What changed in this filing

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Item 1. Financial Statements

2023-11-03 compared with 2023-08-08 · 162 added, 112 removed, 667 unchanged (29% of the section changed)

4 unchanged sentences

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

2023 2022 2023 2022

22 unchanged sentences

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

2023 2022 2023 2022

10 unchanged sentences

(in thousands, except share and per share amounts)

September 30,

2023 December 31,

25 unchanged sentences

authorized shares 450,000,000 ;

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

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

outstanding shares 116,116,895 and 122,186,238 on September 30, 2023 and December 31, 2022, respectively

Preferred stock ($ 0.01 par);

authorized shares 50,000,000 ;

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

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

Additional paid-in capital 1,099,216 1,091,475

1 unchanged sentence

Treasury stock, at cost;

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

shares 24,627,150 and 17,385,034 on September 30, 2023 and December 31, 2022, respectively

( 226,710 ) ( 149,624 )

25 unchanged sentences

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

Net income — — 16,574 — — 16,574

Other comprehensive loss — — — — ( 2,197 ) ( 2,197 )

Repurchases of common shares — — — ( 5,344 ) — ( 5,344 )

Tax withholdings on equity award vesting — — — ( 2,506 ) — ( 2,506 )

Excise tax on repurchases of common shares — — — ( 8 ) — ( 8 )

Stock compensation expense — 3,392 — — — 3,392

Shares issued under equity incentive plan, net of forfeitures — ( 5,461 ) — 5,642 — 181

Balance, September 30, 2023 $ 1,407 $ 1,099,216 $ ( 200,785 ) $ ( 226,710 ) $ 4,728 $ 677,856

stock Additional

16 unchanged sentences

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

Net income — — 21,325 — — 21,325

Other comprehensive income — — — — 972 972

Repurchase of common shares — — — ( 64,869 ) — ( 64,869 )

Stock compensation expense — 3,872 — — — 3,872

Shares issued under equity incentive plan, net of forfeitures ( 1 ) 42 — — — 41

Balance, September 30, 2022 $ 1,395 $ 1,088,704 $ ( 267,262 ) $ ( 86,594 ) $ 3,282 $ 739,525

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

Six months ended

Nine months ended

September 30,

Cash flows from operating activities:

21 unchanged sentences

Payments for business divestiture, net of cash — ( 3,744 )

Business combinations, net of cash acquired — ( 488 )

Other, net — 81

50 unchanged sentences

(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.

Net income for the nine months ended September 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.

1 unchanged sentence

Recently Adopted Accounting Standards

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

In October 2023, the Financial Accounting Standards Board (“FASB”) issued guidance to amend either presentation or disclosure requirements related to fourteen subtopics in the FASB Accounting Standards Codification, that are currently in the SEC Regulation S-X or Regulation S-K.

The new guidance was issued in response to the SEC’s ruling on disclosure simplification.

For entities subject to existing SEC disclosure requirements, the effective date of each amendment of the topics will be the date that the SEC removes the related disclosure from Regulation S-X or Regulation S-K.

The guidance must be applied prospectively, with no early adoption permitted for entities subject to those existing SEC disclosures.

The Company is currently evaluating the impact of the new guidance as it pertains to the fourteen subtopics that would impact the business and will apply prospectively once in effect.

In August 2023, the FASB issued guidance for entities that meet the definition of a joint venture or a corporate joint venture, to adopt a new basis of accounting upon the formation of the joint venture.

The new guidance requires the initial measurement of contributed net assets and liabilities at fair value on the formation date, recognition of goodwill for the difference between the fair value of the joint venture’s equity and net assets, and disclosures about the nature and financial impact of the transaction.

The new guidance requires prospective application and is effective for all joint ventures that are formed on or after January 1, 2025, with early adoption permitted.

Joint ventures that formed before January 1, 2025 may elect to retrospectively apply the new guidance.

The Company will apply the guidance to any new joint ventures formed after the effective date.

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

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

36 unchanged sentences

(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

The following tables disaggregate the Company’s sales, by segment and end uses, for the three and nine months ended September 30, 2023 and 2022, respectively:

Three months ended September 30, 2023

Ecoservices Catalyst Technologies (2)

5 unchanged sentences

Total segment sales $ 147,629 $ 25,697 $ 173,326

Three months ended June 30, 2022

Three months ended September 30, 2022

Ecoservices Catalyst Technologies (2)

5 unchanged sentences

Total segment sales $ 195,674 $ 36,859 $ 232,533

Six months ended June 30, 2023

Nine months ended September 30, 2023

Ecoservices Catalyst Technologies (2)

5 unchanged sentences

Total segment sales $ 443,433 $ 74,877 $ 518,310

Six months ended June 30, 2022

Nine months ended September 30, 2022

Ecoservices Catalyst Technologies (2)

28 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 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.

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

September 30,

2023 Quoted Prices in

6 unchanged sentences

Interest rate caps (Note 12) $ 32,178 $ — $ 32,178 $ —

Derivative liabilities:

Interest rate caps (Note 12) $ 1,197 $ — $ 1,197 $ —

2022 Quoted Prices in

19 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 June 30, 2023, th e Company had interest rate c aps th at were fair valued using Level 2 inputs.

As of September 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 income (loss) for the three and six months ended June 30, 2023 and 2022, respectively:

Three months ended June 30,

The following tables present the tax effects of each component of other comprehensive income (loss) for the three and nine months ended September 30, 2023 and 2022, respectively:

Three months ended September 30,

amount Tax benefit/

9 unchanged sentences

Other comprehensive income (loss) $ ( 2,149 ) $ ( 48 ) $ ( 2,197 ) $ 3,702 $ ( 2,730 ) $ 972

Six months ended June 30,

Nine months ended September 30,

amount Tax benefit/

12 unchanged sentences

(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 six months ended June 30, 2023 and 2022, respectively:

The following tables present the changes in accumulated other comprehensive income, net of tax, by component for the nine months ended September 30, 2023 and 2022, respectively:

Defined benefit

8 unchanged sentences

Net current period other comprehensive income (loss) 228 ( 1,393 ) ( 99 ) ( 1,264 )

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

September 30, 2023 $ ( 280 ) $ 23,279 $ ( 18,271 ) $ 4,728

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

1 unchanged sentence

Amounts reclassified from accumulated other comprehensive income (1)

117 472 — 589

Net current period other comprehensive income (loss) ( 1,040 ) 27,620 ( 17,506 ) 9,074

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

September 30, 2022 $ 1,128 $ 27,910 $ ( 25,756 ) $ 3,282

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

Amounts in parentheses indicate debits.

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

Details about Accumulated Other Comprehensive

Income Components Amounts Reclassified from Accumulated Other

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

Details about Accumulated Other

Comprehensive Income Components Amounts reclassified from Accumulated Other

Comprehensive Income (1)

2 unchanged sentences

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

2023 2022 2023 2022

Amortization of defined benefit and other postretirement items:

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

Net prior service (credit) cost $ ( 31 ) $ ( 53 ) $ ( 94 ) $ ( 158 ) Other (expense) income (2)

Net (gain) loss 21 1 48 3 Other (expense) income (2)

16 unchanged sentences

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).

During the nine months ended September 30, 2023, the Company repurchased 541,494 shares on the open market at an average price of $ 9.85 per share, for a total of $ 5,333 , excluding brokerage commissions and accrued excise tax.

Additionally, 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 $ 73,374 , excluding accrued excise tax.

As of September 30, 2023, $ 234,592 was available for additional share repurchases under the program.

During the nine months ended September 30, 2023, the Company accrued excise tax of $ 638 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).

During the nine months ended September 30, 2022, the Company repurchased 1,970,763 shares on the open market at an average price of $ 9.82 per share, for a total of $ 19,356 , excluding brokerage commissions.

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 underwriters at a price of $ 8.36 per share concurrently with the closing of the offering, for a total of $ 54,316 .

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 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:

There were 315,635 and 32,058 shares delivered to the Company to cover tax payments for the nine months ended September 30, 2023 and 2022, respectively and the fair value of those shares withheld were $ 3,372 and $ 332 for the nine months ended September 30, 2023 and 2022, respectively.

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

Ecoservices Catalyst Technologies Total

1 unchanged sentence

Foreign exchange impact — 205 205

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

Balance as of September 30, 2023 $ 326,589 $ 76,779 $ 403,368

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Other Operating Expense, Net:

1 unchanged sentence

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

2023 2022 2023 2022

2 unchanged sentences

Restructuring, integration and business optimization costs (1)

310 2,338 2,438 8,011

Net loss on asset disposals 1,020 468 3,326 1,174

1 unchanged sentence

$ 4,310 $ 7,673 $ 17,288 $ 25,101

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

Inventories, Net:

Inventories, net are classified and valued as follows:

September 30,

2023 December 31,

7 unchanged sentences

$ 48,263 $ 44,362

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Investments in Affiliated Companies:

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

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

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

Company Country Percent

3 unchanged sentences

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

2023 2022 2023 2022

5 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 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

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

The Company’s investments in affiliated companies balance as of September 30, 2023 and December 31, 2022 includes net purchase accounting fair value adjustments of $ 226,215 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 $ 4,802 of amortization expense related to purchase accounting fair value adjustments for the three and nine months ended September 30, 2023, respectively.

Property, Plant and Equipment:

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

September 30,

2023 December 31,

6 unchanged sentences

$ 580,809 $ 584,889

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.

Depreciation expense was $ 17,773 and $ 51,920 for the three and nine months ended September 30, 2023, respectively.

Depreciation expense was $ 16,103 and $ 48,256 for the three and nine months ended September 30, 2022, respectively.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Long-term Debt:

The summary of long-term debt is as follows:

September 30,

2023 December 31,

9 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 7.65 % as of June 30, 2023.

The interest rate on the 2021 Term Loan Facility was 7.97 % as of September 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 June 30, 2023.

The interest rate on the ABL Facility was 8.75 % as of September 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 June 30, 2023 and December 31, 2022, the fair value of the senior secured term loan facility was $ 878,693 and $ 870,986 , respectively.

As of September 30, 2023 and December 31, 2022, the fair value of the senior secured term loan facility was $ 875,351 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).

23 unchanged sentences

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

Financial instrument Number of instruments In effect as of September 30, 2023

Current notional amount of instruments in effect Annuitized premium of instruments in effect

Interest rate cap 4 3 $ 650,000 $ 24,817

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.

The current notional amounts of the three interest rate cap agreements in effect at September 30, 2023 are $ 250,000 , $ 250,000 and $ 150,000 .

The Company entered into a $ 250,000 interest rate cap to mitigate interest rate volatility from August 2022 to October 2024, a $ 250,000 interest rate cap agreement to mitigate interest rate volatility from September 2023 to October 2025 and a $ 150,000 interest rate cap agreement to mitigate interest rate volatility from August 2023 to July 2024.

The $ 150,000 interest rate cap agreement will increase to $ 175,000 to mitigate interest rate volatility from August 2024 to July 2026.

The cap rate in effect at September 30, 2023 for all agreements in effect was 1.00 %.

The Company has also entered into a forward starting interest rate cap agreement to mitigate interest volatility from November 2024 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.

3 unchanged sentences

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

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,

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

Balance sheet location September 30,

2023 December 31,

8 unchanged sentences

Total derivative liabilities $ — $ 2,071

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,

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

Three months ended September 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 $ 7,294 $ 6,048 $ 12,159 $ ( 29 )

Six months ended June 30,

Nine months ended September 30,

Interest rate caps Interest (expense) income $ 15,935 $ 17,933 $ 36,200 $ ( 627 )

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:

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 nine months ended September 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

September 30, Nine months ended

September 30,

2023 2022 2023 2022

7 unchanged sentences

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

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 $ 8,965 as of June 30, 2023.

Income Taxes:

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 effective income tax rate for the three months ended September 30, 2023 was 32.3 %, compared to 29.6 % for the three months ended September 30, 2022.

The effective income tax rate for the nine months ended September 30, 2023 was 29.9 %, compared to 31.2 % for the nine months ended September 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 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.

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

Benefit Plans:

2 unchanged sentences

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

2023 2022 2023 2022

5 unchanged sentences

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

2023 2022 2023 2022

1 unchanged sentence

Amortization of prior service credit ( 31 ) ( 53 ) ( 94 ) ( 158 )

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

Amortization of net loss ( 1 ) 1 ( 2 ) 3

Net periodic benefit $ ( 26 ) $ ( 47 ) $ ( 78 ) $ ( 142 )

11 unchanged sentences

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

2023 2022 2023 2022

8 unchanged sentences

Adjusted EBITDA from reportable segments $ 71,034 $ 83,382 $ 206,316 $ 231,111

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

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

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.

(1) Excludes the Company’s proportionate share of sales from 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 $ 36,958 and $ 103,721 for the three and nine months ended September 30, 2023, respectively.

The proportionate share of sales excluded is $ 27,773 and $ 92,656 for the three and nine months ended September 30, 2022, respectively.

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

2 unchanged sentences

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

(3) The Adjusted EBITDA from the Zeolyst Joint Venture included in the Catalyst Technologies segment is $ 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.

(3) The Adjusted EBITDA from the Zeolyst Joint Venture included in the Catalyst Technologies segment is $ 9,640 for the three months ended September 30, 2023, which includes $ 4,748 of equity in net income plus $ 1,601 of amortization of investment in affiliate step-up and $ 3,291 of joint venture depreciation, amortization and interest.

The Adjusted EBITDA from the Zeolyst Joint Venture included in the Catalyst Technologies segment is $ 31,270 for the nine months ended September 30, 2023, which includes $ 16,356 of equity in net income plus $ 4,802 of amortization of investment in affiliate step-up and $ 10,112 of joint venture depreciation, amortization and interest.

The Adjusted EBITDA from the Zeolyst Joint Venture included in the Catalyst Technologies segment is $ 8,704 for the three months ended September 30, 2022, which includes $ 3,187 of equity in net income plus $ 1,601 of amortization of investment in affiliate step-up and $ 3,917 of joint venture depreciation, amortization and interest.

The Adjusted EBITDA from the Zeolyst Joint Venture included in the Catalyst Technologies segment is $ 34,306 for the nine months ended September 30, 2022, which includes $ 17,500 of equity in net income plus $ 4,802 of amortization of investment in affiliate step-up and $ 12,004 of joint venture depreciation, amortization and interest.

AND SUBSIDIARIES

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Reconciliation of income before income taxes to Adjusted EBITDA

Reconciliation of income before income taxes to Adjusted EBITDA from reportable segments

Income before income taxes $ 24,465 $ 30,291 $ 58,850 $ 70,428

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Net loss on asset disposals 1,020 468 3,326 1,174

Foreign exchange (gain) loss ( 398 ) 502 ( 1,136 ) 1,148

LIFO expense 1,111 187 2,510 432

Foreign exchange loss (gain) 774 1,030 ( 362 ) 2,179

LIFO (benefit) expense — ( 436 ) 2,510 ( 4 )

Transaction and other related costs 187 1,789 2,811 6,860

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

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.

At September 30, 2023, 9,413,264 shares of common stock were available for issuance under the plan.

The Company historically has settled these awards through the issuance of new shares.

Beginning on July 1, 2023, the Company commenced reissuing shares from treasury in connection with the settlement of awards under its equity incentive plan.

Restricted Stock Units and Performance Stock Units

Restricted Stock Units

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.

During the nine months ended September 30, 2023, the Company granted 1,195,835 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 nine months ended September 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 nine months ended September 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 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.

During the nine months ended September 30, 2023, the Company granted 721,537 performance stock units (at target) under its equity incentive plan.

The performance stock units granted during the nine months ended September 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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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 six months ended June 30, 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 nine months ended September 30, 2023, with the following weighted average assumptions:

Expected dividend yield — %

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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 six months ended June 30, 2023 as follows:

The awards vested during the nine months ended September 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 six months ended June 30, 2023:

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

Restricted Stock Units Performance Stock Units

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Forfeited ( 195,334 ) $ 11.37 ( 183,864 ) $ 19.50

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

Nonvested as of September 30, 2023 2,028,918 $ 10.57 977,001 (1) $ 11.88

(1) Based on target.

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.

During the nine months ended September 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 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.

For the three months ended September 30, 2023 and 2022, stock-based compensation expense for the Company was $ 3,477 and $ 4,740 , respectively.

The associated income tax benefit recognized in the condensed consolidated statements of income for the three months ended September 30, 2023 and 2022 was $ 826 and $ 1,162 , respectively.

For the nine months ended September 30, 2023 and 2022, stock-based compensation expense for the Company was $ 12,547 and $ 17,419 , respectively.

The associated income tax benefit based on the applicable statutory rate recognized in the condensed consolidated statements of income for the nine months ended September 30, 2023 and 2022 was $ 2,980 and $ 4,271 , 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”).

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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.

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.

In addition to the forfeitures described above, 328,677 vested stock options expired unexercised during the nine months ended September 30, 2023.

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

AND SUBSIDIARIES

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(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.

As of September 30, 2023, unrecognized compensation cost was $ 13,205 for restricted stock units and $ 7,377 for performance stock units, and the weighted-average period over which these costs are expected to be recognized at September 30, 2023 was 2.02 years for the restricted stock units and 2.31 years for the performance stock units.

Earnings per Share:

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

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Cash paid during the period for:

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Non-cash financing activity:

Accrued share repurchases (Note 5)

Accrued excise tax on share repurchases (Note 5)

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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 1. Financial Statements