What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-05-03 compared with 2023-11-03 · 205 added, 327 removed, 502 unchanged (51% of the section changed)

4 unchanged sentences

Three months ended

September 30, Nine months ended

September 30,

2023 2022 2023 2022

Sales $ 160,537 $ 160,874

6 unchanged sentences

Interest expense, net 13,409 9,832

Other expense, net 361 1,872 543 2,497

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

Other expense (income), net 216 ( 427 )

Income (loss) before income taxes 2,400 ( 524 )

Provision for income taxes 1,179 947

Net income $ 16,574 $ 21,325 $ 41,225 $ 48,445

Net income per share:

Basic income per share $ 0.14 $ 0.16 $ 0.35 $ 0.36

Diluted income per share $ 0.14 $ 0.16 $ 0.34 $ 0.35

Net income (loss) $ 1,221 $ ( 1,471 )

Net income (loss) per share:

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

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

Weighted average shares outstanding:

6 unchanged sentences

Three months ended

September 30, Nine months ended

September 30,

2023 2022 2023 2022

Net income $ 16,574 $ 21,325 $ 41,225 $ 48,445

Net income (loss) $ 1,221 $ ( 1,471 )

Other comprehensive income (loss), net of tax:

Pension and postretirement benefits ( 213 ) ( 962 ) 228 ( 1,040 )

Pension and postretirement costs ( 6 ) ( 24 )

Net gain (loss) from hedging activities 3,864 ( 7,920 )

1 unchanged sentence

Total other comprehensive income (loss) 2,174 ( 5,759 )

Comprehensive income $ 14,377 $ 22,297 $ 39,961 $ 57,519

Comprehensive income (loss) $ 3,395 $ ( 7,230 )

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(in thousands, except share and per share amounts)

September 30,

2024 December 31,

25 unchanged sentences

authorized shares 450,000,000 ;

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

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

issued shares 140,872,846 and 140,744,045 on March 31, 2024 and December 31, 2023, respectively;

outstanding shares 117,001,446 and 116,116,895 on March 31, 2024 and December 31, 2023, respectively

Preferred stock ($ 0.01 par);

authorized shares 50,000,000 ;

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

no shares issued or outstanding on March 31, 2024 and December 31, 2023

Additional paid-in capital 1,096,965 1,102,581

1 unchanged sentence

Treasury stock, at cost;

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

shares 23,871,400 and 24,627,150 on March 31, 2024 and December 31, 2023, respectively

( 218,599 ) ( 226,710 )

Accumulated other comprehensive income 4,728 5,992

Accumulated other comprehensive income (loss) 1,216 ( 958 )

Total equity 711,356 705,464

8 unchanged sentences

comprehensive

income (loss) Total

Balance, December 31, 2023 $ 1,407 $ 1,102,581 $ ( 170,856 ) $ ( 226,710 ) $ ( 958 ) $ 705,464

Net loss — — ( 1,471 ) — — ( 1,471 )

Other comprehensive loss — — — — ( 5,759 ) ( 5,759 )

Repurchases of common shares — — — ( 29,850 ) — ( 29,850 )

Tax withholdings on equity award vesting — — — ( 866 ) — ( 866 )

Stock compensation expense — 4,756 — — — 4,756

Shares issued under equity incentive plan, net of forfeitures 10 102 — — — 112

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

Net income — — 1,221 — — 1,221

Other comprehensive income — — — — 2,174 2,174

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

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

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

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

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

Net income — — 16,574 — — 16,574

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

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

Tax withholdings on equity award vesting — — — ( 1,218 ) — ( 1,218 )

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

Stock compensation expense — 3,674 — — — 3,674

Shares issued under equity incentive plan, net of forfeitures 2 ( 9,290 ) — 9,329 — 41

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

Balance, March 31, 2024 $ 1,409 $ 1,096,965 $ ( 169,635 ) $ ( 218,599 ) $ 1,216 $ 711,356

stock Additional

2 unchanged sentences

comprehensive

income (loss) Total

Balance, December 31, 2022 $ 1,396 $ 1,091,475 $ ( 242,010 ) $ ( 149,624 ) $ 5,992 $ 707,229

Net income — — 7,875 — — 7,875

Other comprehensive income — — — — 11,378 11,378

Tax withholdings on equity award vesting — — — ( 332 ) — ( 332 )

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

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

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

Net income — — 19,245 — — 19,245

Net loss — — ( 1,471 ) — — ( 1,471 )

Other comprehensive loss — — — — ( 5,759 ) ( 5,759 )

Repurchases of common shares — — — ( 29,850 ) — ( 29,850 )

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

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

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

Net income — — 21,325 — — 21,325

Other comprehensive income — — — — 972 972

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

Tax withholdings on equity award vesting — — — ( 866 ) — ( 866 )

Stock compensation expense — 4,756 — — — 4,756

Shares issued under equity incentive plan, net of forfeitures 10 102 — — — 112

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

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

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

Nine months ended

September 30,

Three months ended

Cash flows from operating activities:

Net income $ 41,225 $ 48,445

Net income (loss) $ 1,221 $ ( 1,471 )

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

2 unchanged sentences

Amortization of deferred financing costs and original issue discount 525 508

Foreign currency exchange (gain) loss ( 41 ) 2,179

Foreign currency exchange loss (gain) 169 ( 437 )

Deferred income tax provision 156 2,790

13 unchanged sentences

Purchases of property, plant and equipment ( 17,372 ) ( 18,698 )

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

Business combinations, net of cash acquired — ( 488 )

Other, net — 81

Net cash used in investing activities ( 17,372 ) ( 18,698 )

Cash flows from financing activities:

Draw down of revolving credit facilities 14,500 —

Repayments of revolving credit facilities ( 14,500 ) —

Repayments of long-term debt ( 2,250 ) ( 2,250 )

15 unchanged sentences

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.

The Company has two uniquely positioned specialty businesses:

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

and Catalyst Technologies provides finished silica catalysts and catalyst supports necessary to produce high strength and high stiffness plastics and, through the Zeolyst Joint Venture, supplies zeolites used for catalysts that help produce renewable fuels, remove nitrogen oxides 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.

Ecoservices also provides chemical waste handling and treatment services, as well as ex-situ catalyst activation services for the refining and petrochemical industry.

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 specialty zeolites used for 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.

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.

6 unchanged sentences

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Correction of an Error

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

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

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

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

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

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

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

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

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

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

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

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

New Accounting Standards:

Accounting Standards Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (“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, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The disclosure will be implemented as required for the fiscal year ended December 31, 2024.

The Company is currently evaluating the impact of this guidance.

In December 2023, 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 disclosure will be implemented as required for the fiscal year ended December 31, 2025.

The Company is currently evaluating the impact of this guidance.

In October 2023, 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

AND SUBSIDIARIES

1 unchanged sentence

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

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

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

New Accounting Standards:

Recently Adopted Accounting Standards

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

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

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

Regulation S-K.

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

5 unchanged sentences

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

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

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

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

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

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.

Under current GAAP, contract assets and contract liabilities acquired in a business combination are recorded by the acquirer at fair value.

The new guidance creates an exception to the general recognition and measurement principles related to business combinations, and is expected to result in the acquirer recognizing contract assets and liabilities at the same amounts recorded by the acquiree.

The new guidance is effective for business combinations occurring during fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, with early adoption permitted.

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.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Revenue from Contracts with Customers:

5 unchanged sentences

• Emission control catalysts

• Catalysts used in production of renewable fuels

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

• Catalysts used in production of sustainable aviation fuels

• Catalyst activation

1 unchanged sentence

• 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

2 unchanged sentences

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

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

Three months ended September 30, 2023

Ecoservices Catalyst Technologies (2)

Clean fuels, emission control & other $ 8,393 $ — $ 8,393

Polymers & engineered plastics — 25,697 25,697

Regeneration and treatment services (1)

87,692 — 87,692

Industrial, mining & automotive 51,544 — 51,544

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

Three months ended September 30, 2022

Ecoservices Catalyst Technologies (2)

Clean fuels, emission control & other $ 7,991 $ — $ 7,991

Polymers & engineered plastics — 36,859 36,859

Regeneration and treatment services (1)

92,676 — 92,676

Industrial, mining & automotive 95,007 — 95,007

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

Nine months ended September 30, 2023

Ecoservices Catalyst Technologies (2)

The following tables disaggregate the Company’s sales, by segment and end uses, for the three months ended March 31, 2024 and 2023, respectively:

Three months ended March 31, 2024

Ecoservices Advanced Materials & Catalyst (2)

Clean fuels, emission control & other $ 7,389 $ — $ 7,389

Polymers & engineered plastics — 74,877 74,877

Polyethylene, polymers & engineered plastics — 18,935 18,935

Regeneration and treatment services (1)

2 unchanged sentences

Total segment sales $ 141,602 $ 18,935 $ 160,537

Nine months ended September 30, 2022

Ecoservices Catalyst Technologies (2)

Three months ended March 31, 2023

Ecoservices Advanced Materials & Catalyst (2)

Clean fuels, emission control & other $ 4,740 $ — $ 4,740

Polymers & engineered plastics — 94,716 94,716

Polyethylene, polymers & engineered plastics — 23,134 23,134

Regeneration and treatment services (1)

25 unchanged sentences

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

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

September 30,

The following tables present information about the Company’s assets and liabilities that were measured at fair value on a recurring basis as of March 31, 2024 and December 31, 2023, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.

2024 Quoted Prices in

6 unchanged sentences

Interest rate caps (Note 12) $ 22,066 $ — $ 22,066 $ —

Derivative liabilities:

Interest rate caps (Note 12) $ 743 $ — $ 743 $ —

2023 Quoted Prices in

19 unchanged sentences

For OTC derivatives that trade in liquid markets, such as forward contracts, swaps and options, model inputs can generally be corroborated by observable market data by correlation or other means, and model selection does not involve significant management judgment.

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

As of March 31, 2024, th e Company had interest rate c aps th at were fair valued using Level 2 inputs.

In addition, the Company applies a credit valuation adjustment to reflect credit risk which is calculated based on credit default swaps.

4 unchanged sentences

Accumulated Other Comprehensive Income (Loss)

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

Three months ended September 30,

amount Tax benefit/

(expense) After-tax amount Pre-tax

amount Tax benefit/

(expense) After-tax amount

Defined benefit and other postretirement plans:

Net prior service credit (cost) $ ( 31 ) $ 8 $ ( 23 ) $ ( 53 ) $ 13 $ ( 40 )

Net gain (loss) ( 253 ) 63 ( 190 ) ( 1,226 ) 304 ( 922 )

Benefit plans, net ( 284 ) 71 ( 213 ) ( 1,279 ) 317 ( 962 )

Net gain (loss) from hedging activities 1,247 ( 119 ) 1,128 12,188 ( 3,047 ) 9,141

Foreign currency translation ( 3,112 ) — ( 3,112 ) ( 7,207 ) — ( 7,207 )

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

Nine months ended September 30,

The following tables present the tax effects of each component of other comprehensive income (loss) for the three months ended March 31, 2024 and 2023, respectively:

Three months ended March 31,

amount Tax benefit/

(expense) After-tax amount Pre-tax

amount Tax benefit/

(expense) After-tax amount

amount Tax benefit After-tax amount

Defined benefit and other postretirement plans:

Net prior service credit (cost) $ ( 94 ) $ 23 $ ( 71 ) $ ( 158 ) $ 39 $ ( 119 )

Net gain (loss) 398 ( 99 ) 299 ( 1,225 ) 304 ( 921 )

Net loss $ ( 1 ) $ — $ ( 1 ) $ ( 1 ) $ — $ ( 1 )

Net prior service cost ( 7 ) 2 ( 5 ) ( 31 ) 8 ( 23 )

Benefit plans, net ( 8 ) 2 ( 6 ) ( 32 ) 8 ( 24 )

5 unchanged sentences

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

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

The following tables present the changes in accumulated other comprehensive income, net of tax, by component for the three months ended March 31, 2024 and 2023, respectively:

Defined benefit

5 unchanged sentences

Other comprehensive income (loss) before reclassifications — 7,356 ( 1,684 ) 5,672

Amounts reclassified from accumulated other comprehensive income (1)

Amounts reclassified from accumulated other comprehensive loss (1)

( 6 ) ( 3,492 ) — ( 3,498 )

Net current period other comprehensive income (loss) ( 6 ) 3,864 ( 1,684 ) 2,174

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

March 31, 2024 $ 606 $ 16,410 $ ( 15,800 ) $ 1,216

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

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

Amounts reclassified from accumulated other comprehensive income (1)

Amounts reclassified from accumulated other comprehensive income (loss) (1)

24 ( 526 ) — ( 502 )

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

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

March 31, 2023 $ ( 532 ) $ 16,752 $ ( 15,987 ) $ 233

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

Amounts in parentheses indicate debits.

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

Details about Accumulated Other

Comprehensive Income Components Amounts reclassified from Accumulated Other

Comprehensive Income (1)

The following table presents the reclassifications out of accumulated other comprehensive income for the three months ended March 31, 2024 and 2023, respectively:

Details about Accumulated Other Comprehensive Income Components Amounts reclassified from Accumulated Other

Comprehensive Loss (Income) (1)

Affected line item where

1 unchanged sentence

Three months ended

September 30, Nine months ended

September 30,

2023 2022 2023 2022

Amortization of defined benefit and other postretirement items:

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

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

Net loss (gain) $ 1 $ ( 1 ) Other (expense) income (2)

Net prior service cost (credit) 7 ( 31 ) Other (expense) income (2)

8 ( 32 ) Total before tax

7 12 25 38 Tax benefit

( 2 ) 8 Tax (expense) benefit

$ 6 $ ( 24 ) Net of tax

Gains and losses on cash flow hedges:

Interest rate caps $ 6,048 $ ( 29 ) $ 17,933 $ ( 627 ) Interest expense

( 1,511 ) 7 ( 4,483 ) 155 Tax (expense) benefit

Interest rate caps $ 4,656 $ 698 Interest income

( 1,164 ) ( 172 ) Tax expense

$ 3,492 $ 526 Net of tax

8 unchanged sentences

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

Additionally, in connection with secondary offerings of the Company’s common stock in March and May 2023 , the Company repurchased 7,000,000 shares of its common stock sold in the offerings from the underwriters at a weighted average price of $ 10.48 per share concurrently with the closing of the offerings, for a total of $ 73,374 , excluding accrued excise tax.

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

During the nine months ended September 30, 2023, the Company accrued excise tax of $ 638 related to these repurchases, net of shares issued under the Company’s equity incentive program (see Note 17 to these condensed consolidated financial statements).

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

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

Additionally, in connection with a secondary offering of the Company’s common stock in August 2022, the Company repurchased 6,500,000 shares of its common stock sold in the offering from underwriters at a price of $ 8.36 per share concurrently with the closing of the offering, for a total of $ 54,316 .

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 with an equity sponsor 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 three months ended March 31, 2024, the Company did no t repurchase any of its common stock pursuant to the stock repurchase program.

As of March 31, 2024, $ 234,592 was available for share repurchases under the program.

During the three m onths ended March 31, 2023, in connection with a secondary offering of the Company’s common stock by an equity sponsor in March 2023, the Company repurchased 3,000,000 shares of its common stock sold in the offering from underwriters at a price of $ 9.95 per share concurrently with the closing of the offering, for a total of $ 29,850 , excluding brokerage commissions and accrued excise tax .

Tax Withholdings on Equity Award Vesting

In connection with the vesting of restricted stock awards, restricted stock units and performance stock units, shares of common stock may be delivered to the Company by employees to satisfy withholding tax obligations at the instruction of the employee award holders.

In connection with the vesting of restricted stock awards (“RSA” or “RSAs”), restricted stock units (“RSU” or “RSUs”) and performance stock units (“PSU” or “PSUs”), shares of common stock may be delivered to the Company by employees to satisfy withholding tax obligations at the instruction of the employee award holders.

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

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

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

Ecoservices Catalyst Technologies Total

There were 128,801 and 95,269 shares delivered to the Company to cover tax payments for the three months ended March 31, 2024 and 2023, respectively and the fair value of those shares withheld were $ 1,218 and $ 866 for the three months ended March 31, 2024 and 2023, respectively.

The change in the carrying amount of goodwill for the three months ended March 31, 2024 is summarized as follows:

Ecoservices Advanced Materials & Catalysts Total

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

Foreign exchange impact — ( 218 ) ( 218 )

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

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Balance as of March 31, 2024 $ 326,589 $ 77,663 $ 404,252

Other Operating Expense, Net:

1 unchanged sentence

Three months ended

September 30, Nine months ended

September 30,

2023 2022 2023 2022

Amortization expense $ 2,645 $ 2,637

1 unchanged sentence

Restructuring, integration and business optimization costs 226 1,023

310 2,338 2,438 8,011

Net loss on asset disposals 648 1,178

1 unchanged sentence

$ 3,666 $ 6,716

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

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Inventories, Net:

Inventories, net are classified and valued as follows:

September 30,

2024 December 31,

7 unchanged sentences

$ 52,503 $ 45,115

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Investments in Affiliated Companies:

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

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

Affiliated companies accounted for on the equity basis as of March 31, 2024 are as follows:

Company Country Percent

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Three months ended

September 30, Nine months ended

September 30,

2023 2022 2023 2022

Sales $ 56,860 $ 55,897

4 unchanged sentences

the Company’s share of the net assets and net income of affiliates is calculated based on the percent ownership specified in the table above.

The Company’s investments in affiliated companies balance as of September 30, 2023 and December 31, 2022 includes net purchase accounting fair value adjustments of $ 226,215 and $ 231,017 , respectively, related to a prior business combination, consisting primarily of goodwill and intangible assets such as customer relationships, technical know-how and trade names.

Consolidated equity in net income from affiliates is net of $ 1,601 and $ 4,802 of amortization expense related to purchase accounting fair value adjustments for the three and nine months ended September 30, 2023, respectively.

The Company’s investments in affiliated companies balance as of March 31, 2024 and December 31, 2023 includes net purchase accounting fair value adjustments of $ 223,014 and $ 224,614 , respectively, related to a prior business combination, consisting primarily of goodwill and intangible assets such as customer relationships, technical know-how and trade names.

Consolidated equity in net income from affiliates is net of $ 1,601 of amortization expense related to purchase accounting fair value adjustments for the three months ended March 31, 2024 and 2023, respectively.

The Company had receivables due from affiliates of $ 3,136 and $ 3,231 as of March 31, 2024 and December 31, 2023, respectively, which are included in prepaid and other current assets.

The Company had no payables from affiliates as of March 31, 2024 and $ 1,351 as of December 31, 2023, which is included in accrued liabilities.

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

There were no sales to affiliates for the three months ended March 31, 2024 and $ 1,700 for the three months ended March 31, 2023, respectively.

There were no purchases from affiliates for the three months ended March 31, 2024 and immaterial for the three months ended March 31, 2023, respectively.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Property, Plant and Equipment:

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

September 30,

2024 December 31,

6 unchanged sentences

$ 572,307 $ 576,904

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

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

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Depreciation expense was $ 18,415 and $ 16,692 for the three months ended March 31, 2024 and 2023, respectively.

Long-term Debt:

The summary of long-term debt is as follows:

September 30,

2024 December 31,

7 unchanged sentences

Total long-term debt, excluding current portion $ 857,220 $ 858,946

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

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

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

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

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

The interest rate on the ABL Facility was 8.75 % as of September 30, 2023.

The 2021 Term Loan Facility bears interest at an adjusted term Secured Overnight Financing Rate (“SOFR”) (with a 0.50 % minimum floor and a credit spread adjustment of 10 basis points) 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 7.91 % as of March 31, 2024.

The borrowings under the senior secured asset-based lending revolving credit facility (“ABL Facility”) bears interest at a rate equal to an adjusted term SOFR, which includes a credit spread adjustment of 10 basis points or the base rate 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 March 31, 2024.

Fair Value of Debt

The fair value of a financial instrument is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants.

As of September 30, 2023 and December 31, 2022, the fair value of the senior secured term loan facility was $ 875,351 and $ 870,986 , respectively.

As of March 31, 2024 and December 31, 2023, the fair value of the 2021 Term Loan Facility was $ 873,062 and $ 876,403 , respectively.

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

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

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

Financial instrument Number of instruments In effect as of March 31, 2024

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

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

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

The current notional amounts of the three interest rate cap agreements in effect at March 31, 2024 are $ 250,000 , $ 250,000 and $ 150,000 .

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

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

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

The cap rate in effect at March 31, 2024 for all agreements in effect was 1.00 %.

The Company has also entered into a forward starting interest rate cap agreement to mitigate interest volatility from November 2024 to October 2026.

4 unchanged sentences

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

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

Balance sheet location September 30,

The fair values of derivative instruments held as of March 31, 2024 and December 31, 2023, respectively are shown below:

Balance sheet location March 31,

2024 December 31,

8 unchanged sentences

Total derivative liabilities $ 743 $ 2,496

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

Three months ended September 30,

Location of gain (loss) reclassified from AOCI into income Amount of gain (loss) recognized in OCI on derivatives Amount of gain (loss) reclassified from AOCI into income Amount of gain (loss) recognized in OCI on derivatives Amount of gain (loss) reclassified from AOCI into income

Interest rate caps Interest (expense) income $ 7,294 $ 6,048 $ 12,159 $ ( 29 )

Nine months ended September 30,

The following table shows the effect of the Company’s derivative instruments designated as cash flow hedges on AOCI for the three months ended March 31, 2024 and 2023, respectively:

Three months ended March 31,

Interest rate caps Interest (expense) income $ 9,808 $ ( 4,656 ) $ ( 9,605 ) $ 698

The following table shows the effect of the Company’s cash flow hedge accounting on the condensed consolidated statements of income for the three and nine months ended September 30, 2023 and 2022, respectively:

The following table shows the effect of the Company’s cash flow hedge accounting on the condensed consolidated statements of income for the three months ended March 31, 2024 and 2023, respectively:

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

Three months ended

September 30, Nine months ended

September 30,

2023 2022 2023 2022

Total amounts of income and expense line items presented in the statement of income in which the effects of cash flow hedges are recorded in interest (expense) income $ ( 13,409 ) $ ( 9,832 )

3 unchanged sentences

Amount of loss reclassified from AOCI into income 4,656 698

The amount of unrealized losses in AOCI related to the Company’s cash flow hedges that is expected to be reclassified to the condensed consolidated statement of income over the next twelve months is $ 9,199 as of March 31, 2024.

AND SUBSIDIARIES

1 unchanged sentence

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

Income Taxes:

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

The effective income tax rate for the nine months ended September 30, 2023 was 29.9 %, compared to 31.2 % for the nine months ended September 30, 2022.

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

The effective income tax rate for the three months ended March 31, 2024 was 49.1 %, compared to ( 180.7 )% for the three months ended March 31, 2023.

The Company’s effective income tax rate for the three months ended March 31, 2024 was different from the effective tax rate for the three months ended March 31, 2023 primarily due to a stock compensation shortfall recognized discretely in the respective quarters with lower profits before tax in the prior year.

The difference between the U.S.

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

federal statutory income tax rate and the Company’s effective income tax rate for the three months ended March 31, 2024 was mainly due to state and local taxes, a discrete shortfall tax expense related to stock compensation and a discrete tax expense associated with the recording of accrued penalties and interest on historical uncertain tax positions.

The difference between the U.S.

federal statutory income tax rate and the Company’s effective income tax rate for the nine months ended September 30, 2022 was mainly due to state and local taxes, a discrete shortfall tax expense related to stock compensation and a discrete tax expense associated with the Employee Retention Credit.

federal statutory income tax rate and the Company’s effective income tax rate for the three months ended March 31, 2023 was mainly due to state and local taxes, a discrete shortfall tax expense related to stock compensation and a discrete tax expense associated with the recording of accrued penalties and interest on historical uncertain tax positions.

Benefit Plans:

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Three months ended

September 30, Nine months ended

September 30,

2023 2022 2023 2022

Interest cost $ 808 $ 871

Expected return on plan assets ( 827 ) ( 837 )

Settlement loss 22 38 50 38

Net periodic expense (benefit) $ 59 $ 339 $ 161 $ ( 673 )

Net periodic (benefit) expense $ ( 19 ) $ 34

Other Postretirement Benefit Plan

Three months ended

September 30, Nine months ended

September 30,

2023 2022 2023 2022

Interest cost $ 6 $ 6

Amortization of prior service credit ( 7 ) ( 31 )

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

Amortization of net gain ( 1 ) ( 1 )

Net periodic benefit $ ( 2 ) $ ( 26 )

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

Commitments and Contingent Liabilities:

7 unchanged sentences

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

Related Party Transactions:

The Company maintains certain policies and procedures for the review, approval and ratification of related party transactions to ensure that all transactions with selected parties are fair, reasonable and in the Company’s best interests.

All significant relationships and transactions are separately identified by management if they meet the definition of a related party or a related party transaction.

Related party transactions include transactions that occurred during the year, or are currently proposed, in which the Company was or will be a participant, and for which any related person had or will have a direct or indirect material interest.

All related party transactions are reviewed, approved and documented by the appropriate level of the Company’s management in accordance with these policies and procedures.

Joint Venture Agreement

The Company entered into a joint venture agreement (the “ZI Partnership Agreement”) in 1988 with Shell Catalysts & Technologies, an affiliate of Royal Dutch Shell plc, to form Zeolyst International, a 50/50 joint venture partnership (the “Partnership”).

Under the terms of the ZI Partnership Agreement, the Partnership leases certain land used in its Kansas City production facilities from Ecovyst.

This lease, which has been recorded as an operating lease, provided for rental payments to the Company of $ 77 for the three months ended March 31, 2024 and 2023, respectively.

The terms of this lease are evergreen as long as the ZI Partnership Agreement is in place.

The Partnership had no sales to the Company for the three months ended March 31, 2024 and 2023, respectively.

The Partnership purchases certain of its raw materials from the Company and is charged for various manufacturing costs incurred at the Company’s Kansas City production facility.

The amount of these costs charged to the Partnership were $ 4,034 and $ 5,841 for the three months ended March 31, 2024 and 2023, respectively.

Certain administrative, marketing, engineering, management-related, and research and development services are provided to the Partnership by the Company.

The Partnership was charged $ 4,300 and $ 3,634 for the three months ended March 31, 2024 and 2023, respectively, for these services.

In addition, the Partnership was charged certain product demonstration costs of $ 357 and $ 500 for the three months ended March 31, 2024 and 2023, respectively.

These charges to the Partnership are recorded as reductions in either cost of goods sold or selling, general and administrative expenses in the consolidated statements of income, depending on the nature of the expenditures.

The Company had an accounts receivable from the Partnership of $ 3,115 and $ 3,164 as of March 31, 2024 and December 31, 2023, respectively.

There were no accounts payable with the Partnership as of March 31, 2024 and December 31, 2023, respectively.

From time to time, the Company makes sales to and purchases raw materials from portfolio companies of funds that are affiliated with INEOS Capital Partners.

The Company had sales of $ 1,249 and $ 595 to companies affiliated with INEOS Capital Partners for the three months ended March 31, 2024 and 2023, respectively.

There were no purchases of raw materials from companies affiliated with INEOS Capital Partners for the three months ended March 31, 2024 and immaterial for the three months ended March 31, 2023.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Reportable Segments:

1 unchanged sentence

Three months ended

September 30, Nine months ended

September 30,

2023 2022 2023 2022

Ecoservices $ 141,602 $ 137,740

Catalyst Technologies (1)

Advanced Materials & Catalysts (1)

18,935 23,134

2 unchanged sentences

Ecoservices $ 41,494 $ 36,787

Catalyst Technologies (3)

Advanced Materials & Catalysts (3)

11,129 12,989

1 unchanged sentence

(1) Excludes the Company’s proportionate share of sales from the Zeolyst Joint Venture accounted for using the equity method (see Note 9 to these condensed consolidated financial statements for further information).

The proportionate share of sales excluded is $ 36,958 and $ 103,721 for the three and nine months ended September 30, 2023, respectively.

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

The proportionate share of sales excluded is $ 23,481 and $ 22,074 for the three months ended March 31, 2024 and 2023, respectively.

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

2 unchanged sentences

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

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

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

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

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

(3) The Adjusted EBITDA for the Company’s Advanced Materials & Catalysts segment includes the Company’s 50 % portion of the Adjusted EBITDA from the Zeolyst Joint Venture.

The Adjusted EBITDA from the Zeolyst Joint Venture included in the Advanced Materials & Catalysts segment was $ 6,927 for the three months ended March 31, 2024, which includes $ 2,072 of equity in net income plus $ 1,601 of amortization of investment in affiliate step-up and $ 3,254 of joint venture depreciation, amortization and interest.

The Adjusted EBITDA from the Zeolyst Joint Venture included in the Advanced Materials & Catalysts segment was $ 5,436 for the three months ended March 31, 2023, which includes $ 226 of equity in net income plus $ 1,601 of amortization of investment in affiliate step-up and $ 3,609 of joint venture depreciation, amortization and interest.

AND SUBSIDIARIES

1 unchanged sentence

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

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

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

Three months ended

September 30, Nine months ended

September 30,

2023 2022 2023 2022

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

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

Reconciliation of income (loss) before income taxes to Adjusted EBITDA from reportable segments

Income (loss) before income taxes $ 2,400 $ ( 524 )

Interest expense, net 13,409 9,832

11 unchanged sentences

Adjusted EBITDA from reportable segments $ 52,623 $ 49,776

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Stock-Based Compensation:

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

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

At March 31, 2024, 7,994,600 shares of common stock were available for issuance under the plan.

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

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

Restricted Stock Units and Performance Stock Units

Restricted Stock Units

During the nine months ended September 30, 2023, the Company granted 1,195,835 restricted stock units under its equity incentive plan.

Each restricted stock unit provides the recipient with the right to receive a share of common stock subject to graded vesting terms based on service, which for the awards granted during the nine months ended September 30, 2023, generally requires approximately one year of service for members of the Company’s board of directors and approximately three years of service for employees.

The value of the restricted stock units granted during the nine months ended September 30, 2023 was based on the average of the high and low trading prices of the Company’s common stock on the NYSE on the preceding trading day, in accordance with the Company’s policy for valuing such awards.

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

Performance Stock Units

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

The performance stock units granted during the nine months ended September 30, 2023 provide the recipients with the right to receive shares of common stock dependent on the achievement of a total shareholder return (“TSR”) goal, and are generally subject to the provision of service through the vesting date of the award.

The performance period for the TSR goal is measured based on a three-year performance period from January 1, 2023 through December 31, 2025.

The TSR goal is based on the Company’s actual TSR percentage increase over the performance period.

Depending on the Company’s performance relative to the TSR goal, each performance stock unit award recipient is eligible to receive a percentage of the target number of shares granted to the recipient, ranging from zero to 200 %.

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

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

During the three months ended March 31, 2024, the Company granted 1,108,063 RSUs under its equity incentive plan.

Each RSU provides the recipient with the right to receive a share of common stock subject to graded vesting terms based on service, which for the awards granted during the three months ended March 31, 2024, generally requires approximately one year of service for members of the Company’s board of directors and approximately three years of service for employees.

The value of the RSUs granted during the three months ended March 31, 2024 was based on the average of the high and low trading prices of the Company’s common stock on the NYSE on the preceding trading day, in accordance with the Company’s policy for valuing such awards.

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

During the three months ended March 31, 2024, the Company granted 535,629 PSUs (at target) under its equity incentive plan.

The PSUs granted during the three months ended March 31, 2024 provide the recipients with the right to receive shares of common stock dependent on 50 % of a Company-specific financial performance target and 50 % on the relative increase in the total shareholder return (“TSR”) goal (“the Performance measures”).

The Performance measures are measured independently of each other, but achievement of both metrics is measured on the same three-year performance period from January 1, 2024 through December 31, 2026 (“Performance period”).

Depending on the Company’s performance relative to the Performance measures, each PSU award recipient is eligible to receive a percentage of the target number of shares granted to the recipient, ranging from 50 % to 200 %.

The PSUs, to the extent earned, will vest on the date the Compensation Committee of the Company’s Board of Directors (“Compensation Committee”) certifies the achievement of the Performance measures for the Performance period, which will occur subsequent to the end of the Performance period and after the Company files its annual consolidated financial statements for the year ending December 31, 2026.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Achievement of the Company-specific financial performance target is measured based on the actual three-year cumulative results across the Performance period.

The TSR goal is based on the Company’s actual TSR performance against companies in the S&P 1500 Specialty Chemicals Index over the Performance period.

The TSR goal, which determines how much of the 50 % of the PSUs granted during 2024 may be earned, is considered a market condition as opposed to a vesting condition.

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

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

The Company used a Monte Carlo simulation to estimate the $ 11.64 weighted average fair value of the awards granted subject to the TSR goal during the three months ended March 31, 2024, with the following weighted average assumptions:

Expected dividend yield — %

2 unchanged sentences

Expected term (in years) 2.95

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

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

The awards vested during the nine months ended September 30, 2023 as follows:

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

In February 2024, the Compensation Committee certified the achievement of the performance metrics for the three-year period ended December 31, 2023, related to the PSUs granted during the year ended December 31, 2021.

The PSUs granted during the year ended December 31, 2021 provide the recipients with the right to receive shares of common stock dependent on the achievement of a TSR goal, and are generally subject to the provision of service through the vesting date of the award.

The TSR goal was based on the Company’s actual TSR percentage increase over the performance period.

The awards vested during the three months ended March 31, 2024 with no percentage of the TSR goal earned.

Award Activity

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

The following table summarizes the activity for the Company’s RSUs and PSUs for the three months ended March 31, 2024:

Restricted Stock Units Performance Stock Units

5 unchanged sentences

Forfeited ( 19,197 ) $ 11.10 ( 126,497 ) $ 12.99

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

Nonvested as of March 31, 2024 2,055,546 $ 9.35 1,368,349 (1) $ 11.10

(1) Based on target.

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

Stock-Based Compensation Expense

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

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

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

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

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

On March 7, 2023, all of the outstanding performance-based stock options ( 284,956 options) and performance-based restricted shares ( 277,056 shares) that would vest upon the achievement of the MOI Target were canceled due to the failure of the MOI Target to be achieved upon the sale by investment funds affiliated with CCMP of all of their remaining shares of our common stock.

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

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

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

During the three months ended March 31, 2024, the Company also granted 4,540 of RSAs with a weighted average grant date fair value of $ 8.81 per share that immediately vested.

Cash proceeds received by the Company from the exercise of stock options were not material for the three months ended March 31, 2024.

AND SUBSIDIARIES

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

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

Stock-Based Compensation Expense

For the three months ended March 31, 2024 and 2023, stock-based compensation expense for the Company was $ 3,680 and $ 4,068 , respectively.

The associated income tax benefit based on the applicable statutory rate recognized in the condensed consolidated statements of income for the three months ended March 31, 2024 and 2023 was $ 902 and $ 973 , respectively.

As of March 31, 2024, unrecognized compensation cost was $ 16,857 for RSUs and $ 10,670 for PSUs, and the weighted-average period over which these costs are expected to be recognized at March 31, 2024 was 2.01 years for the RSUs and 2.36 years for the PSUs.

Earnings per Share:

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

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

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

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

Potential common shares reflect (1) unvested restricted stock awards and restricted stock units with service vesting conditions, (2) performance stock units with vesting conditions considered probable of achievement and (3) options to purchase common stock, all of which have been included in the diluted earnings per share calculation using the treasury stock method.

Potential common shares reflect (1) unvested RSAs and RSUs with service vesting conditions, (2) PSUs with vesting conditions considered probable of achievement and (3) options to purchase common stock, all of which have been included in the diluted earnings per share calculation using the treasury stock method.

The reconciliation from basic to diluted weighted average shares outstanding is as follows:

Three months ended

September 30, Nine months ended

September 30,

2023 2022 2023 2022

Weighted average shares outstanding – Basic 116,955,043 122,178,867

Dilutive effect of unvested common shares and restricted stock units with service conditions, performance stock units considered probable of vesting and assumed stock option exercises and conversions 928,262 1,474,734 1,374,971 1,550,617

Dilutive effect of unvested common shares and RSUs with service conditions, PSUs considered probable of vesting and assumed stock option exercises and conversions 496,106 —

Weighted average shares outstanding – Diluted 117,451,149 122,178,867

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Three months ended

September 30, Nine months ended

September 30,

2023 2022 2023 2022

Net income $ 16,574 $ 21,325 $ 41,225 $ 48,445

Net income (loss) $ 1,221 $ ( 1,471 )

Weighted average shares outstanding – Basic 116,955,043 122,178,867

Weighted average shares outstanding – Diluted 117,451,149 122,178,867

Net income per share:

Basic income per share $ 0.14 $ 0.16 $ 0.35 $ 0.36

Diluted income per share $ 0.14 $ 0.16 $ 0.34 $ 0.35

Net income (loss) per share:

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

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

AND SUBSIDIARIES

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Three months ended

September 30, Nine months ended

September 30,

2023 2022 2023 2022

Restricted stock awards with performance only targets not achieved — 505,439 65,966 574,048

RSAs with performance only targets not achieved — 200,096

Stock options with performance only targets not achieved — 208,968

Anti-dilutive restricted stock units and performance stock units — 487,322 — 19,306

Anti-dilutive RSUs and PSUs (1)

558,989 432,308

Anti-dilutive stock options (1)

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

367,100 695,777

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

for the period.

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

These awards and stock options were canceled on March 7, 2023 (see Note 18 to these condensed consolidated financial statements for additional information).

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

Nine months ended

September 30,

Three months ended

Cash paid during the period for:

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Capital expenditures acquired on account but unpaid as of the period end 713 650

Non-cash financing activity:

Accrued excise tax on share repurchases (Note 5)

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

4 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements