding accrued excise tax.

As of June 30, 2023, $ 239,925 was available for additional share repurchases under the program.

During the six months ended June 30, 2023, the Company accrued excise tax of $ 630 related to these repurchases, net of shares issued under the Company’s equity incentive program (see Note 17 to these condensed consolidated financial statements).

This amount is included in accrued liabilities in the condensed consolidated balance sheet and is treated by the Company as a cost of the treasury stock transactions in equity.

During the 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).

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.

There were 95,269 and 32,058 shares delivered to the Company to cover tax payments for the three months ended March 31, 2023 and 2022, respectively and the fair value of those shares withheld were $ 866 and $ 332 for the three months ended March 31, 2023 and 2022, respectively.

The change in the carrying amount of goodwill for the three months ended March 31, 2023 is summarized as follows:

There were 95,269 and 32,058 shares delivered to the Company to cover tax payments for the six months ended June 30, 2023 and 2022, respectively and the fair value of those shares withheld were $ 866 and $ 332 for the six months ended June 30, 2023 and 2022, respectively.

The change in the carrying amount of goodwill for the six months ended June 30, 2023 is summarized as follows:

Ecoservices Catalyst Technologies Total

1 unchanged sentence

Foreign exchange impact — 1,057 1,057

Balance as of March 31, 2023 $ 326,589 $ 77,173 $ 403,762

Balance as of June 30, 2023 $ 326,589 $ 77,631 $ 404,220

Other Operating Expense, Net:

1 unchanged sentence

Three months ended

June 30, Six months ended

2023 2022 2023 2022

Amortization expense $ 2,643 $ 2,644 $ 5,280 $ 5,299

20 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, 2023 are as follows:

Affiliated companies accounted for on the equity basis as of June 30, 2023 are as follows:

Company Country Percent

3 unchanged sentences

Three months ended

June 30, Six months ended

2023 2022 2023 2022

Sales $ 99,188 $ 84,663 $ 155,085 $ 151,346

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, 2023 and December 31, 2022 includes net purchase accounting fair value adjustments of $ 229,416 and $ 231,017 , 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 $ 1,601 of amortization expense related to purchase accounting fair value adjustments for the three months ended March 31, 2023 and 2022, respectively.

The Company’s investments in affiliated companies balance as of June 30, 2023 and December 31, 2022 includes net purchase accounting fair value adjustments of $ 227,815 and $ 231,017 , 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, 2023, respectively.

AND SUBSIDIARIES

11 unchanged sentences

$ 587,204 $ 584,889

Depreciation expense was $ 16,692 and $ 16,011 for the three months ended March 31, 2023 and 2022, respectively.

Depreciation expense was $ 17,455 and $ 34,147 for the three and six months ended June 30, 2023, respectively.

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

Long-term Debt:

11 unchanged sentences

Following this amendment, the 2021 Term Loan Facility bears interest at an adjusted term SOFR, which includes a credit spread adjustment of 10 basis points (with a 0.50 % minimum floor) plus 2.75 % per annum (or, depending on the Company’s first lien net leverage ratio, 2.50 %).

The interest rate on the 2021 Term Loan Facility was 7.325 % as of March 31, 2023.

The interest rate on the 2021 Term Loan Facility was 7.65 % as of June 30, 2023.

Also in February 2023, the Company amended its senior secured asset-based revolving credit facility (the “ABL Facility”) to replace LIBOR with SOFR as the benchmark interest rate.

Following this amendment, the borrowings under the ABL Facility bear interest at a rate equal to an adjusted term SOFR rate or the base rate, which includes a credit spread adjustment of 10 basis points, plus a margin of between 1.25 % to 1.75 % or 0.25 % to 0.75 %, respectively.

The interest rate on the ABL Facility was 8.50 % as of March 31, 2023.

The interest rate on the ABL Facility was 8.50 % as of June 30, 2023.

Fair Value of Debt

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, 2023 and December 31, 2022, the fair value of the senior secured term loan facility was $ 876,513 and $ 870,986 , respectively.

As of June 30, 2023 and December 31, 2022, the fair value of the senior secured term loan facility was $ 878,693 and $ 870,986 , respectively.

The fair value is classified as Level 2 based upon the fair value hierarchy (see Note 4 to these condensed consolidated financial statements for further information on fair value measurements).

22 unchanged sentences

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

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

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

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

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

In July 2020, the Company entered into an additional interest rate cap agreement to mitigate interest rate volatility from September 2020 to August 2023, with a cap rate of 1.00 % on $ 400,000 of notional variable-rate debt and a $ 416 premium annuitized during the effective period.

The cap rate in effect at March 31, 2023 was 1.00 %.

In January 2022, the Company entered into two new forward starting interest rate cap agreements, with a cap rate of 1.00 % on $ 250,000 of notional variable-rate debt each and a $ 9,953 of total premium annuitized during the effective period.

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

The cap rate for the interest rate cap in effect at March 31, 2023 was 1.00 %.

In November 2022, the Company entered into a new forward starting interest rate cap agreement to mitigate interest rate volatility from August 2023 through July 2024, with a cap rate of 1.00 % on $ 150,000 of notional variable-rate debt and mitigate interest rate volatility from August 2024 through July 2026, with a cap rate of 1.00 % on $ 175,000 of notional variable-rate debt.

The $ 150,000 of notional variable-debt has $ 5,372 premium annuitized during the effective period and the $ 175,000 of notional variable-rate debt has $ 12,445 premium annuitized during the effective period.

In February 2023, the Company amended all interest rate cap agreements to replace LIBOR with SOFR as the benchmark interest rate, with all other terms of the agreements remaining the same.

The following table provides a summary of the Company’s interest rate cap agreements:

Financial Instrument Number of Instruments In Effect as of June 30, 2023

Notional Amount of Instruments in Effect Annuitized Premium of Instruments in Effect

Interest rate cap 5 2 $ 650,000 $ 3,589

The notional amounts of the two interest rate cap agreements in effect at June 30, 2023 are $ 400,000 and $ 250,000 .

The Company entered into the $ 400,000 interest rate cap agreement to mitigate interest rate volatility from September 2020 to August 2023 and the $ 250,000 interest rate cap to mitigate interest rate volatility from August 2022 to October 2024.

The cap rate in effect at June 30, 2023 for both agreements was 1.00 %.

The Company has also entered into three forward starting interest rate cap agreements to mitigate interest volatility from August 2023 to October 2026.

In February 2023, the Company amended all existing interest rate cap agreements to replace LIBOR with SOFR as the benchmark interest rate, with all other terms of the agreements remaining the same.

This amendment changed the previously annuitized premiums on the existing interest rate cap agreements.

This resulted in a reduction in the premium annuitized on the $ 400,000 of notional variable-debt of $ 172 , a reduction in the premium annuitized on the $ 250,000 of notional variable-debt of $ 2,022 , a reduction in the premium annuitized on the $ 150,000 of notional variable-debt of $ 281 and a reduction in the premium annuitized on the $ 175,000 of notional variable-debt of $ 651 .

AND SUBSIDIARIES

1 unchanged sentence

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

In May 2023, the Company entered into two new forward starting interest rate cap agreements to mitigate interest rate volatility from November 2024 through October 2025, with a cap rate of 1.00 % on $ 200,000 of notional variable-rate debt and mitigate interest rate volatility from November 2025 through October 2026, with a cap rate of 1.00 % on $ 450,000 of notional variable-rate debt.

The $ 200,000 of notional variable-debt has $ 4,258 premium annuitized during the effective period and the $ 450,000 of notional variable-rate debt has $ 9,555 premium annuitized during the effective period.

The fair values of derivative instruments held as of March 31, 2023 and December 31, 2022, respectively are shown below:

Balance sheet location March 31,

The fair values of derivative instruments held as of June 30, 2023 and December 31, 2022, respectively are shown below:

Balance sheet location June 30,

2023 December 31,

8 unchanged sentences

Total derivative liabilities $ 1,197 $ 2,071

The following table shows the effect of the Company’s derivative instruments designated as cash flow hedges on AOCI for the three months ended March 31, 2023 and 2022, respectively:

Three months ended March 31,

The following table shows the effect of the Company’s derivative instruments designated as cash flow hedges on AOCI for the three and six months ended June 30, 2023 and 2022, respectively:

Three months ended June 30,

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 $ 18,246 $ 11,187 $ 5,985 $ ( 359 )

The following table shows the effect of the Company’s cash flow hedge accounting on the condensed consolidated statements of income for the three months ended March 31, 2023 and 2022, respectively:

Three months ended March 31,

Six months ended June 30,

Interest rate caps Interest (expense) income $ 8,641 $ 11,885 $ 24,041 $ ( 598 )

The following table shows 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, 2023 and 2022, respectively:

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

Three months ended

June 30, Six months ended

2023 2022 2023 2022

Total amounts of income and expense line items presented in the statement of income in which the effects of cash flow hedges are recorded in interest (expense) income $ ( 9,168 ) $ ( 8,888 ) $ ( 19,000 ) $ ( 17,338 )

2 unchanged sentences

Interest contracts:

Amount of gain (loss) reclassified from AOCI into income 698 ( 683 )

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 $ 7,652 as of March 31, 2023.

Amount of loss reclassified from AOCI into income 11,187 ( 359 ) 11,885 ( 598 )

AND SUBSIDIARIES

1 unchanged sentence

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

Income Taxes:

The effective income tax rate for the three months ended March 31, 2023 was ( 180.7 )% compared to 42.1 % for the three months ended March 31, 2022.

The Company’s effective income tax rate has fluctuated primarily due to the discrete impact related to a shortfall of stock compensation tax deduction which outweighed the tax benefit from the pre-tax loss during the quarter.

The effective income tax rate for the three months ended June 30, 2023 was 25.2 %, compared to 27.5 % for the three months ended June 30, 2022.

The effective income tax rate for the six months ended June 30, 2023 was 28.3 %, compared to 32.4 % for the six months ended June 30, 2022.

The Company’s effective income tax rate fluctuated primarily due to a reduced discrete tax impact related to a stock compensation shortfall and a discrete tax benefit associated with state and local tax law changes.

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, 2023 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 recording of accrued penalties and interest associated with historical uncertain tax positions.

federal statutory income tax rate and the Company’s effective income tax rate for the six months ended June 30, 2023 was mainly due to state and local taxes, a discrete shortfall tax expense related to stock compensation, a discrete tax expense associated with the recording of accrued penalties and interest associated with historical uncertain tax positions, and a discrete tax benefit connected to state and local tax law changes.

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.

Benefit Plans:

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Three months ended

June 30, Six months ended

2023 2022 2023 2022

Interest cost $ 871 $ 604 $ 1,742 $ 1,207

Expected return on plan assets ( 837 ) ( 1,110 ) ( 1,674 ) ( 2,219 )

Settlement loss 29 — 29 —

Net periodic expense (benefit) $ 63 $ ( 506 ) $ 97 $ ( 1,012 )

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Three months ended

June 30, Six months ended

2023 2022 2023 2022

Interest cost $ 6 $ 5 $ 12 $ 9

Amortization of prior service credit ( 31 ) ( 53 ) ( 62 ) ( 105 )

Amortization of net loss ( 1 ) 1

Amortization of net (gain) loss — 1 ( 1 ) 2

Net periodic benefit $ ( 25 ) $ ( 47 ) $ ( 51 ) $ ( 94 )

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Three months ended

June 30, Six months ended

2023 2022 2023 2022

Ecoservices $ 158,065 $ 192,968 $ 295,805 $ 347,028

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joint ventures (collectively, the “Zeolyst Joint Venture”) accounted for using the equity method (see Note 9 to these condensed consolidated financial statements for further information).

The proportionate share of sales excluded is $ 22,074 and $ 28,977 for the three months ended March 31, 2023 and 2022, respectively.

The proportionate share of sales excluded is $ 44,689 and $ 66,763 for the three and six months ended June 30, 2023, respectively.

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

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

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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 $ 5,436 for the three months ended March 31, 2023, which includes $ 226 of equity in net income plus $ 1,601 of amortization of investment in affiliate step-up and $ 3,609 of joint venture depreciation, amortization and interest.

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.

(3) The Adjusted EBITDA from the Zeolyst Joint Venture included in the Catalyst Technologies segment is $ 16,194 for the three months ended June 30, 2023, which includes $ 11,382 of equity in net income plus $ 1,601 of amortization of investment in affiliate step-up and $ 3,212 of joint venture depreciation, amortization and interest.

The Adjusted EBITDA from the Zeolyst Joint Venture included in the Catalyst Technologies segment is $ 21,630 for the six months ended June 30, 2023, which includes $ 11,608 of equity in net income plus $ 3,201 of amortization of investment in affiliate step-up and $ 6,821 of joint venture depreciation, amortization and interest.

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 $ 1,601 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.

AND SUBSIDIARIES

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

A reconciliation of (loss) income before income taxes to Adjusted EBITDA is as follows:

A reconciliation of income before income taxes to Adjusted EBITDA is as follows:

Three months ended

Reconciliation of (loss) income before income taxes to Adjusted EBITDA

(Loss) income before income taxes $ ( 524 ) $ 13,595

June 30, Six months ended

2023 2022 2023 2022

Reconciliation of income before income taxes to Adjusted EBITDA

Income before income taxes $ 34,909 $ 26,542 $ 34,385 $ 40,137

Interest expense, net 9,168 8,888 19,000 17,338

11 unchanged sentences

Adjusted EBITDA from reportable segments $ 85,507 $ 81,413 $ 135,283 $ 147,729

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, 2023, 9,158,811 shares of common stock were available for issuance under the plan.

At June 30, 2023, 9,404,927 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, 2023, the Company granted 1,104,690 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, 2023, 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 value of the restricted stock units granted during the three months ended March 31, 2023 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, 2023, the Company granted 1,104,690 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, 2023, 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 value of the restricted stock units granted during the six months ended June 30, 2023 was based on the average of the high and low trading prices of the Company’s common stock on the NYSE on the preceding trading day, in accordance with the Company’s policy for valuing such awards.

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

Performance Stock Units

During the three months ended March 31, 2023, the Company granted 703,440 performance stock units (at target) under its equity incentive plan.

The performance stock units granted during the three months ended March 31, 2023 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, 2023, the Company granted 703,440 performance stock units (at target) under its equity incentive plan.

The performance stock units granted during the six months ended June 30, 2023 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, 2023 through December 31, 2025.

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The performance stock units, to the extent earned, will vest on the date the Compensation Committee of the Company’s Board of Directors (“Compensation Committee”) certifies the achievement of the performance metric for the three -year period ending December 31, 2025, which will occur subsequent to the end of the performance period and after the Company files its annual consolidated financial statements for the year ending December 31, 2025.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

The Company used a Monte Carlo simulation to estimate the $ 12.28 weighted average fair value of the awards granted during the three months ended March 31, 2023, with the following weighted average assumptions:

The Company used a Monte Carlo simulation to estimate the $ 12.28 weighted average fair value of the awards granted during the six months ended June 30, 2023, with the following weighted average assumptions:

Expected dividend yield — %

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Expected term (in years) 2.96

During the three months ended March 31, 2023, the Compensation Committee certified the achievement of the performance metrics for the three-year period ended December 31, 2022, related to the performance stock units (“PSUs”) granted during the year ended December 31, 2020.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

In March 2023, the Compensation Committee certified the achievement of the performance metrics for the three-year period ended December 31, 2022, related to the performance stock units (“PSUs”) granted during the year ended December 31, 2020.

Fifty percent of the target number of such PSUs could be earned depending on performance against a Company-specific financial performance target, and 50 % of the target number of such PSUs could be earned depending on performance against a TSR goal, subject to the provision of service through the vesting date of the awards.

The Company-specific financial performance target and the TSR goal were measured independently of each other, and each PSU award recipient was eligible to earn a percentage of the target number of shares granted to the recipient, ranging from zero to 200 %.

The awards vested during the three months ended March 31, 2023 as follows:

The awards vested during the six months ended June 30, 2023 as follows:

53.3 % of target with respect to the portion of the PSU award subject to the Company-specific financial measure, and 56.0 % of target with respect to the portion of the PSU award subject to the TSR goal.

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, 2023:

The following table summarizes the activity for the Company’s restricted stock units and performance stock units for the six months ended June 30, 2023:

Restricted Stock Units Performance Stock Units

5 unchanged sentences

Forfeited ( 165,116 ) $ 10.92 ( 183,864 ) $ 19.50

Nonvested as of March 31, 2023 2,587,191 $ 10.55 958,904 (1) $ 11.87

Nonvested as of June 30, 2023 2,502,791 $ 10.57 958,904 (1) $ 11.87

(1) Based on target.

During the three months ended March 31, 2023, the Company also granted 5,081 restricted stock awards with a weighted average grant date fair value of $ 9.84 per share that immediately vested.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

During the six months ended June 30, 2023, the Company also granted 5,081 restricted stock awards with a weighted average grant date fair value of $ 9.84 per share that immediately vested.

Stock-Based Compensation Expense

For the three months ended March 31, 2023 and 2022, stock-based compensation expense for the Company was $ 4,068 and $ 7,294 , respectively.

The associated income tax benefit based on the applicable statutory rate recognized in the condensed consolidated statements of income for the three months ended March 31, 2023 and 2022 was $ 973 and $ 1,788 , respectively.

For the three months ended June 30, 2023 and 2022, stock-based compensation expense for the Company was $ 5,002 and $ 5,385 , respectively.

The associated income tax benefit recognized in the statements of income for the three months ended June 30, 2023 and 2022 was $ 1,181 and $ 1,321 , respectively.

For the six months ended June 30, 2023 and 2022, stock-based compensation expense for the Company was $ 9,070 and $ 12,679 , respectively.

The associated income tax benefit based on the applicable statutory rate recognized in the condensed consolidated statements of income for the six months ended June 30, 2023 and 2022 was $ 2,154 and $ 3,109 , respectively.

Performance-based restricted stock awards and performance-based stock options would vest only on the achievement with respect to shares of our common stock of an average closing trading price equal or exceeding, in any ten trading-day period, the lowest amount which, when multiplied by the number of shares of our common stock then held by investment funds affiliated with CCMP Capital Advisors, LP (“CCMP”) and added to the aggregate net proceeds received by investment funds affiliated with CCMP with respect to their shares of capital stock of the Company, would yield a quotient of equal or greater than two when divided by the equity investment in the Company by investment funds affiliated with CCMP (such quotient, the “MOI Target”).

1 unchanged sentence

No expense had previously been recognized for either the restricted stock awards or the stock options subject to this performance condition, as the condition was not achieved nor was previously considered probable of achievement.

As of March 31, 2023, unrecognized compensation cost was $ 19,668 for restricted stock units and $ 8,827 for performance stock units considered probable of vesting.

The weighted-average period over which these costs are expected to be recognized at March 31, 2023 was 1.62 years for the restricted stock units and 2.62 years for the performance stock units.

In addition to the forfeitures described above, 241,316 vested stock options expired unexercised during the three months ended June 30, 2023.

Cash proceeds received by the Company from the exercise of stock options were not material for the six months ended June 30, 2023.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

As of June 30, 2023, unrecognized compensation cost was $ 15,433 for restricted stock units and $ 8,013 for performance stock units considered probable of vesting.

The weighted-average period over which these costs are expected to be recognized at June 30, 2023 was 1.80 years for the restricted stock units and 2.37 years for the performance stock units.

Earnings per Share:

Basic earnings per share is calculated as income (loss) available to common stockholders, divided by the weighted average number of common shares outstanding during the period.

Basic earnings per share is calculated as income available to common stockholders, divided by the weighted average number of common shares outstanding during the period.

The weighted average number of common shares outstanding during the period for the computation of basic earnings per share excludes restricted stock awards that have legally been issued but are nonvested during the period, as the sale of these shares is prohibited pending satisfaction of certain vesting conditions by the award recipients in order to earn the rights to the shares.

Diluted earnings per share is calculated as income (loss) available to common stockholders, divided by the weighted average number of common and potential common shares outstanding during the period, if dilutive.

Diluted earnings per share is calculated as income available to common stockholders, divided by the weighted average number of common and potential common shares outstanding during the period, if dilutive.

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.

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Three months ended

June 30, Six months ended

2023 2022 2023 2022

Weighted average shares outstanding – Basic 118,651,402 138,035,764 120,335,414 137,876,185

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Weighted average shares outstanding – Diluted 119,920,742 139,149,560 121,831,942 139,175,659

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

Basic and diluted income per share are calculated as follows:

Three months ended

Net (loss) income attributable to Ecovyst Inc.

June 30, Six months ended

2023 2022 2023 2022

Net income $ 26,122 $ 19,245 $ 24,651 $ 27,120

Weighted average shares outstanding – Basic 118,651,402 138,035,764 120,335,414 137,876,185

Weighted average shares outstanding – Diluted 119,920,742 139,149,560 121,831,942 139,175,659

Net (loss) income per share:

Basic (loss) income per share $ ( 0.01 ) $ 0.06

Diluted (loss) income per share $ ( 0.01 ) $ 0.06

Net income per share:

Basic income per share $ 0.22 $ 0.14 $ 0.20 $ 0.20

Diluted income per share $ 0.22 $ 0.14 $ 0.20 $ 0.19

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

2023 2022 2023 2022

Restricted stock awards with performance only targets not achieved — 603,993 99,495 608,921

2 unchanged sentences

Anti-dilutive stock options 520,757 807,301 607,783 807,301

695,777 807,301

(1) Does not include 1,044,098 of restricted stock units and performance stock units, and 352,771 of stock options, for the three months ended March 31, 2023 due to the net loss attributable to Ecovyst Inc.

for the period.

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

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These stock options and anti-dilutive awards are not included in the dilution calculation, as their inclusion would have the effect of increasing diluted income per share or reducing diluted loss per share.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Supplemental Cash Flow Information:

T he following table presents supplemental cash flow information for the Company:

Three months ended

The following table presents supplemental cash flow information for the Company:

Six months ended

Cash paid during the period for:

Income taxes, net of refunds $ 9,955 $ 19,843

Interest 15,185 8,363

19,391 15,818

Non-cash investing activity:

Capital expenditures acquired on account but unpaid as of the period end 605 2,943

Non-cash financing activity:

Accrued share repurchases (Note 5)

Accrued excise tax on share repurchases (Note 5)

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

Operating leases 6,202 4,370

(1) Cash paid for interest is shown net of capitalized interest and includes the cash received or paid on the Company’s interest rate cap agreements designated as cash flow hedges for the periods presented (see Note 12 to these condensed consolidated financial statements for details).

Subsequent Events:

In May 2023, the Company entered into two new forward starting interest rate cap agreements for $ 200,000 of notional variable-debt and $ 450,000 of notional variable-debt .

See Note 12 to these condensed consolidated financial statements for additional details.

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

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

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

What changed 10-Q

Item 1. Financial Statements