What changed in this filing

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Item 9A. Controls and Procedures

2024-02-29 compared with 2023-02-28 · 591 added, 729 removed, 2117 unchanged (38% of the section changed)

22 unchanged sentences

OTHER INFORMATION.

Trading Arrangements

During the year ended December 31, 2023, none of the Company’s directors or executive officers adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each item is defined in Item 408(a) of Regulation S-K.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.

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S-1/A 333-218650 10.9 9/1/2017

10.16* Severance Agreement, dated August 9, 2018, by and between PQ Corporation and Belgacem Chariag

8-K 001-38221 10.2 8/9/2018

10.16* Severance Agreement, dated September 25, 2017, by and between PQ Corporation and Joseph S.

8 unchanged sentences

10-Q 001-38221 10.3 8/9/2021

10.20* Form of Ecovyst Inc.

Director and Officer Indemnification Agreement

10-Q 001-38221 10.4 8/9/2021

Incorporated by Reference

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Exhibit Filing

10.21* Form of Ecovyst Inc.

Director and Officer Indemnification Agreement

10-Q 001-38221 10.4 8/9/2021

10.21* Form of 2021 Performance Stock Unit Award Agreement under the Ecovyst Inc.

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10-K 001-38221 10.38 3/1/2022

10.23* General Release and Waiver of Claims, dated April 25, 2022, between Ecovyst Inc., Ecovyst Catalyst Technologies LLC and Belgacem Chariag

8-K 001-38221 10.1 4/29/2022

10.22 * Severance Agreement, dated December 16, 2022, between Ecovyst Catalyst Technologies LLC and Kurt J.

5 unchanged sentences

10.25 First Amendment Agreement, dated February 9, 2023 to the Term Loan Credit Agreement, dated June 9, 2021, by and among Ecovyst Catalyst Technologies LLC , Ecovyst Midco II Inc, Eco Services Operations Corp and Credit Suisse AG

10-K 001-38221 10.27 2/28/2023

10.26 Fourth Amendment, dated February 17, 2023 to the ABL Credit Agreement, dated May 4, 2016 by and among Ecovyst Catalyst Technologies LLC, Ecovyst Catalyst Technologies UK Limited, Ecovyst Midco II Inc.

and Citibank, N.A.

10.29* Letter of employment, dated November 25, 2019, between PQ Corporation and Thomas Schneberger

10-K 001-38221 10.28 2/28/2023

10.27* Letter of employment, dated July 19, 2022, between Ecoservices and George L.

10-K 001-38221 10.3 2/28/2023

10.28* Letter of employment, dated November 28, 2022, between Ecovyst Catalyst Technologies LLC and Paul Whittleston

10-K 001-38221 10.31 2/28/2023

21.1 Subsidiaries of Ecovyst Inc.

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Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2 Certification of Chief Financial Officer of Ecovyst Inc.

pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

97.1 Policy relating to Recovery of Erroneously Awarded Compensation

Incorporated by Reference

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Exhibit Filing

32.2 Certification of Chief Financial Officer of Ecovyst Inc.

pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101 The following financial statements from the Annual Report on Form 10-K of Ecovyst Inc.

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/s/ ROBERT COXON Director February 29, 2024

/s/ JONNY GINNS Director February 28, 2023

/s/ KYLE VANN Director February 29, 2024

/s/ TIMOTHY WALSH Director February 28, 2023

Timothy Walsh

WARD Director February 29, 2024

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Report of Independent Auditors

Balance Sheets as of December 31, 2022 and 2021

Statements of Operations and Accumulated Earnings for the Years Ended December 31, 202 3 , 202 2 and 202 1

Balance Sheets as of December 31, 2023 and 2022

Statements of Changes in Partners’ Capital for the Years Ended December 31, 202 3 , 202 2 and 202 1

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We have audited the accompanying consolidated balance sheets of Ecovyst Inc.

and its subsidiaries (the “Company”) as of December 31, 2022 and 2021, and the related consolidated statements of income, of comprehensive income (loss), of stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2022, including the related notes and financial statement schedule listed in the accompanying index (collectively referred to as the “consolidated financial statements”).

and its subsidiaries (the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of income, of comprehensive income (loss), of stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2023, including the related notes and schedule I – parent company financial information as of December 31, 2023 and 2022 and for each of the three years in the period ended December 31, 2023 appearing on the accompanying index (collectively referred to as the “consolidated financial statements”).

We also have audited the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

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Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Goodwill Impairment Assessment - Catalyst Technologies Reporting Unit

As described in Notes 2 and 16 to the consolidated financial statements, goodwill associated with the Company’s Catalyst Technologies reporting unit was $76.6 million as of December 31, 2022.

Goodwill Impairment Assessment — Advanced Materials & Catalysts Reporting Unit

As described in Notes 2 and 14 to the consolidated financial statements, goodwill associated with the Company’s Advanced Materials & Catalysts reporting unit was $77.9 million as of December 31, 2023.

Management is required to test goodwill associated with each of its reporting units for impairment at least annually and whenever events or circumstances indicate that it is more likely than not that goodwill may be impaired.

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Management estimates reporting unit income-based fair value using the discounted cash flow approach, which requires use of significant assumptions including revenue growth rates and discount rate.

The principal considerations for our determination that performing procedures relating to the goodwill impairment assessment of the Catalyst Technologies reporting unit is a critical audit matter are (i) the significant judgment by management when determining the fair value of the Catalyst Technologies reporting unit;

The principal considerations for our determination that performing procedures relating to the goodwill impairment assessment of the Advanced Materials & Catalysts reporting unit is a critical audit matter are (i) the significant judgment by management when determining the fair value of the Advanced Materials & Catalysts reporting unit;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to market multiples, revenue growth rates, and discount rate;

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Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the valuation of the Catalyst Technologies reporting unit.

These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the valuation of the Advanced Materials & Catalysts reporting unit.

These procedures also included, among others, (i) testing management’s process for determining the fair value of the reporting unit;

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and (iv) testing the completeness and accuracy of the underlying data used in the market and income approaches.

Evaluating management’s significant assumptions related to revenue growth rates involved evaluating whether the assumption was reasonable considering (i) the current and past performance of the Catalyst Technologies reporting unit;

(ii) consistency with external market and industry data;

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Debt extinguishment costs — — 26,902

Other expense (income), net 158 4,511 ( 5,021 )

Income from continuing operations before income taxes and noncontrolling interest 94,735 13,941 2,215

Provision (benefit) for income taxes 24,940 12,147 ( 52,065 )

Other expense, net 605 158 4,511

Income before income taxes 81,939 94,735 13,941

Provision for income taxes 10,785 24,940 12,147

Net income from continuing operations 71,154 69,795 1,794

1 unchanged sentence

Net income (loss) 71,154 73,697 ( 139,616 )

Net income (loss) attributable to the noncontrolling interest - discontinued operations — 333 ( 2,933 )

Net income attributable to the noncontrolling interest - discontinued operations — — 333

Net income (loss) attributable to Ecovyst Inc.

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Pension and postretirement benefits 1,120 ( 2,676 ) 9,530

Net gain from hedging activities 24,382 2,914 1,177

Net gain (loss) from hedging activities ( 12,126 ) 24,382 2,914

Foreign currency translation 4,056 ( 9,922 ) ( 2,248 )

1 unchanged sentence

Comprehensive income (loss) 64,204 85,481 ( 129,420 )

Comprehensive income (loss) attributable to noncontrolling interests — 333 ( 4,596 )

Comprehensive income attributable to noncontrolling interests — — 333

Comprehensive income (loss) attributable to Ecovyst Inc.

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stock Additional

capital Retained earnings

deficit Shares of

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Balance, December 31, 2020 137,102,143 $ 1,371 $ 1,477,859 $ ( 175,758 ) ( 783,586 ) $ ( 11,081 ) $ ( 15,265 ) $ 53 $ 1,277,179

Net loss — — — ( 278,771 ) — — — ( 2,933 ) ( 281,704 )

Other comprehensive income (loss) — — — — — — 83 ( 1,663 ) ( 1,580 )

Repurchases of common shares — — — — ( 211,700 ) ( 2,059 ) — — ( 2,059 )

Net (income) loss — — — ( 139,949 ) — — — 333 ( 139,616 )

Other comprehensive income — — — — — — 9,473 723 10,196

Tax withholdings on equity award vesting — — — — ( 98,627 ) ( 1,470 ) — — ( 1,470 )

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Balance, December 31, 2021 137,820,971 1,378 1,073,409 ( 315,707 ) ( 882,213 ) ( 12,551 ) ( 5,792 ) — 740,737

Net (loss) income — — — ( 139,949 ) — — — 333 ( 139,616 )

Net income — — — 73,697 — — — — 73,697

Other comprehensive income — — — — — — 11,784 — 11,784

Repurchases of common shares — — — — ( 16,470,763 ) ( 136,741 ) — — ( 136,741 )

Tax withholdings on equity award vesting — — — — ( 32,058 ) ( 332 ) — — ( 332 )

Distributions to noncontrolling interests — — — — — — — ( 1,109 ) ( 1,109 )

Dividends paid on common stock ($ 3.20 per share)

— — ( 435,593 ) — — — — — ( 435,593 )

Stock compensation expense — — 17,469 — — — — — 17,469

1 unchanged sentence

Balance, December 31, 2022 139,571,272 1,396 1,091,475 ( 242,010 ) ( 17,385,034 ) ( 149,624 ) 5,992 — 707,229

Net income (loss) — — — 73,697 — — — — 73,697

Other comprehensive income — — — — — — 11,784 — 11,784

Net income — — — 71,154 — — — — 71,154

Other comprehensive loss — — — — — — ( 6,950 ) — ( 6,950 )

Repurchases of common shares — — — — ( 7,541,494 ) ( 78,718 ) — — ( 78,718 )

Tax withholdings on equity award vesting — — — — ( 315,635 ) ( 3,372 ) — — ( 3,372 )

Excise tax on repurchases of common shares — — — — — ( 638 ) — — ( 638 )

Stock compensation expense — — 16,252 — — — — — 16,252

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Debt extinguishment costs — — 21,166

Foreign currency exchange loss (gain) 978 4,716 ( 5,264 )

Pension and postretirement healthcare (benefit) expense ( 1,015 ) ( 302 ) 416

Pension and postretirement healthcare benefit funding — — ( 3,264 )

Foreign currency exchange (gain) loss ( 589 ) 978 4,716

Deferred income tax (benefit) provision ( 17,072 ) 1,652 4,548

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Proceeds from business divestitures, net of cash — — 978,449

Payments for business divestiture ( 3,744 ) — —

Proceeds from sale of assets — — 2,375

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

Business combinations, net of cash acquired — ( 488 ) ( 42,639 )

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Tax withholdings on equity award vesting ( 3,372 ) ( 332 ) ( 1,470 )

Proceeds from stock options exercised 611 746 373

Repayments of financing obligation ( 2,847 ) ( 2,692 ) ( 1,435 )

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Net cash used in financing activities ( 93,498 ) ( 148,186 ) ( 964,233 )

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 5,368 ) 2,253 11,052

Net change in cash, cash equivalents and restricted cash ( 29,969 ) 3,670 63,302

Cash, cash equivalents and restricted cash at beginning of period 140,889 137,219 73,917

Cash, cash equivalents and restricted cash at end of period 110,920 140,889 137,219

cash, cash equivalents and restricted cash of discontinued operations — — ( 22,202 )

Cash, cash equivalents and restricted cash at end of period of continuing operations $ 110,920 $ 140,889 $ 115,017

Effect of exchange rate changes on cash and cash equivalents ( 1,319 ) ( 5,368 ) 2,253

Net change in cash and cash equivalents ( 22,555 ) ( 29,969 ) 3,670

Cash and cash equivalents at beginning of period 110,920 140,889 137,219

Cash and cash equivalents at end of period $ 88,365 $ 110,920 $ 140,889

For supplemental cash flow disclosures, see Note 25.

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Description of Business

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

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

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

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

The Company believes that its products and services contribute to improving the sustainability of the environment.

Basis of Presentation

On December 14, 2020, the Company completed the sale of its Performance Materials business for $ 650,000 and on August 1, 2021, completed the sale of its Performance Chemicals business for $ 1,100,000 .

T he financial results of these business are presented as discontinued operations in the consolidated financial statements for the 2021 and 2020 periods presented.

See Note 4 and Note 5 for more information on these transactions.

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

The financial results of this business are presented as discontinued operations in the consolidated financial statements for the 2021 period presented.

On August 1, 2021, the Company completed the sale of its Performance Chemicals business for $ 1,100,000 .

The financial results of this business are presented as discontinued operations in the consolidated financial statements for the 2022 and 2021 periods presented.

See Note 4 to these consolidated financial statements for further information on these transactions.

The Company has two uniquely positioned specialty businesses:

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

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

Ecoservices provides sulfuric acid recycling to the North American refining industry for the production of alkylate and provides high quality and high strength virgin sulfuric acid for industrial and mining applications;

and Advanced Materials & Catalysts provides finished silica catalysts, catalyst supports and functionalized silicas necessary to produce high performing plastics and to enable sustainable chemistry, and through the Zeolyst Joint Venture, innovates and supplies zeolites used in catalysts that support the production of sustainable fuels, remove nitrogen oxides from diesel engine emissions and that are broadly applied in refining and petrochemical processes.

Effective November 28, 2023, the Company renamed the Catalyst Technologies segment to Advanced Materials & Catalysts.

Beginning with the year ended December 31, 2023, the segment results and disclosures included in the Company’s consolidated financial statements reflect the new segment name for all periods presented.

This change to the Company’s segment name does not change the Company’s consolidated balance sheets, statements of income or cash flows for the prior periods or the way the Company’s CODM evaluated the business.

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

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The notes to the consolidated financial statements, unless otherwise indicated, are on a continuing operations basis.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Summary of Significant Accounting Policies:

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dollars using exchange rates in effect at the balance sheet date.

Adjustments resulting from translation of the balance sheets are included in stockholders’ equity as part of accumulated other comprehensive income (loss).

Income and expense items are translated at average exchange rates during the year.

Adjustments resulting from translation of the balance sheets and statements of income are included in stockholders’ equity as part of accumulated other comprehensive income (loss), and are included in earnings only upon the sale or liquidation of the underlying foreign subsidiary or affiliated company.

Foreign currency transaction gains and losses are recognized in earnings based on differences between foreign currency exchange rates on the transaction date and on the settlement date.

Adjustments resulting from translation of certain intercompany loans, which are not considered permanent and are denominated in foreign currencies, are included in other expense (income), net in the consolidated statements of income.

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Therefore, the foreign currency transaction gains or losses associated with the int ercompany loans were recorded in the consolidated statements of income for the years ended December 31, 2023, 2022 and 2021.

Income and expense items are translated at average exchange rates during the year.

Net foreign currency exchange (gains) and losses included in other expense (income), net were $( 589 ), $ 978 and $ 4,716 for the years ended December 31, 2023, 2022 and 2021 , respectively.

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Cash and cash equivalents include highly liquid investments with original terms to maturity of 90 days or less from the time of purchase.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Restricted Cash.

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When property, plant and equipment is retired or otherwise disposed of, the net carrying amount is eliminated with any gain or loss on disposition recognized in earnings at that time.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Depreciation is provided on the straight-line method based on the estimated useful lives of the assets, which generally range from 15 to 33 years for buildings and improvements and 3 to 10 years for machinery and equipment.

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The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The Company recognizes a right-of-use lease asset and lease liability at the lease commencement date based on the present value of the remaining lease payments over the lease term.

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Significant influence is generally deemed to exist if the Company’s ownership interest in the voting stock of the investee ranges between 20% and 50%, although other factors, such as representation on the investee’s board of directors and the impact of commercial arrangements, are considered in determining whether the equity method of accounting is appropriate.

Under the equity method of accounting, the investments in equity-method investees are recorded in the consolidated balance sheets as investments in affiliated companies, and the Company’s share of the investees’ earnings or losses, together with other than temporary impairments in value, is recorded as equity in net income from affiliated companies in the consolidated statements of income.

Under the equity method of accounting, the investments in equity-method investees are

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

recorded in the consolidated balance sheets as investments in affiliated companies, and the Company’s share of the investees’ earnings or losses, together with other than temporary impairments in value, is recorded as equity in net income from affiliated companies in the consolidated statements of income.

Any differences between the Company’s cost of an equity method investment and the underlying equity in the net assets of the investment, such as fair value step-ups resulting from acquisitions, are accounted for according to their nature and impact the amounts recognized as equity in net income from affiliated companies in the consolidated statements of income.

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The Company performs its annual goodwill impairment test as of October 1.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Goodwill is tested for impairment at the reporting unit level.

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The Company’s estimates of future cash flows involve assumptions concerning future operating performance, economic conditions and technological changes that may affect the future useful lives of the assets.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Derivative Financial Instruments.

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Cash flows from derivative instruments are reported in the same cash flow category as the cash flows from the items being hedged.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for undertaking various hedge transactions.

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The carrying values of cash, accounts receivable, accounts payable and accrued liabilities approximate fair value due to the short-term nature of these items.

See Note 8 to these consolidated financial statements regarding the application of fair value measurements and Note 18 regarding the fair value of debt.

See Note 6 to these consolidated financial statements for further information regarding the application of fair value measurements and Note 16 regarding the fair value of debt.

Treasury Stock.

2 unchanged sentences

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

See Note 9 of these consolidated financial statements regarding the Company’s treasury stock repurchases.

See Note 7 of these consolidated financial statements for further information regarding the Company’s treasury stock repurchases.

Revenue Recognition.

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The Company identifies a contract when an agreement with a customer creates legally enforceable rights and obligations, which occurs when a contract has been approved by both parties, the parties are committed to perform their respective obligations, each party’s rights and payment terms are clearly identified, commercial substance exists and it is probable that the Company will collect the consideration to which it is entitled.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The Company may offer rebates to customers who have reached a specified volume of optional purchases.

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The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date.

The Company evaluates its deferred tax assets each period to ensure that estimated future taxable income will be sufficient in character (e.g., capital gain

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

versus ordinary income treatment), amount and timing, to result in their realizability.

The Company evaluates its deferred tax assets each period to ensure that estimated future taxable income will be sufficient in character (e.g., capital gain versus ordinary income treatment), amount and timing, to result in their realizability.

A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets, unless it is more likely than not that those assets will be realized.

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The Company has determined that it is able to repatriate the non-permanently reinvested earnings of its foreign subsidiaries in a tax-free manner.

As such, the Company is able to asset, for purposes of ASC 740-30, that no deferred income taxes are needed with respect to earnings from foreign subsidiaries.

As such, the Company is able to assert, for purposes of ASC 740-30, that no deferred income taxes are needed with respect to earnings from foreign subsidiaries.

The Company recognizes a financial statement benefit for positions taken for tax return purposes when it will be more likely than not (i.e.

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Recoveries of expenditures for environmental remediation are recognized as assets only when recovery is deemed probable.

See Note 25 to these consolidated financial statements regarding commitments and contingencies.

See Note 23 to these consolidated financial statements for further information regarding commitments and contingencies.

Deferred Financing Costs.

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Deferred financing costs are amortized as interest expense using the effective interest method over the respective terms of the associated debt instruments.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Stock-Based Compensation.

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Certain assumptions are made regarding the occurrence of future events affecting pension costs, such as mortality, withdrawal, disa blement and retirement, changes in compensation and benefits, and discount rates to reflect the time value of money.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The major elements in determining pension income and expense are pension liability discount rates and the expected return on plan assets.

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Actual results could differ from those estimates.

Reclassification and Correction of an Error.

Certain reclassifications and correction of an error have been made to the historical presentation of the consolidated financial statements and the notes accompanying the consolidated financial statements.

During the preparation of the condensed consolidated financial statements for the period ended September 30, 2022, the Company identified a presentation error in the condensed consolidated statements of comprehensive income for the 2021 comparable periods presented.

The presentation of comprehensive income (loss) inadvertently omitted the release of accumulated other comprehensive income (loss) related to foreign currency translation and deferred pension and postretirement benefit plan losses in conjunction with the sale of the Company’s Performance Chemicals business.

The presentation of other comprehensive income (loss) for the year ended December 31, 2021, was corrected for the additional comprehensive loss of $ 9,123 , of which $ 723 of comprehensive income was attributed to noncontrolling interest.

This presentation error in other comprehensive income (loss) was also corrected for the year ended December 31, 2020, which resulted in additional comprehensive income of $ 13,835 , of which $ 740 was attributed to noncontrolling interest.

Additionally, Note 9 was corrected for this presentation error.

The Company assessed the materiality of the error and concluded it was not material to the Company’s previously issued financial statements for the years ended December 31, 2021 and 2020.

There was no impact on the consolidated statements of income, consolidated balance sheets and consolidated statements of cash flows for the years ended December 31, 2021 and 2020.

The previously disclosed disposal of business presented in accumulated other comprehensive income (loss) has been reclassified to other comprehensive income (loss) in the condensed consolidated statement of stockholders’ equity.

AND SUBSIDIARIES

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

Correction of Errors.

Correction of errors have been made to the historical presentation of the consolidated financial statements and the notes accompanying the consolidated financial statements.

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 7 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 consolidated financial statements.

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

Net income for the year ended December 31, 2023 increased by $ 1,390 from adjustments for the Company’s interest rate cap agreements related to prior year interest expense amortization, $ 840 from adjustments related to prior year sales rebate reserves and $ 2,776 from adjustments for the Company’s equity in net income of affiliated companies related to revised Zeolyst International historical results offset by $ 1,301 from other adjustments.

The $ 3,705 total net impact of these adjustment was not material to the consolidated financial statements for any prior quarterly or annual periods or the current annual period.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

New Accounting Standards:

Recently Adopted Accounting Standards

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

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

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

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

The new guidance is effective for fiscal years beginning after December 15, 2021, with early adoption permitted, and can be applied either prospectively or retrospectively.

The Company adopted the new guidance as required on January 1, 2022;

the Company has not identified any significant government assistance or grants subject to the scope of the guidance upon adoption.

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

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

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

The time period through which the practical expedients provided in the guidance is available was set to expire on December 31, 2022, but was extended through December 31, 2024 by the FASB in December 2022.

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

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 18 and 20 to these consolidated financial statements for additional information.

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

Accounting Standards Not Yet Adopted as of December 31, 2022

Accounting Standards Not Yet Adopted

In December 2023, the Financial Accounting Standards Board (“FASB”) issued guidance to improve disclosures related to incomes taxes.

This new guidance requires public business entities to disaggregate information on the effective tax rate reconciliation and income taxes paid to provide greater transparency.

Public business entities will be required to provide additional information in specified categories related to effective tax rate reconciliation in tabular form and provide income taxes paid by jurisdictions, with further disaggregation needed if amounts exceed 5% of the total.

The new guidance is effective for fiscal years beginning after December 15, 2024.

The Company will adopt the new guidance effective January 1, 2025 as required.

In November 2023, the FASB issued guidance to improve the disclosures related to public business entities reportable segments.

This new guidance requires entities to provide information regarding significant segment expenses, especially those segment expenses that are regularly reported to the Company’s chief operating decision maker (the Company’s Chief Executive Officer), or CODM.

The guidance also require public entities to disclose the nature, type and amounts of other segment items by reportable segment.

Public business entities will also have to report all annual disclosures about segments profits or losses that are required by ASC 280 on an interim basis, including the significant segment expenses and other segment items.

The new guidance is effective for fiscal years beginning after December 15, 2023, including interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company will adopt the new guidance effective January 1, 2024 as required.

In October 2023, the 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.

Accounting Standards Recently Adopted

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

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The Company adopted the new guidance effective January 1, 2023 as required, and will apply the guidance prospectively to business combinations that occur after the adoption date.

Performance Materials Divestiture:

On December 14, 2020, the Company completed the sale of its Performance Materials business to Potters Buyer, LLC (the “Purchaser”), an affiliate of The Jordan Company, L.P., for a purchase price of $ 650,000 .

The net cash proceeds to the Company from the sale were $ 624,256 after certain customary adjustments for indebtedness, working capital and cash at the closing of the transaction.

The Company classified the proceeds within net cash provided by (used in) investing activities – continuing operations in the consolidated statements of cash flows and used the net proceeds from the sale as well as cash on hand to pay down debt and issue a special cash dividend of $ 1.80 per share to stockholders.

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

As a result, the Company’s consolidated financial statements for all periods presented reflect the Performance Materials business as a

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

discontinued operation.

The divested business was historically reported in the Performance Materials reportable segment, with the exception of certain Australian operations that were historically reported in the Performance Chemicals reportable segment.

The total transaction costs incurred in connection with the sale were approximately $ 13,161 for the year ended December 31, 2020.

The Company recorded a pre-tax loss on sale of $ 70,878 , which is included in net (loss) income from discontinued operations, net of tax in the Company’s consolidated statements of income for the year ended December 31, 2020.

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

Net proceeds received from the sale of Performance Materials $ 624,256

Transaction costs ( 13,161 )

Net assets derecognized ( 681,973 )

Loss on sale of Performance Materials $ ( 70,878 )

In connection with the sale of Performance Materials and the related loss, as noted above, the Company has recognized a tax expense of $ 58,008 within d iscontinued operations for the year ended December 31, 2020.

The following table summarizes the results of discontinued operations for the periods presented:

Sales $ 342,738

Cost of goods sold 251,917

Selling, general and administrative expenses 33,195

Other operating expense, net 18,289

Operating income 39,337

Equity in net income from affiliated companies ( 37 )

Interest expense, net (1)

Other income, net ( 3,481 )

Loss on sale of Performance Materials 70,878

Loss from discontinued operations before income tax ( 44,233 )

Provision for income taxes 58,008

Loss from discontinued operations, net of tax $ ( 102,241 )

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

As such, interest expense has been allocated to discontinued operations on the basis of the Company’s required refinancing of debt repayment provision of $ 275,787 of the 2018 Term Loan Facility and its required repayment of $ 188,722 of the 2020 Term Loan Facility.

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

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

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

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

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 16 and Note 18 to these consolidated financial statements for further 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 consolidated financial statements.

Divestitures:

Performance Materials

The net cash proceeds to the Company from the sale were $ 624,256 after certain customary adjustments for indebtedness, working capital and cash at the closing of the transaction.

During the year ended December 31, 2021 , the Company incurred transaction costs of $ 2,054 and stock-based compensation expense of $ 1,970 , and an associated tax benefit of $ 988 related to the Performance Materials divestiture, as well as a provision to return benefit of $ 5,429 related to the filing of the 2020 tax returns filed in the fourth quarter of 2021, which is included in loss from discontinued operations, net of tax.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Net income attributable to the noncontrolling interest related to the Performance Materials business, net of tax was $ 265 for the year ended December 31, 2020.

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

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Cash flows associated with these transition services and supply agreements were not material to the Company’s results of operations.

Performance Chemicals Divestiture:

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Performance Chemicals

On February 28, 2021, the Company entered into a definitive agreement to sell its Performance Chemicals business to Sparta Aggregator L.P.

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In connection with the sale of the Performance Chemicals business and the related loss, as noted above, the Company has recognized a tax benefit of $ 37,255 within net loss from discontinued operations, net of tax on the consolidated statement of income for the year ended December 31, 2021.

In March 2022, the Company made a payment to the buyer for $ 3,744 , representing the final adjustments to the sale price.

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

During the year ended December 31, 2022, the Company recognized $ 3,902 of net income from discontinued operations, net of tax, related to the sale of the Performance Chemicals business for an income tax benefit upon the finalization of the Company’s U.S.

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

2022 2021 2020

Sales $ — $ 389,870

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Other operating expense, net (1)

2,409 14,765 33,144

Loss on sale of the Performance Chemicals business — 150,230

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Interest expense, net (2)

— 10,730 16,570

Other income, net — ( 6,210 )

Loss from discontinued operations before income tax ( 2,409 ) ( 168,690 )

(Benefit) Provision for income taxes ( 6,311 ) ( 24,886 ) 3,943

Benefit for income taxes ( 6,311 ) ( 24,886 )

Loss from discontinued operations, net of tax $ 3,902 $ ( 143,804 )

(1) The Company reclassified transaction costs that were previously recorded to this line item and included those charges in the line item Loss on sale of the Performance Chemicals business during the years ended December 31, 2021 and 2020 .

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

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

Net income (loss) attributable to the noncontrolling interest related to the Performance Chemicals business, net of tax was $ 333 and $( 3,198 ) for the years ended December 31, 2021 and 2020, respectively.

Net loss attributable to Ecovyst Inc., related to the Performance Chemicals business, net of tax was $( 144,137 ) and $( 230,545 ) for the years ended December 31, 2021 and 2020, respectively.

Net income attributable to the noncontrolling interest related to the Performance Chemicals business, net of tax was $ 333 for the year ended December 31, 2021.

Net loss attributable to Ecovyst Inc., related to the Performance Chemicals business, net of tax was $( 144,137 ) for the year ended December 31, 2021.

Financing Obligation

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

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

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

Pursuant to this agreement, the Buyer will manufacture and sell advanced silica finished good products to the Company, which are finished good products sold within the Company’s Advanced Materials & Catalysts segment.

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

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

For the year ended December 31, 2021 , the Company recorded a financing obligation of £ 11,648 (equivalent $ 16,005 ).

The current portion of the obligation is included in accrued liabilities and the long-term portion in other long-term liabilities on the consolidated balance sheets.

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

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assets’ remaining useful lives.

For the year ended December 31, 2021 , the Company recorded a financing obligation of £ 11,648 (equivalent $ 16,005 ).

The table below presents the financing obligation assets and liabilities recognized on the consolidated balance sheet as of December 31, 2023 and 2022:

Classification December 31,

2023 December 31,

Financing obligation Property, plant and equipment, net $ 19,878 $ 20,084

Total $ 19,878 $ 20,084

Financing obligation Accrued liabilities $ 2,999 $ 2,770

Financing obligation Other long-term liabilities 4,927 7,532

Total $ 7,926 $ 10,302

Based on the estimated fair market value of the Catalyst Production Assets, the failed sale-leaseback accounting treatment resulted in an allocation of $ 16,005 of the cash proceeds from the sale to cash flows from financing activities in the consolidated statement of cash flows for the year ended December 31, 2021, due to the requirement to treat this portion of the proceeds as though it were the result of a financing obligation.

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

Payments made to the Buyer under the contact manufacturing agreement were $ 7,872 and $ 3,395 for the years ended December 31, 2022 and 2021, respectfully .

Payments made to the Buyer under the contact manufacturing agreement were $ 8,416 , $ 7,872 and $ 3,395 for the years ended December 31, 2023, 2022 and 2021, respectively .

Included in these payments were $ 2,847 , $ 2,692 and $ 1,435 of principal on the financing obligation for the years ended December 31, 2023, 2022 and 2021, respectively, and $ 266 , $ 336 and $ 185 of interest on the financing obligation for the years ended December 31, 2023 , 2022 and 2021 , respectively.

Principal payments are included in financing activities and interest payments are included in operating activities on the Company’s consolidated statement of cash flows.

The remaining lease term is 2.6 years with a weighted average discount rate of 2.86 % as of December 31, 2023.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Maturities of the financing obligation as of December 31, 2023 are as follows:

Total lease payments 8,232

Total lease liabilities (1)

(1) Refer to the table above regarding the Company’s classification of financing obligation in the Company’s consolidated balance sheet as of December 31, 2023.

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

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T hose billings are included in selling, general and administrative expenses on the consolidated financial statements for the years ended December 31, 2022 and 2021 .

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

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

The net cash paid by the Company was $ 42,639 , after certain customary adjustments for indebtedness, working capital, cash and a holdback amount pursuant to the agreement.

A portion of the holdback was settled in September 2022 for $ 488 , with $ 512 of the holdback remaining as of December 31, 2022.

Chem32 is reported as part of the Ecoservices segment.

The Company’s consolidated financial statements include Chem32’s results of operations from the Closing Date through December 31, 2021.

Net sales and net income attributable to Chem32 during this period are included in the Company’s consolidated statement of income for the year ended December 31, 2021 and totaled $ 14,419 and $ 4,755 , respectively.

Acquisition and integration costs were $ 1,235 for the year ended December 31, 2021 and are included in other operating expense, net in the Company’s consolidated statements of income.

The Company believes that the Acquisition will offer a more robust portfolio of services within the refining industry by leveraging the Company’s existing relationships, therefore contributing to a total purchase price that resulted in the recognition of $ 14,778 of goodwill, which was deductible for tax purposes during the year ended December 31, 2021.

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

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

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

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

See Note 16 to these consolidated financial statements for further information.

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

Price Allocation

Cash paid, net of cash acquired $ 42,639

Holdback 1,000

Total consideration, net of cash acquired $ 43,639

Recognized amounts of identifiable assets acquired and liabilities assumed:

Receivables $ 1,368

Inventories 204

Prepaid and other current assets 351

Property, plant and equipment 5,046

Other intangible assets 22,100

Other long-term assets 187

Fair value of assets acquired 29,256

Accounts payable 207

Accrued liabilities 188

Fair value of net assets acquired 28,861

Goodwill 14,778

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

As of the Closing Date, the fair value of accounts receivable approximated historical cost.

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

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

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

Amount Weighted-Average

Expected Useful Life

Intangible assets subject to amortization:

Customer relationships $ 16,000 10

Technical know-how 3,800 10

Non-compete agreements 700 5

Trade names 1,600 10

Total intangible assets subject to amortization $ 22,100

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The Company’s cost of goods sold for the year ended December 31, 2021 includes a pre-tax charge of $ 317 of additional amortization expense related to identified intangible assets, which would have been recorded during the reporting period if the adjustments to the provisional amounts had been recognized as of the Closing Date.

The Company’s other operating expense, net for the year ended December 31, 2021 includes a pre-tax charge of $ 1,583 of additional amortization expense related to identified intangible assets, which would have been recorded during the reporting period if the adjustments to the provisional amounts had been recognized as of the Closing Date.

Pro forma financial information has not been presented as it is immaterial for the year ended December 31, 2021 .

Revenue from Contracts with Customers:

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During the years ended December 31, 2023, 2022 and 2021, there have been no material issues in which Ecoservices customers failed to meet their contractual obligations.

During the year ended December 31, 2020, some customers fell short of monthly orders due to the pandemic and take-or-pay provisions within contracts were acted upon.

Catalyst Technologies

The Company’s Catalyst Technologies segment sells customized products to its customers through its Silica Catalysts product group.

These customized products are reformulations of existing Catalyst Technologies products, tailored to meet individual customer specifications.

Advanced Materials & Catalysts

The Company’s Advanced Materials & Catalysts segment sells customized products to its customers through its Advanced Silicas product group.

These customized products are reformulations of existing Advanced Materials & Catalysts products, tailored to meet individual customer specifications.

Prior to entering into an arrangement, the Company will allow a customer to obtain a sample of goods to ensure that it meets their needs.

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The Company has elected to use certain practical expedients and has made certain accounting policy elections as permitted under the revenue recognition guidance.

The majority of the Company’s contracts with customers are based on an individual purchase order;

The majority of the Company’s contracts with customers are based on an individual purchase order or a MSA in combination with an individual purchase order;

thus, the duration of these contracts are for one year or less.

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As such, the Company has elected to utilize the “as-invoiced” practical expedient, which permits the Company to recognize revenue in the amount to which it has a right to invoice the customer, provided that the amount corresponds directly with the value provided by the performance obligation as completed to date.

When the Company performs shipping and handling activities after the transfer of control to the customer (e.g.

when control transfers prior to delivery), they are considered fulfillment activities as opposed to separate performance obligations, and the Company recognizes revenue upon the transfer of control to the customer.

Accordingly, the costs

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

When the Company performs shipping and handling activities after the transfer of control to the customer (e.g.

Accordingly, the costs associated with these shipping and handling activities are accrued when the related revenue is recognized under the Company’s policy election.

associated with these shipping and handling activities are accrued when the related revenue is recognized under the Company’s policy election.

The Company does not utilize sales-based commissions plans, and as a result, the Company does not capitalize any costs which could be considered incremental costs of obtaining a contract.

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Disaggregated Revenue

The Company’s primary means of disaggregating revenues is by reportable segment, which can be found in Note 15 to these consolidated financial statements.

The Company’s portfolio of products are integrated into a variety of end uses, which are described in the table below:

The Company’s primary means of disaggregating revenues is by reportable segments, which can be found in Note 13 to these consolidated financial statements.

The Company’s portfolio of products is integrated into a variety of end uses, which are described in the table below.

Key End Uses Key Products

Clean fuels, emission control & other • Refining hydrocracking catalysts

• Emission control catalysts

• Catalysts used in production of renewable fuels

• Emission control catalyst supports

• Catalyst supports used in production of sustainable fuels such as renewable diesel

• Catalyst used in the production of sustainable aviation fuels

• Catalyst activation

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• Ammonium bisulfite solution

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

• Antiblocks for film packaging

• Niche custom catalyst

Polyethylene, polymers & engineered plastics • Catalysts for high-density polyethylene and chemicals syntheses

• Antiblock for film packaging

• Catalyst for advanced recycling

Regeneration and treatment services • Sulfuric acid regeneration services

• Treatment services

Industrial, mining, & automotive • Sulfur derivatives for industrial production

• Sulfuric acid for mining

Industrial, mining & automotive • Sulfuric acid for mining

• Sulfur derivatives for industrial production

• Sulfuric derivatives for nylon production

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

The following table disaggregates the Company’s sales, by segment and end use, for the years ended December 31, 2022, 2021 and 2020:

The following tables disaggregate the Company’s sales, by segment and end uses, for the years ended December 31, 2023, 2022 and 2021, respectively:

Year ended December 31, 2023

Ecoservices Catalyst Technologies (2)

Ecoservices Advanced Materials & Catalysts (2)

Clean fuels, emission control & other $ 29,850 $ — $ 29,850

Polymers & engineered plastics — 117,687 117,687

Polyethylene, polymers & engineered plastics — 106,273 106,273

Regeneration and treatment services (1)

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Year ended December 31, 2022

Ecoservices Catalyst Technologies (2)

Ecoservices Advanced Materials & Catalysts (2)

Clean fuels, emission control & other $ 28,966 $ — $ 28,966

Polymers & engineered plastics — 110,688 110,688

Polyethylene, polymers & engineered plastics — 117,687 117,687

Regeneration and treatment services (1)

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Year ended December 31, 2021

Ecoservices Catalyst Technologies (2)

Ecoservices Advanced Materials & Catalysts (2)

Clean fuels, emission control & other $ 25,673 $ — $ 25,673

Polymers & engineered plastics — 94,007 94,007

Polyethylene, polymers & engineered plastics — 110,688 110,688

Regeneration and treatment services (1)

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Total segment sales $ 500,513 $ 110,688 $ 611,201

(1) As described in Note 1, the Company experiences seasonal sales fluctuations to customers in the regeneration and treatment services end use.

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

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

joint ventures (collectively, the “Zeolyst Joint Venture”) accounted for using the equity method (see Note 12 to these condensed consolidated financial statements for further information).

joint ventures (collectively, the “Zeolyst Joint Venture”) accounted for using the equity method (see Note 10 to these consolidated financial statements for further information).

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

The following table presents information about the Company’s assets and liabilities that were measured at fair value on a recurring basis as of December 31, 2022 and 2021, 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 December 31, 2023 and 2022, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.

2023 Quoted Prices in

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Accumulated Other Comprehensive Income (Loss)

The stockholders’ equity footnote disclosures have been revised to include the impact of discontinued operations on pensions and postretirement benefits and foreign currency translation for the year ended December 31, 2021 in other comprehensive income (loss) and accumulated other comprehensive income (loss).

The stockholders’ equity footnote disclosures have been revised to correct a presentation error in the components of accumulated other comprehensive income (loss) for the years ended December 31, 2022 and 2021.

See Note 2 to these consolidated financial statements for further information on the reclassification and correction of errors in historical presentation.

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Net changes in fair values of derivatives, net of tax of $( 4,385 ) and $( 9,057 )

12,546 24,672

Foreign currency translation adjustments, net of tax of $ 8,177 and $ 8,177

( 14,116 ) ( 18,172 )

Accumulated other comprehensive income (loss) $ 5,992 $ ( 5,792 )

Accumulated other comprehensive (loss) income $ ( 958 ) $ 5,992

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Defined benefit and other postretirement plans:

Amortization of net gains and (losses) $ ( 3,383 ) $ 836 $ ( 2,547 ) $ 10,917 $ ( 2,757 ) $ 8,160 $ 2,627 $ ( 791 ) $ 1,836

Amortization of prior service cost ( 210 ) 52 ( 158 ) ( 232 ) 58 ( 174 ) ( 232 ) 58 ( 174 )

Settlement gain (loss) 39 ( 10 ) 29 2,059 ( 515 ) 1,544 64 ( 16 ) 48

Net gain (loss) $ 1,511 $ ( 297 ) $ 1,214 $ ( 3,344 ) $ 826 $ ( 2,518 ) $ 12,976 $ ( 3,272 ) $ 9,704

Net prior service cost ( 125 ) 31 ( 94 ) ( 210 ) 52 ( 158 ) ( 232 ) 58 ( 174 )

Benefit plans, net 1,386 ( 266 ) 1,120 ( 3,554 ) 878 ( 2,676 ) 12,744 ( 3,214 ) 9,530

Net gain from hedging activities 33,194 ( 8,812 ) 24,382 3,885 ( 971 ) 2,914 1,569 ( 392 ) 1,177

Net (loss) gain from hedging activities ( 17,312 ) 5,186 ( 12,126 ) 33,194 ( 8,812 ) 24,382 3,885 ( 971 ) 2,914

Foreign currency translation (1)

4,056 — 4,056 ( 9,922 ) — ( 9,922 ) ( 9,202 ) 6,954 ( 2,248 )

Other comprehensive income (loss) $ 19,718 $ ( 7,934 ) $ 11,784 $ 7,427 $ 2,769 $ 10,196 $ 5,812 $ ( 7,392 ) $ ( 1,580 )

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

Other comprehensive (loss) income $ ( 11,870 ) $ 4,920 $ ( 6,950 ) $ 19,718 $ ( 7,934 ) $ 11,784 $ 7,427 $ 2,769 $ 10,196

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

deferred income tax rate.

See Note 20 to these consolidated financial statements for information regarding the Company’s cross currency interest rate swaps.

In March 2021, as a result of the Performance Materials and Performance Chemicals divestitures, the Company settled its cross-currency swaps.

The following table presents the changes in accumulated other comprehensive income (loss), net of tax, by component for the years ended December 31, 2023 and 2022:

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

Other comprehensive income before reclassifications 5,622 2,580 11,043 19,245

Other comprehensive income (loss) before reclassifications ( 2,832 ) 23,868 ( 9,922 ) 11,114

Amounts reclassified from accumulated other comprehensive income (1)

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Amortization of defined benefit and other postretirement plans:

Prior service credit $ ( 210 ) $ ( 232 ) Other (expense) income (2)

Actuarial losses 3 5 Other (expense) income (2)

Release of actuarial losses — ( 3,737 ) Net loss from discontinued operations, net of tax

Net prior service credit $ ( 125 ) $ ( 210 ) Other (expense) income (2)

Net loss 59 3 Other (expense) income (2)

( 66 ) ( 207 ) Total before tax

3 unchanged sentences

Interest rate caps $ 22,731 $ ( 683 ) Interest expense

169 110 Tax benefit

( 5,574 ) 169 Tax benefit (expense)

17,157 ( 514 ) Net of tax

Release of foreign currency translation — 14,014 Net loss from discontinued operations, net of tax

Total reclassifications for the period $ 17,122 $ ( 670 ) Net of tax

(1) Amounts in parentheses indicate debits to profit/loss.

(2) These accumulated other comprehensive income (loss) components are components of net periodic pension and other postretirement cost (see Note 22 to these consolidated financial statements for additional details).

(2) These accumulated other comprehensive income (loss) components are components of net periodic pension and other postretirement cost (see Note 20 to these consolidated financial statements for further information).

Treasury Stock Repurchases

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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 next four years .

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

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

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 year ended December 31, 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 $ 73,373 , excluding accrued excise tax.

As of December 31, 2023, $ 234,592 was available for additional share repurchases under the program.

AND SUBSIDIARIES

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

During the year ended December 31, 2022, the Company repurchased 1,970,763 shares of its common stock on the open market at an average price of $ 9.82 per share, for a total of $ 19,356 .

Additionally, i n connection with secondary offerings of the Company’s common stock, the Company repurchased 6,500,000 shares of its common stock sold in the August 2022 offering from the underwriters at a price of $ 8.36 per share and 8,000,000 shares of its common stock sold in the November 2022 offering from the underwriters at a price of $ 7.88 per share, for a total of $ 117,346 .

As of December 31, 2022, $ 313,298 was available for additional share repurchases under the program.

The Company accrued excise tax of $ 638 related to these repurchases, net of shares issued under the Company’s equity incentive program during the year ended December 31, 2023 (see Note 19 to these consolidated financial statements for further information).

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

During the year ended December 31, 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 secondary offerings of the Company’s common stock in August and November 2022, the Company repurchased 14,500,000 shares of its common stock sold in the offerings from underwriters at a weighted average price of $ 8.09 per share concurrently with the closing of the offerings, for a total of $ 117,346 .

Tax Withholdings on Equity Award Vesting

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

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

There were 315,635 and 32,058 shares delivered to the Company to cover tax payments for the year ended December 31, 2023 and2022 , respectively and the fair value of those shares withheld to cover tax payments were $ 3,372 and $ 332 for the years ended December 31, 2023 and 2022 , respectively.

Dividends Paid

On December 14, 2020, the Company’s Board of Directors declared a special cash dividend of $ 1.80 per share, using after tax cash proceeds and cash on hand from the sale of the Performance Materials business.

The dividend was paid to our stockholders of record at the close of business on December 31, 2020.

See Note 4 of these consolidated financial statements for additional details.

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

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

See Note 5 of these consolidated financial statements for additional details.

See Note 4 of these consolidated financial statements for f urther information.

Other Operating Expense, Net:

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$ 22,100 $ 34,911 $ 24,273

(1) During the year ended December 31, 2022, the Company’s results were impacted by costs associated with severance charges for certain executives and employees.

(1) During the year ended December 31, 2022, the Company’s results were impacted by costs associated with severance charges for certain former executives and employees.

The severance charges were not related to a specific restructuring plan of the Company, but rather were incurred primarily in connection with the leadership transition in April 2022 and the retirement of several executives.

26 unchanged sentences

Noncurrent liabilities 5,797 16,000

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

2023 2022 2021

3 unchanged sentences

Net income 74,053 68,255 68,433

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

(1) Summarized information of the combined investments is presented at 100%;

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Balance at end of period $ 440,198 $ 436,013

The Company had net receivables due from affiliates of $ 3,539 and $ 6,739 as of December 31, 2022 and 2021, respectively, which are included in prepaid and other current assets.

Net receivables due from affiliates are generally non-trade receivables.

The Company had receivables due from affiliates of $ 3,231 and $ 3,861 as of December 31, 2023 and 2022, respectively, which are included in prepaid and other current assets.

The Company had payables from affiliates of $ 1,351 and $ 322 as of December 31, 2023 and 2022, respectively, which is included in accrued liabilities.

Receivables and payables due from affiliates are generally non-trade.

Sales to affiliates were $ 2,457 , $ 5,915 and $ 3,643 for the years ended December 31, 2023, 2022 and 2021, respectively.

The Company did no t purchase goods from affiliates during the years ended December 31, 2022, 2021 and 2020.

On December 18, 2013, the Company and its joint venture, Zeolyst International, entered into a ten year real estate tax abatement agreement with the Unified Government of Wyandotte County, Kansas.

Purchases from affiliates were immaterial during the years ended December 31, 2023, 2022 and 2021.

On December 18, 2013, the Company and its joint venture, Zeolyst International, entered into a ten year real estate tax abatement agreement with the Unified Government of Wyandotte County in Kansas City, Kansas.

The agreement utilizes an Industrial Revenue Bond (“IRB”) financing structure to achieve a 75 % real estate tax abatement on the value of the improvements that were constructed during the expansion of the Company and Zeolyst International’s facilities at the jointly-operated Kansas City, Kansas plant.

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Depreciation expense was $ 70,551 , $ 65,121 and $ 65,955 for the years ended December 31, 2023, 2022 and 2021, respectively.

Operating lease costs of $ 10,318 and $ 9,825 are included in cost of goods sold and in selling, general and administrative expenses on the consolidated statement of income for the year ended December 31, 2022 and 2021, respectively.

Finance lease and financing obligation costs of $ 3,400 and $ 1,656 are included in cost of goods sold and in selling, general, and administrative expenses on the consolidated statement of income for the years ended December 31, 2022 and 2021.

Lease income is not material to the results of operations for the years ended December 31, 2022 and 2021.

The table below presents the operating leases, finance leases, and financing obligation right-of-use assets and liabilities recognized on the consolidated balance sheet as of December 31, 2022 and 2021:

Operating lease costs of $ 10,828 , $ 10,318 and $ 9,825 are included in cost of goods sold and in selling, general and administrative expenses on the consolidated statements of income for the years ended December 31, 2023, 2022 and 2021, respectively.

Finance lease costs of $ 77 , $ 36 and $ 37 are included in cost of goods sold and in selling, general, and administrative expenses on the consolidated statement of income for the years ended December 31, 2023 2022 and 2021, respectively.

Lease income is not material to the results of operations for the years ended December 31, 2023, 2022 and 2021, respectively.

The table below presents the operating and finance leases right-of-use assets and liabilities recognized on the consolidated balance sheet as of December 31, 2023 and 2022:

Classification December 31,

2023 December 31,

Operating lease assets Right-of-use lease assets $ 28,265 $ 30,115

Finance lease and financing obligation assets Property, plant and equipment, net 21,506 29,737

Operating lease Right-of-use lease assets $ 24,281 $ 28,265

Finance lease Property, plant and equipment, net 1,269 1,422

Total leased assets $ 25,550 $ 29,687

Operating lease liabilities Operating lease liabilities—current $ 8,155 $ 8,306

Finance lease and financing obligation liabilities Accrued liabilities 2,855 3,181

Operating lease liabilities Operating lease liabilities—noncurrent 20,021 21,719

Finance lease and financing obligation liabilities Other long-term liabilities 7,633 11,667

Operating lease Operating lease liabilities—current $ 8,193 $ 8,155

Finance lease Accrued liabilities 70 86

Operating lease Operating lease liabilities—noncurrent 16,030 20,021

Finance lease Other long-term liabilities 28 101

Total leased liabilities $ 24,321 $ 28,363

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

The Company’s weighted average remaining lease term and weighted average discount rate for operating and financing leases as of December 31, 2022 are as follows:

The Company’s weighted average remaining lease term and weighted average discount rate for operating and financing leases as of December 31, 2023 and 2022 are as follows:

2023 December 31,

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Operating leases 3.96 4.45

Finance leases and financing obligation 3.57 4.69

Finance leases 1.33 2.29

Weighted average discount rate:

Operating leases 5.95 % 5.24 %

Finance leases and financing obligation 2.86 % 2.86 %

Finance leases 3.91 % 3.10 %

Maturities of lease liabilities as of December 31, 2023 are as follows:

1 unchanged sentence

Leases Finance

Leases and Financing Obligation

2024 $ 9,539 $ 78

2025 6,916 23

2025 5,797 3,036

2026 4,166 1,878

Thereafter 1,014 —

3 unchanged sentences

$ 24,223 $ 98

(1) Refer to the above table regarding the Company’s right-of-use lease assets and lease liabilities for the presentation of the lease liabilities in the Company’s consolidated balance sheet as of December 31, 2022.

The following table presents other information related to the Company’s operating leases, finance leases and financing obligation and the impact on the Company’s consolidated statement of cash flows:

(1) Refer to the above table regarding the Company’s right-of-use lease assets and lease liabilities for the classification of lease liabilities in the Company’s consolidated balance sheet as of December 31, 2023.

The following table presents other information related to the Company’s operating and finance leases and the impact on the Company’s consolidated statement of cash flows:

Cash paid for amounts included in the measurement of lease liabilities:

Payments on operating leases included in operating cash flows $ 10,813 $ 10,327

Interest payments under finance leases and financing obligation included in operating cash flows 339 189

Principal payments under finance leases and financing obligation included in financing cash flows 2,724 1,466

Interest payments under finance leases included in operating cash flows 5 3

Principal payments under finance leases included in financing cash flows 72 33

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

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Reportable Segments:

The Company has organized its business around two operating segments based on the review of discrete financial results for each of the operating segments by the Company’s chief operating decision maker (the Company’s Chief Executive Officer), or CODM, for performance assessment and resource allocation purposes.

The Company has organized its business around two operating segments based on the review of discrete financial results for each of the operating segments by the CODM, for performance assessment and resource allocation purposes.

Each of the Company’s operating segments represents a reportable segment under GAAP.

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

and (2) Catalyst Technologies serves the polymers and engineered plastics and the global refining, petrochemical and emissions control industries.

The Catalyst Technologies segment includes equity in net income from Zeolyst International and Zeolyst C.V.

and (2) Advanced Materials & Catalysts serves the polymers and engineered plastics and the global refining, petrochemical and emissions control industries.

The Advanced Materials & Catalysts segment includes equity in net income from Zeolyst International and Zeolyst C.V.

(collectively, the “Zeolyst Joint Venture”), each of which are 50/50 joint ventures with CRI Zeolites Inc.

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The Zeolyst Joint Venture is accounted for using the equity method in the Company’s consolidated financial statements (see Note 10 to these consolidated financial statements for further information).

Company management evaluates the Catalyst Technologies segment’s performance, including the Zeolyst Joint Venture, on a proportionate consolidation basis.

Accordingly, the revenues and expenses used to compute the Catalyst Technologies segment’s adjusted earnings before interest, income taxes, depreciation and amortization (“Adjusted EBITDA”) include the Zeolyst Joint Venture’s results of operations on a proportionate basis based on the Company’s 50% ownership level.

Company management evaluates the Advanced Materials & Catalysts segment’s performance, including the Zeolyst Joint Venture, on a proportionate consolidation basis.

Accordingly, the revenues and expenses used to compute the Advanced Materials & Catalysts segment’s adjusted earnings before interest, income taxes, depreciation and amortization (“Adjusted EBITDA”) include the Zeolyst Joint Venture’s results of operations on a proportionate basis based on the Company’s 50% ownership level.

Since the Company uses the equity method of accounting for the Zeolyst Joint Venture, these items are eliminated when reconciling to the Company’s consolidated results of operations.

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Adjusted EBITDA consists of EBITDA, which is a measure defined as net income before interest, income taxes, depreciation and amortization (each of which is included in the Company’s consolidated statements of income), and adjusted for certain items as discussed below.

Corporate overhead costs are not included in segment results as they relate to corporate-based responsibilities and decisions and are not included in the internal measures of segment operating performance used by the Company to measure the underlying performance of the operating segments.

AND SUBSIDIARIES

4 unchanged sentences

Ecoservices $ 584,845 $ 702,472 $ 500,513

Catalyst Technologies (1)

Advanced Materials & Catalysts (1)

106,273 117,687 110,688

2 unchanged sentences

Ecoservices $ 199,966 $ 227,760 $ 177,672

Catalyst Technologies (3)

Advanced Materials & Catalysts (3)

81,892 77,978 88,028

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(1) Excludes the Company’s proportionate share of sales from the Zeolyst Joint Venture accounted for using the equity method.

The proportionate share of sales is $ 132,588 , $ 131,332 and $ 128,623 for the years ended December 31, 2022, 2021 and 2020, respectively.

The proportionate share of sales excluded is $ 156,481 , $ 132,588 and $ 131,332 for the years ended December 31, 2023, 2022 and 2021, 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 $ 50,331 for the year ended December 31, 2022, which includes $ 27,931 of equity in net income plus $ 6,403 of amortization of investment in affiliate step-up plus $ 15,997 of joint venture depreciation, amortization and interest.

The Adjusted EBITDA from the Zeolyst Joint Venture included in the Catalyst Technologies segment is $ 49,872 for the year ended December 31, 2021, which includes $ 27,827 of equity in net income plus $ 6,480 of amortization of investment in affiliate step-up plus $ 15,565 of joint venture depreciation, amortization and interest.

The Adjusted EBITDA from the Zeolyst Joint Venture included in the Catalyst Technologies segment is $ 42,515 for the year ended December 31, 2020, which includes $ 21,157 of equity in net income plus $ 6,634 of amortization of investment in affiliate step-up plus $ 14,724 of joint venture depreciation, amortization and interest.

(3) The Adjusted EBITDA from the Zeolyst Joint Venture included in the Advanced Materials & Catalysts segment is $ 50,490 for the year ended December 31, 2023, which includes $ 30,695 of equity in net income plus $ 6,403 of amortization of investment in affiliate step-up plus $ 13,392 of joint venture depreciation, amortization and interest.

The Adjusted EBITDA from the Zeolyst Joint Venture included in the Advanced Materials & Catalysts segment is $ 50,331 for the year ended December 31, 2022, which includes $ 27,931 of equity in net income plus $ 6,403 of amortization of investment in affiliate step-up plus $ 15,997 of joint venture depreciation, amortization and interest.

The Adjusted EBITDA from the Zeolyst Joint Venture included in the Advanced Materials & Catalysts segment is $ 49,872 for the year ended December 31, 2021, which includes $ 27,827 of equity in net income plus $ 6,480 of amortization of investment in affiliate step-up plus $ 15,565 of joint venture depreciation, amortization and interest.

AND SUBSIDIARIES

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The Company’s consolidated results include equity in net income from affiliated companies of $ 30,624 , $ 27,725 and $ 27,737 for the years ended December 31, 2023, 2022, and 2021, respectively.

This is primarily comprised of equity in net income of $ 27,931 , $ 27,827 and $ 21,157 in the Catalyst Technologies segment from the Zeolyst Joint Venture for the years ended December 31, 2022, 2021 and 2020, respectively.

This is primarily comprised of equity in net income of $ 30,695 , $ 27,931 and $ 27,827 in the Advanced Materials & Catalysts segment from the Zeolyst Joint Venture for the years ended December 31, 2023, 2022 and 2021, respectively.

The Company’s equity in net income from affiliated companies in the consolidated results includes amortization expense related to purchase accounting fair value adjustments associated with the Zeolyst Joint Venture as a result of a prior business combination.

3 unchanged sentences

Ecoservices $ 53,705 $ 47,770 $ 43,561

Catalyst Technologies (1)

Advanced Materials & Catalysts (1)

8,441 8,194 15,997

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United States $ 649,652 $ 774,119 $ 571,587

Other foreign countries 46,040 39,614 52,238

Foreign countries 41,466 46,040 39,614

Total $ 691,118 $ 820,159 $ 611,201

(1) Except for the United States, no sales in an individual country exceeded 10% of the Company’s total sales.

The Company sold products through its Ecoservices and Catalyst Technologies segments to customer A, which accounted for 12.3 %, 12.6 % and 10.4 % of the Company’s total sales as of December 31, 2022, 2021, and 2020 respectively.

The Company sold products through its Ecoservices and Advanced Materials & Catalysts segments to single customer, which accounted for 13.2 %, 12.3 % and 12.6 % of the Company’s total sales as of December 31, 2023, 2022, and 2021 respectively.

Long-lived assets by geographic area is presented in the following table.

2 unchanged sentences

United States $ 575,536 $ 587,726

Other foreign countries 25,428 28,840

Foreign countries 25,649 25,428

Total $ 601,185 $ 613,154

4 unchanged sentences

The changes in the carrying amount of goodwill for the years ended December 31, 2023 and 2022 is summarized as follows:

Ecoservices Catalyst Technologies Total

Ecoservices Advanced Materials & Catalysts Total

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

Goodwill recognized (Note 6)

Goodwill adjustments (1)

( 81 ) — ( 81 )

1 unchanged sentence

Balance as of December 31, 2022 326,589 76,574 403,163

Goodwill adjustments (1)

( 81 ) — ( 81 )

Foreign exchange impact — 1,307 1,307

Balance as of December 31, 2023 $ 326,589 $ 77,881 $ 404,470

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

The Company completed its annual goodwill impairment assessments as of October 1, 2023 and 2022.

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Amortization expense related to technical know-how is included in cost of goods sold in the consolidated statements of income and was $ 3,482 , $ 3,480 and $ 3,465 for the years ended December 31, 2023, 2022 and 2021, respectively.

Amortization expense related to customer relationships, non-compete agreements, trademarks, and tradenames is included in other operating expense, net in the consolidated statements of income and was $ 10,562 , $ 10,321 and $ 8,678 for the years ended December 31, 2022, 2021 and 2020, respectively.

Amortization expense related to customer relationships, non-compete agreements, trademarks, and trade names is included in other operating expense, net in the consolidated statements of income and was $ 10,565 , $ 10,562 and $ 10,321 for the years ended December 31, 2023, 2022 and 2021, respectively.

Estimated future aggregate amortization expense of intangible assets is as follows:

13 unchanged sentences

Dividends payable 641 4,062

Accrued closing adjustments for Performance Chemicals divestiture (Note 5) — 3,745

Other 18,048 17,394

22 unchanged sentences

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

On February 17, 2023, the Company amended the ABL Facility to replace LIBOR with a SOFR as the benchmark interest rate with respect to U.S.

dollar-denominated borrowings.

Following these amendments, U.S.

dollar-denominated borrowings under the ABL Facility will bear interest at a rate equal to an adjusted SOFR rate or the base rate plus a margin of between 1.25 % and 1.75 % or 0.25 % to 0.75 %, respectively.

On February 17, 2023, the Company amended 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 8.75 % as of December 31, 2023.

As of December 31, 2023, there were no revolving credit borrowings outstanding under the ABL Facility.

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In addition, the ABL Facility is secured by the equity interests in, and substantially all of the assets of, certain foreign guarantors in connection with the Euro-denominated availability.

The ABL Facility and the 2021 Term Loan Facility contain various non-financial restrictive covenants.

The ABL Facility and the 2021 Term Loan Facility contain various restrictive covenants.

Each limits the ability of the Borrower and its restricted subsidiaries to incur certain indebtedness or liens, merge, consolidate or liquidate, dispose of certain property, make investments or declare or pay dividends, make optional payments, modify certain debt instruments, enter into certain transactions with affiliates, enter into certain sales and leasebacks, and certain other non-financial restrictive covenants.

The ABL Facility also contains one financial covenant which applies when minimum availability under the ABL Facility exceeds a certain threshold.

During such time, the Company is required to maintain a fixed-charge coverage ratio of at least 1 .0 to 1.0.

The Company is in compliance with all debt covenants as of December 31, 2022 and 2021, respectively.

The Company was in compliance with all debt covenants as of December 31, 2023 and 2022, respectively.

2021 Term Loan Facility

1 unchanged sentence

The 2021 Term Loan Facility requires scheduled quarterly amortization payments, each equal to 0.25 % of the original principal amount of the loans under the 2021 Term Loan Facility.

The proceeds of the 2021 Term Loan Facility were used to pay in full the 2020 Term Loan Facility, partially pay the 2018 Term Loan Facility (each as described below) and pay the associated fees and expenses.

As of December 31, 2022, the 2021 Term Loan Facility accrued interest at a floating rate of LIBOR plus 2.75 % per annum and is scheduled to mature in June 2028.

The proceeds of the 2021 Term Loan Facility were used to pay in full the 2020 Term Loan Facility, partially pay the 2018 Term Loan Facility and pay the associated fees and expenses.

On February 9, 2023, the Company amended the 2021 Term Loan Facility to replace LIBOR with SOFR as the benchmark interest rate.

Following this amendments, the 2021 Term Loan Facility bears interest at an adjusted SOFR rate (with a 0.50 % minimum floor) plus 2.75 % per annum (or, depending on the Borrower’s first lien net leverage ratio, 2.50 %).

The interest rate on the 2021 Term Loan Facility was 7.98 % as of December 31, 2023.

AND SUBSIDIARIES

1 unchanged sentence

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

As of December 31, 2023, the 2021 Term Loan Facility accrued interest at a floating rate of SOFR plus 2.50 % per annum and is scheduled to mature in June 2028.

The Company may at any time or from time to time voluntarily prepay loans under the 2021 Term Loan Facility in whole or in part without premium or penalty.

5 unchanged sentences

subsidiary guarantors securing the ABL Facility.

2018 Term Loan Facility - Repaid in 2021

On February 8, 2018, PQ Corp entered in an agreement for a senior secured term loan facility (the “2018 Term Loan Facility”) for an aggregate principal amount of $ 1,267,000 .

The 2018 Term Loan Facility was amended on February 7, 2020 and partially repaid on June 9, 2021 with a portion of the proceeds of the 2021 Term Loan Facility.

On August 1, 2021, the Company used a portion of the net cash proceeds from the sale of the Performance Chemicals business to repay the entire 2018 Term Loan Facility balance of $ 231,363 .

As a result, Ecovyst LLC wrote off $ 849 of unamortized deferred financing costs and $ 2,395 of original issue discount as debt extinguishment costs during the year ended December 31, 2022.

2020 Term Loan Facility - Repaid in 2021

On July 22, 2020, PQ Corp entered into an agreement for a new senior secured term loan facility (the “2020 Term Loan Facility”) in an aggregate principal amount of $ 650,000 .

The proceeds were used to redeem its existing $ 625,000 of 6.75 % Senior Secured Notes due 2022 and pay the associated early redemption premiums.

The 2020 Term Loan Facility was fully repaid with the proceeds of the 2021 Term Loan Facility.

5.75% Senior Unsecured Notes due 2025 - Redeemed in 2021

On December 11, 2017, PQ Corp issued $ 300,000 aggregate principal amount of 5.75% Senior Unsecured Notes due 2025 (the “ 5.75 % Senior Unsecured Notes”).

Concurrent with, and using a portion of the net proceeds from, the divestiture of the Performance Chemicals business on August 1, 2021, the Company redeemed the remaining principal balance of $ 295,000 of its 5.75% Senior Unsecured Notes due 2025.

In connection with the redemption of the 5.75% Senior Unsecured Notes, PQ Corp paid a redemption premium of $ 8,481 which was recorded as debt extinguishment costs during the year ended December 31, 2021.

In addition, previous unamortized deferred financing costs of $ 2,262 and original issue discount of $ 1,198 associated with the previously outstanding debt were written off as debt extinguishment costs during the year ended December 31, 2021.

Fair Value of Debt

2 unchanged sentences

The fair value is classified as Level 2 based upon the fair value hierarchy (see Note 6 to these consolidated financial statements for further information on fair value measurements).

Aggregate Long-term Debt Maturities

The aggregate long-term debt maturities are:

AND SUBSIDIARIES

1 unchanged sentence

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

Debt extinguishment costs resulting from Term Loan amendments

As a result of amending the term loan facilities during the year ended December 31, 2021, Ecovyst LLC recorded $ 5,736 of new creditor and third-party financing costs as debt extinguishment costs.

In addition, previous unamortized deferred financing costs of $ 1,725 and original issue discount of $ 3,664 associated with the previously outstanding debt were written off as debt extinguishment costs during the year ended December 31, 2021.

As a result of the ABL Amendment, unamortized deferred financing costs of $ 485 and original issue discount of $ 107 associated with the ABL Credit Agreement were written off as debt extinguishment costs during the year ended December 31, 2021.

Aggregate Long-term Debt Maturities

The aggregate long-term debt maturities are:

Thereafter 841,500

Other Long-term Liabilities:

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The derivative instruments entered into by the Company do not contain credit-risk-related contingent features.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Market risk is the adverse effect on the value of a derivative instrument that results from a change in interest rates.

3 unchanged sentences

Changes in interest rates will not affect the market value of such debt but will affect the Company’s interest payments over the term of the loans.

Likewise, an increase in interest rates could have a material impact on the Company’s cash flow.

Likewise, an increase in interest rates could have a material impact on the Company’s consolidated statements of cash flows.

The Company hedges the interest rate fluctuations on debt obligations through interest rate cap agreements.

The Company records these agreements at fair value as assets or liabilities in its consolidated balance sheet.

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

The Company records these agreements at fair value as assets or liabilities in its consolidated balance sheets.

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

Reclassifications of the gains and losses on the interest rate cap agreements into earnings are recorded as part of interest expense in the consolidated statements of income as the Company makes its interest payments on the hedged portion of its senior secured credit facilities.

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

In July 2016, the Company entered into interest rate cap agreements, paying a premium of $ 1,551 to mitigate interest rate volatility from July 2016 through July 2020 by employing varying cap rates, ranging from 1.50 % to 3.00 % on $ 1,000,000 of notional variable-rate debt.

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

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

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

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

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

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

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

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

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

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

The total cumulative annuitized premium is $ 4,450 .

The cap rate in effect at December 31, 2022 was 1.00 %.

In November 2022, the Company entered into a new interest rate cap agreement to mitigate interest rate volatility from July 2023 through July 2024, with a cap rate of 1.00 % on $ 150,000 of notional variable-rate debt and annuitized premium of $ 5,268 during the effective period, and mitigate interest rate volatility from July 2024 through July 2026, with a cap rate of 1.00 % and 175,000 notional variable-rate debt and annuitized premium of $ 6,145 during the effective period.

On February 21, 2023, we 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.

Use of Derivative Financial Instruments to Manage Foreign Currency Risk.

The Company is exposed to risks related to its net investments in foreign operations due to fluctuations in foreign currency exchange rates, and prior to the sale of the Performance Materials and Performance Chemicals businesses, particularly between the United States dollar and the Euro.

The Company entered into multiple cross-currency interest rate swap arrangements with an aggregate notional amount of € 280,000 in October 2019 to hedge the exposure on the net investments of certain of its Euro-denominated

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

Financial instrument Number of instruments In effect as of December 31, 2023

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

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

AND SUBSIDIARIES

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

subsidiaries in its Performance Materials and Performance Chemicals businesses.

The Company recorded these swap agreements at fair value as assets or liabilities in its consolidated balance sheet.

In March 2021, as a result of the Performance Materials and Performance Chemicals divestitures, the Company settled its cross-currency swaps.

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

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

As the derivatives were designated and qualified as net investment hedges, changes in the fair value of the swaps attributable to changes in the spot exchange rates are recognized in cumulative translation adjustment (“CTA”) within OCI and are held there until the hedged net investments are sold or substantially liquidated.

Changes in the fair value of the swaps attributable to the cross currency basis spread were excluded from the assessment of hedge effectiveness and were recorded in current period earnings.

Upon such sale or liquidation, the amount recognized in CTA was reclassified to earnings and reported in the same line item as the gain or loss on the liquidation of the net investments.

In connection with the sales of the Performance Materials business in December 2020 and Performance Chemicals business in August 2021, amounts deferred in CTA related to the cross-currency swaps were reclassified from accumulated other comprehensive income and recognized as part of the respective losses on sale.

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

The current notional amounts of the three interest rate cap agreements in effect at December 31, 2023 are $ 250,000 , $ 150,000 and $ 250,000 .

The Company entered into a $ 250,000 interest rate cap to mitigate interest rate volatility from August 2022 to October 2024, a $ 150,000 interest rate cap agreement to mitigate interest rate volatility from August 2023 to July 2026, and a $ 250,000 interest rate cap agreement to mitigate interest rate volatility from September 2023 to October 2025.

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 rates in effect at December 31, 2023 was 1.00 %.

The Company has also entered into a forward starting interest rate cap agreements 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.

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

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

Balance sheet location 2023 2022

6 unchanged sentences

Derivatives designated as cash flow hedges:

Interest rate caps Accrued liabilities $ — $ 1,288

Interest rate caps Other long-term liabilities $ 2,496 $ 2,071

Total derivative liabilities $ 2,496 $ 2,071

The following table shows the effect of the Company’s derivative instruments designated as hedges on accumulated other comprehensive income (loss) (“AOCI”) and the statements of income for the years ended December 31, 2022, 2021 and 2020:

The following table shows the effect of the Company’s derivative instruments designated as cash flow hedges on accumulated other comprehensive income (loss) and the consolidated statements of income for the years ended December 31, 2023, 2022 and 2021, respectively:

Years ended December 31,

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

The following table shows the effect of the Company’s cash flow hedge accounting on the consolidated statements of income for the years ended December 31, 2022, 2021 and 2020:

The following table shows the effect of the Company’s cash flow hedge accounting on the consolidated statements of income for the years ended December 31, 2023, 2022 and 2021, respectively:

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

1 unchanged sentence

2023 2022 2021

Cost of goods sold Interest (expense) income Cost of goods sold Interest (expense) income Cost of goods sold Interest (expense) income

Total amounts of income and expense line items presented in the statement of income in which the effects of cash flow hedges are recorded $ ( 595,529 ) $ ( 37,217 ) $ ( 434,540 ) $ ( 36,990 ) $ ( 344,967 ) $ ( 50,409 )

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 $ ( 44,730 ) $ ( 37,217 ) $ ( 36,990 )

The effects of cash flow hedging:

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The amount of unrealized losses in AOCI related to the Company’s cash flow hedges that is expected to be reclassified to the consolidated statement of income over the next twelve months is $ 9,712 as of December 31, 2023.

The following table shows the effect of the Company’s net investment hedges on AOCI and the consolidated statements of income for the years ended December 31, 2021 and 2020, respectively:

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

December 31, Years ended

2021 2020 2021 2020 2021 2020

Cross currency swaps $ 9,787 $ ( 23,622 ) Net (loss) income from discontinued operations, net of tax (1)

$ 9,754 $ 1,967 Interest (expense) income $ 545 $ 5,090

(1) Includes the gain (loss) on the sale of the underlying subsidiary .

Income Taxes:

Income (loss) before income taxes and noncontrolling interest within or outside the United States are shown below:

Income before income taxes within or outside the United States are shown below:

2023 2022 2021

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

The provision (benefit) for income taxes as shown in the accompanying consolidated statements of income consists of the following:

The provision for income taxes as shown in the accompanying consolidated statements of income consists of the following:

2023 2022 2021

7 unchanged sentences

( 17,072 ) 1,652 4,548

Provision (benefit) for income taxes $ 24,940 $ 12,147 $ ( 52,065 )

A reconciliation of income tax expense (benefit) at the U.S.

Provision for income taxes $ 10,785 $ 24,940 $ 12,147

A reconciliation of income tax expense at the U.S.

federal statutory income tax rate to actual income tax expense is as follows:

3 unchanged sentences

Changes in uncertain tax positions 985 558 877

State credit - valuation allowance release ( 10,203 ) — —

Rate changes ( 101 ) — 5,209

4 unchanged sentences

Other, net ( 750 ) ( 416 ) ( 93 )

Provision (benefit) for income taxes $ 24,940 $ 12,147 $ ( 52,065 )

Provision for income taxes $ 10,785 $ 24,940 $ 12,147

AND SUBSIDIARIES

24 unchanged sentences

The Company has $ 14,659 of deferred tax assets related to state tax credits, which are subject to a 16-year carryforward period.

A partial valuation allowance of $ 10,203 has been recorded due to the expected expiration of these credits before they are able to be utilized.

The Company has $ 13,705 of deferred tax assets related to state net operating losses, which are subject to various carryforward periods of 5 to 20 years or an indefinite carryforward period.

The Company expects to fully utilize its state tax credits before each expiration, as a result the Company has released the valuation allowance associated with its state tax credits.

As of December 31, 2023, the valuation allowance associated with its state tax credits is $ 0 .

The Company has $ 14,680 of deferred tax assets related to state net operating losses and foreign losses, which are subject to various carryforward periods of 5 to 20 years or an indefinite carryforward period.

A partial valuation allowance of $ 9,242 has been recorded due to the expected expiration of these state net operating losses before they are able to be utilized.

The change in net deferred tax liabilities for the years ended December 31, 2022 and 2021 was primarily related to activity connected to book amortization of intangible assets with no corresponding tax basis reducing those deferred tax liabilities, activity with respect to tax deductible goodwill, activity with respect to interest rate caps recorded against other comprehensive income, and activity with respect to stock compensation.

The change in net deferred tax liabilities for the years ended December 31, 2023 and 2022 was primarily related to the release of a state tax credit valuation allowance, differences between book and tax basis depreciation, activity connected to book amortization of intangible assets with no corresponding tax basis reducing those deferred tax liabilities, activity with respect to tax deductible goodwill, activity with respect to interest rate caps recorded against other comprehensive income, and activity with respect to stock compensation.

AND SUBSIDIARIES

2 unchanged sentences

The net change in the total valuation allowance was a decrease of $ 12,290 in 2023.

The valuation allowance at December 31, 2022 was related to state net operating loss carryforwards and tax credits that, in the judgment of management, are not more likely than not to be realized.

The valuation allowance at December 31, 2023 was related to state and foreign net operating loss carryforwards and foreign withholding tax credits that, in the judgment of management, are not more likely than not to be realized.

In assessing the ability to realize deferred tax assets, management considered whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.

6 unchanged sentences

Determination of the deferred withholding tax liability on these unremitted earnings is not practicable.

The Company had total unrecognized tax benefits of $ 7,787 as of December 31, 2022 and 2021, respectively, and there was no activity related to these balances during the year then ended.

If these amounts are recognized in future periods, it would affect the effective tax rate on income from continuing operations for the years in which they are recognized.

Undistributed earnings of foreign subsidiaries and related companies that are deemed to be indefinitely reinvested amounted to $ 198,580 at December 31, 2023.

The following table summarizes the activity related to the Company’s gross unrecognized tax benefits.

The amounts listed in the below table also represents the total unrecognized tax benefits that, if recognized, would impact the effective tax rate as of December 31, 2023 and 2022, respectively:

Balance at beginning of period $ 7,787 $ 7,787

Increases related to prior year tax positions 323 —

Balance at end of period $ 8,110 $ 7,787

To the extent interest and penalties are not assessed with respect to uncertain tax positions, amounts accrued will be reduced and reflected as a reduction of the overall income tax provision in the period for which the event occurs requiring the adjustment.

The Company recorded accrued interest and penalties amounting to $ 558 as of December 31, 2022 in other long-term liabilities on its consolidated balance sheets.

The Company did no t record accrued interest and penalties in December 31, 2021.

The total amount of interest and penalties recognized in provision for income taxes on continuing operations was $ 855 and $ 558 for the years ended December 31, 2023 and 2022, respectively.

The Company recorded cumulative accrued interest and penalties amounting to $ 1,413 as of December 31, 2023 in other long-term liabilities on its consolidated balance sheets.

The Company files numerous consolidated and separate income tax returns in the U.S.

8 unchanged sentences

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

As of December 31, 2022 and 2021, the Company does not believe that there are any positions for which it is reasonably possible that the total amount of unrecognized tax benefits will significantly increase or decrease within the next twelve months.

As of December 31, 2023, it is reasonably possible that the Company may recognize approximately $ 8,023 of previously net unrecognized tax benefits, excluding interest and penalties, related to various U.S.

federal tax positions, primarily due to the expiration of statutes of limitations within the next twelve months.

As of December 31, 2023 and 2022, the Company no longer has a federal net operating loss or foreign tax credit carryforward.

8 unchanged sentences

Beginning in 2023, these transactions will be subject to the excise tax of the IRA.

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

See Note 7 for information on the accrued excise tax related to these stock repurchases.

Benefit Plans:

13 unchanged sentences

The following tables summarize changes in the benefit obligation, plan assets and funded status of the Company’s defined benefit pension plans as well as the components of net periodic benefit cost, including key assumptions:

December 31, December 31,

2022 2021 2021

Change in benefit obligation:

3 unchanged sentences

Benefits paid ( 2,798 ) ( 2,552 )

Actuarial gains ( 18,741 ) ( 3,818 ) —

Translation adjustment — — ( 843 )

Actuarial losses/(gains) 1,565 ( 18,741 )

Benefit obligation at end of the period 66,556 66,879

4 unchanged sentences

Benefits paid ( 2,798 ) ( 2,552 )

Translation adjustment — — ( 843 )

Fair value of plan assets at end of the period 61,618 60,629

Funded status of the plans (underfunded) $ ( 4,938 ) $ ( 6,250 )

The total actuarial gains for the year ended December 31, 2022 was $ 18,741 , which was driven by declines in the discount rates of $ 18,641 and declines in general experience of $ 100 .

The total actuarial gains for the year ended December 31, 2021 was $ 3,818 , which was driven by declines in the discount rates of $ 3,989 and changes in the lump sum conversion of $ 545 offset by changes in mortality assumptions of $ 204 and declines in general experience of $ 512 .

The total actuarial losses for the year ended December 31, 2023 was $ 1,565 , which was driven by decreases in the discount rates of $ 1,365 and declines in general demographic experience of $ 200 .

The total actuarial gains for the year ended December 31, 2022 was $ 18,741 , which was driven by increases in the discount rates of $ 18,641 and increase in general demographic experience of $ 100 .

AND SUBSIDIARIES

3 unchanged sentences

Noncurrent liability $ ( 4,937 ) $ ( 6,250 )

Accumulated other comprehensive income (loss) ( 509 ) ( 672 )

Accumulated other comprehensive income (loss), net of tax 567 ( 509 )

Net amount recognized $ ( 4,370 ) $ ( 6,759 )

5 unchanged sentences

Components of net periodic benefit cost consist of:

December 31, Years ended

December 31, Year ended

2023 2022 2021 2021

Service cost $ — $ — $ 769 $ — $ 1,080

Interest cost $ 3,453 $ 2,569 $ 2,210 $ 255

Expected return on plan assets ( 3,305 ) ( 3,433 ) ( 4,360 ) ( 255 )

Amortization of net loss — — — — 95

Settlement loss (gain) recognized 61 38 ( 26 ) 2,084

Net periodic (benefit) expense $ ( 826 ) $ ( 2,176 ) $ ( 386 ) $ 2,084 $ 1,187

Net periodic expense (benefit) $ 209 $ ( 826 ) $ ( 2,176 ) $ 2,084

All components of net periodic benefit cost other than service cost are presented within other expense (income), net in the Company’s consolidated statements of income.

Components of other changes in plan assets and benefit obligations recognized in other comprehensive income consists of:

Net loss (gain) $ 3,563 $ ( 5,841 )

Translation adjustment — ( 82 )

Amortization or settlement recognition of net gain (loss) ( 38 ) ( 2,058 )

Total recognized in other comprehensive income 3,525 ( 7,981 )

Total recognized in net periodic benefit cost and other comprehensive income $ 2,699 $ ( 7,991 )

Net (gain) loss $ ( 1,461 ) $ 3,563

Amortization or settlement recognition of net loss ( 61 ) ( 38 )

Total recognized in other comprehensive (income) loss ( 1,522 ) 3,525

Total recognized in net periodic benefit cost and other comprehensive (income) loss $ ( 1,313 ) $ 2,699

The net amount of projected benefit obligation and plan assets for all underfunded plans was $ 4,938 and $ 6,250 as of December 31, 2023 and 2022, respectively, and was classified as noncurrent liabilities.

10 unchanged sentences

Significant weighted average assumptions used in determining net periodic benefit cost include the following:

December 31, Years ended

December 31, Year ended

2023 2022 2021 2021

Discount rate 5.39 % 2.90 % 2.50 % 1.20 %

Rate of compensation increase (1)

N/A N/A 3.00 % 1.75 % 1.75 %

Expected return on assets 5.74 % 4.90 % 5.60 % 1.20 %

Rate of compensation increase (1)

N/A N/A N/A 1.75 %

(1) Includes only plans not frozen to benefit accruals for the respective periods.

9 unchanged sentences

and 30 % equity securities and 70 % fixed income investments for the Eco Services Hourly Pension Plan.

The Company classifies plan assets based upon a fair value hierarchy (see Note 8 to these consolidated financial statements for further information).

The classification of each asset within the hierarchy is based on the lowest level input that is significant to its measurement.

The Company classifies plan assets based upon a fair value hierarchy where each asset within the hierarchy is based on the lowest level input that is significant to its measurement.

The fair value hierarchy consists of three levels as follows:

41 unchanged sentences

Years 2029-2033 22,815

The Company does not expect to contribute to its pension plans in 2023.

The Company expects to contribute $ 1,680 to its pension plans in 2024.

What changed 10-K

Item 9A. Controls and Procedures