What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-05-03 compared with 2023-11-03 · 112 added, 323 removed, 246 unchanged (64% of the section changed)

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We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short- and long-term business operations and objectives, and financial needs.

Examples of forward-looking statements include, but are not limited to, statements we make regarding demand trends, economic effects on our operations and financial results and our liquidity, and our belief that our current level of operations, cash and cash equivalents, cash flow from operations and borrowings under our credit facilities and other lines of credit will provide us adequate cash to fund the working capital, capital expenditure, debt service and other requirements for our business for at least the next twelve months.

Examples of forward-looking statements include, but are not limited to, statements we make regarding demand trends, economic effects on our operations and financial results and our liquidity, potential strategic acquisitions or divestitures, the repurchasing, refinancing, or repricing of our debt, and our belief that our current level of operations, cash and cash equivalents, cash flow from operations and borrowings under our credit facilities and other lines of credit will provide us adequate cash to fund working capital requirements, capital expenditure projects, debt service requirements and other requirements for our business for at least the next twelve months.

These forward-looking statements are subject to a number of risks, uncertainties and assumptions.

27 unchanged sentences

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

Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022, as supplemented in “Item 1A, Risk Factors” in our quarterly reports on Form 10-Q for the quarters ended March 31, 2023 and June 30, 2023.

Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 (the “Annual Report on Form 10-K”).

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

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We are a leading integrated and innovative global provider of specialty catalysts and services.

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

We believe that our products and services contribute to improving the sustainability of the environment.

We conduct operations through two reporting segments:

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

(1) Ecoservices and (2) Advanced Materials & Catalysts (including our 50% interest in the Zeolyst Joint Venture).

We are a leading provider of sulfuric acid recycling to the North American refining industry for the production of alkylate, an essential gasoline component for lowering vapor pressure and increasing octane to meet stringent gasoline specifications and fuel efficiency standards.

We are also a leading North American producer of on-purpose virgin sulfuric acid for water treatment, mining and industrial applications.

Catalyst Technologies:

We are a global supplier of finished silica catalysts and catalyst supports necessary to produce high strength and high stiffness plastics used in packaging films, bottles, containers, and other molded applications.

This segment includes our 50% interest in the Zeolyst Joint Venture, where we are a leading global supplier of 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.

We are also a leading North American producer of high quality and high strength virgin sulfuric acid for industrial and mining applications.

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

Advanced Materials & Catalysts:

We are a global supplier of finished silica catalyst, catalyst supports and functionalized silicas necessary to produce high performing plastics and to enable sustainable chemistry.

This segment includes our 50% interest in the Zeolyst Joint Venture, where we are a leading global supplier of specialty zeolites used in catalysts that supports the production of sustainable fuels, remove nitrogen oxides from diesel engine emissions and that are broadly applied in refining and petrochemical processes.

Stock Repurchase Program

On April 27, 2022, the Board approved a stock repurchase program that authorized the Company to purchase up to $450.0 million of the Company’s common stock over the four-year period from the date of approval.

For the nine months ended September 30, 2023, the Company repurchased 541,494 shares on the open market at an average price of $9.85, for a total of $5.3 million, 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 $73.4 million, excluding accrued excise tax.

As of September 30, 2023, $234.6 million was available for additional share repurchases under the program.

For the nine months ended September 30, 2022, the Company repurchased 1,970,763 shares on the op en market at an average price of $9.82, for a total of $19.4 million, 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 the underwriters at a price of $8.36 per share concurrently with the closing of the offering, for a total of $54.3 million.

For the three months ended March 31, 2024, the Company did not repurchase any of its common stock pursuant to the stock repurchase program.

As of March 31, 2024, $234.6 million was available for share repurchases under the program.

For the three months 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 in the offering from underwriters at price of $9.95 per share concurrently with the close of the offering, for a total of $29.9 million.

Key Performance Indicators

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Key Factors and Trends Affecting Operating Results and Financial Condition

Overall, our Ecoservices and Catalyst Technologies segments continued to benefit from positive demand trends for our products and services in the industries we serve.

Strong domestic and export demand for refined products continued to support high refinery utilization rates, while more stringent gasoline standards and growing demand for premium gasoline to power higher-compression and turbocharged engines continued to drive demand for alkylate and for our regeneration services.

Overall, our Ecoservices and Advanced Materials & Catalysts segments continued to benefit from positive demand trends for our products and services in the industries we serve.

Strong domestic and export demand for refined products continued to support high refinery utilization rates, while more stringent gasoline standards and growing demand for premium gasoline to power higher-compression and turbo-charged engines continued to drive demand for alkylate and for our regeneration services.

In addition, demand for virgin sulfuric acid across a wide range of industrial applications remained favorable.

However, sales in our Ecoservices segment were impacted primarily by unplanned production downtime at our sites, which adversely impacted sales and maintenance costs in 2023.

During the second quarter of 2023, we began to see a slowdown in global polyethylene demand impact the sales of our silica-based catalyst, while still seeing increasing demand for renewable fuels and more stringent regulation in traditional fuels, and in emission control applications.

For the remainder of 2023, we believe weaker demand fundamentals may adversely impact sales of virgin sulfuric acid into nylon production.

In addition, we anticipate declining global polyethylene demand and lower polyethylene production plant operating rates may adversely impact sales of polyethylene catalysts.

Sales in our Ecoservices and Catalyst Technologies segments are made on both a purchase order basis and pursuant to long-term contracts.

Our Catalyst Technologies segment may experience demand fluctuations based upon the timing of some of our customer’s fixed bed catalyst replacements.

Sales in our Ecoservices and Advanced Materials & Catalysts segments are made on both a purchase order basis and pursuant to long-term contracts.

Our Advanced Materials & Catalysts segment may experience demand fluctuations based upon the timing of some of our customer’s fixed bed catalyst replacements.

Cost of Goods Sold

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Spent sulfuric acid for our Ecoservices segment is supplied by customers for a nominal charge as part of their contracts.

The primary raw materials used in the manufacture of products in our Catalyst Technologies segment include sodium silicate and cesium hydroxide.

During the second quarter of 2023, inflationary pressures began to ease, which reduced the cost of goods for sulfur, energy, logistics and other raw materials.

The primary raw materials used in the manufacture of products in our Advanced Materials & Catalysts segment include sodium silicate and cesium hydroxide.

Most of our Ecoservices contracts feature take-or-pay volume protection and/or quarterly price adjustments for commodity inputs, labor, the Chemical Engineering Index (U.S.

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

We operate in various geographies with approximately 6% of our sales for the nine months ended September 30, 2023 and for the year ended December 31, 2022 in currencies other than the U.S.

We operate in various geographies with approximately 5% of our sales for the three months ended March 31, 2024 and approximately 6% for the year ended December 31, 2023 in currencies other than the U.S.

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

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Results of Operations

Three Months Ended September 30, 2023 Compared to the Three Months Ended September 30, 2022

The following is a summary of our financial performance for the three months ended September 30, 2023 compared to the three months ended September 30, 2022.

Three Months Ended March 31, 2024 Compared to the Three Months Ended March 31, 2023

The following is a summary of our financial performance for the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

• Sales decreased $0.4 million to $160.5 million.

The decrease in sales was primarily due to the result of the pass-through of lower sulfur costs within our virgin sulfuric acid product group and lower sales volume.

• Gro ss profit decreased $14.5 million to $53.2 million.

The decrease in gross profit was primarily due to lower sales volume and higher manufacturing costs.

The decrease in sales was primarily due to lower average selling price as a result of the pass-through of lower costs, partially offset by higher sales volume.

• Gross profit increased $2.7 million to $39.2 million.

The increase in gross profit was primarily due to lower variable costs and higher sales volume.

Operating Income

• Operating income decreased by $6.5 million to $32.0 million.

The decrease in operating income was due to a decrease in gross profit, offset by lower selling, general and administrative expenses and other operating expenses.

• Operating income increased by $5.2 million to $13.9 million.

The increase in operating income was due to an increase in gross profit and lower other operating expenses.

Equity in Net Income of Affiliated Companies

• Equity in net income of affiliated companies for the three months ended September 30, 2023 was $4.7 million, compared to $3.2 million for the three months ended September 30, 2022.

The increase of $1.5 million was due to higher earnings generated by the Zeolyst Joint Venture for the three months ended September 30, 2023, driven by higher sales volume of catalyst used in the production of renewable fuels and hydrocracking catalysts.

The following is our unaudited condensed consolidated statements of income and a summary of financial results for the three months ended September 30, 2023 and 2022:

• Equity in net income of affiliated companies for the three months ended March 31, 2024 was $2.1 million, compared to $0.2 million for the three months ended March 31, 2023.

The increase of $1.9 million was due to higher earnings from the Zeolyst Joint Ventur e during the three months ended March 31, 2024.

The following is our unaudited condensed consolidated statements of income and a summary of financial results for the three months ended March 31, 2024 and 2023:

Three months ended

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March 31, Change

2024 2023 $ %

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Operating income margin 8.7 % 5.4 %

Equity in net (income) from affiliated companies (4.7) (3.2) (1.5) 46.9 %

Equity in net (income) from affiliated companies (2.1) (0.2) (1.9) NM

Interest expense, net 13.4 9.9 3.5 35.4 %

Other expense, net 0.4 1.9 (1.5) (78.9) %

Income before income taxes 24.5 30.3 (5.8) (19.1) %

Other expense (income), net 0.2 (0.4) 0.6 150.0 %

Income (loss) before income taxes 2.4 (0.6) 3.0 500.0 %

Provision for income taxes 1.2 0.9 0.3 33.3 %

Effective tax rate 49.1 % (180.7) %

Net income $ 16.6 $ 21.3 $ (4.7) (22.1) %

Net income (loss) $ 1.2 $ (1.5) $ 2.7 180.0 %

Three months ended

September 30, Change

March 31, Change

2024 2023 $ %

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Ecoservices $ 141.6 $ 137.8 $ 3.8 2.8 %

Catalyst Technologies 25.7 36.8 (11.1) (30.2) %

Advanced Materials & Catalysts 18.9 23.1 (4.2) (18.2) %

Total sales $ 160.5 $ 160.9 $ (0.4) (0.2) %

Sales in Ecoservices for the three months ended September 30, 2023 were $147.6 million, a decrease of $48.1 million, or 24.6%, compared to sales of $195.7 million for the three months ended September 30, 2022.

The decrease in sales was due to lower sales volume of $9.3 million and lower average selling prices of $38.8 million, inclusive of the negative impact associated with the pass-through of lower sulfur costs of approximately $39 million .

Lower average selling prices were primarily a result of the pass-through of lower sulfur costs of approximately $39 million within our virgin sulfuric acid product group.

The decrease in sales volume was primarily related to the lower end use demand of virgin sulfuric acid, primarily into the production of nylon intermediates during the quarter.

Catalyst Technologies:

Sales in Catalyst Technologies for the three months ended September 30, 2023 were $25.7 million, a decrease of $11.1 million, or 30.2%, compared to sales of $36.8 million for the three months ended September 30, 2022.

Of the decrease in sales, $13.3 million was associated with lower sales volume, which was partially offset by higher average selling prices of $1.5 million and $0.7 million of favorable foreign exchange.

The decrease in sales volume was primarily driven by lower end use demand for polyethylene catalysts associated with destocking and lower customer operating rates and the absence of certain niche custom catalyst sales realized in the third quarter of 2022 that did not occur in the third quarter of 2023.

Higher average selling prices was driven by the implemented price increases.

Gross profit for the three months ended September 30, 2023 was $53.2 million, a decrease of $14.5 million, or 21.4%, compared to $67.7 million for the three months ended September 30, 2022.

The decrease in gross profit was primarily due to unfavorable manufacturing costs, including higher variable and maintenance costs, and lower sales volume of $0.9 million, partially offset by favorable average selling prices of $1.7 million, exclusive of the pass-through of lower sulfur costs.

Ecoservices :

Sales in Ecoservices for the three months ended March 31, 2024 were $141.6 million, an increase of $3.8 million, or 2.8%, compared to sales of $137.8 million for the three months ended March 31, 2023.

The increase in sales reflects higher sales volume of $20.1 million, partially offset by lower average selling pricing of $16.3 million, before adjusting for the impact of the pass-through of lower sulfur costs of approximately $5 million.

Sales volume was higher primarily due to increased virgin sulfuric acid and regeneration services sales for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 which had the adverse impact of Winter Storm Elliott and extended maintenance turnaround activity at our facilities, as well as strong demand for regeneration services in the gulf coast.

Average selling price was lower primarily due to the pass-through of lower costs, including sulfur, natural gas, electricity and other variable costs.

Advanced Materials & Catalysts:

Sales in Advanced Materials & Catalysts for the three months ended March 31, 2024 were $18.9 million, a decrease of $4.2 million, or 18.2%, compared to sales of $23.1 million for the three months ended March 31, 2023.

The decrease in sales was primarily due to lower sales volume of advanced silicas used for the production of polyethylene, whereas sales of finished catalysts used to produce polyethylene increased compared to the three months ended March 31, 2023 on improved demand in the U.S.

Sales of polyethylene catalyst supports decreased, largely due to customer order timing and limited destocking.

Gross profit for the three months ended March 31, 2024 was $39.2 million, an increase of $2.7 million, or 7.4%, compared to $36.5 million for the three months ended March 31, 2023.

The increase in gross profit is primarily driven by higher sales volume of $3.5 million as well as favorable manufacturing costs of $10.6 million, partially offset by lower average selling prices of $11.4 million, exclusive of the $5 million pass-through of sulfur costs.

The favorable manufacturing costs were primarily driven by lower variable costs.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three months ended September 30, 2023 were $16.9 million, a decrease of $4.6 million, compared to $21.5 million for the three months ended September 30, 2022.

The decrease in selling, general and administrative expenses was primarily due to a decrease in other compensation-related expenses of $3.9 million and a decrease in stock compensation of $1.3 million due to fewer overall awards granted and outstanding for the three months ended September 30, 2023 as compared to the prior year period.

This was partly offset by an increase in professional fees of $1.1 million primarily related to consulting and recruiting charges.

Selling, general and administrative expenses for the three months ended March 31, 2024 were $21.6 million, an increase of $0.5 million, as compared to $21.1 million for the three months ended March 31, 2023.

The increase in selling, general and administrative expenses was mainly due to an increase in other compensation-related expenses of $2.0 million, partially offset by a decrease in professional fees of $0.5 million and other expenses of $0.8 million.

Other Operating Expense, Net

Other operating expense, net for the three months ended September 30, 2023 was $4.3 million, a decrease of $3.4 million, compared to $7.7 million for the three months ended September 30, 2022.

The decrease in other operating expense, net was primarily due to $2.0 million decrease i n restructuring, integration and business optimization costs, driven by severance charges incurred in the prior period from contracts associated with fo rmer executives and a decrease of $1.6 million in transactions costs, primarily associated with the sale of the Performance Chemicals business in 2021 and costs associated with share repurchases.

Other operating expense, net for the three months e nded March 31, 2024 was $3.7 million, a decrease of $3.0 million, compared to $6.7 million for the three months ended March 31, 2023.

The decrease in other operating expense, net was mainly driven by a decrease of $1.4 million in transaction costs, a decrease of $0.8 million in business optimization costs and a decrease in net losses on asset disposals of $0.5 million.

Equity in Net Income of Affiliated Companies

Equity in net income of affiliated comp anies for the three months ended September 30, 2023 was $4.7 million, compared to $3.2 million for the three months ended September 30, 2022.

The increase was due to $1.5 million of higher earnings from the Zeolyst Joint Venture during the three months ended September 30, 2023, as compared to the three months ended September 30, 2022.

The increase in earnings from the Zeolyst Joint Venture was due to higher sales volume of catalyst used in the production of renewable fuels and hydrocracking catalysts .

Equity in net income of affiliated companies for the three months ended March 31, 2024 was $2.1 million, compared to $0.2 million for the three months ended March 31, 2023.

The increase was due to higher sales of catalysts used in sustainable fuel and production and sales growth in customized catalyst applications within the Zeolyst Joint Venture during the three months ended March 31, 2024 .

Interest Expense, Net

Interest expense, net for the three month s ended September 30, 2023 was $11.8 million, an increase of $2.3 million, as compared to $9.5 million for the three months ended September 30, 2022.

The increase in interest expense, net was primarily due to the year over year increase in variable rates, which was partially offset by lower outstanding debt during the three months ended September 30, 2023, as compared to the three months ended September 30, 2022 and benefits associated with the interest rate caps.

Other Expense, Net

Other expense, net for the three months ended September 30, 2023 was $0.4 million, a change of $1.5 million, as compared to $1.9 million for the three months ended September 30, 2022.

The decrease in other expense, net primarily relates to lower foreign currency exchange of $0.4 million mainly related to the non-permanent intercompany debt denominated in local currency and translated to the U.S.

dollar, a lower net periodic benefit for the defined benefit pension and postretirement plans of $0.3 million and $0.4 million in other income.

Interest expense, net for the three months ended March 31, 2024 was $13.4 million, an increase of $3.5 million, as compared to $9.9 million for the three months ended March 31, 2023.

The increase in interest expense, net was primarily due to year over year increase in variable rates, which was partially offset by lower outstanding debt during the three months ended March 31, 2024, as compared to the three months ended March 31, 2023.

This was offset by the benefits associated with our interest rate caps.

Other Expense (Income), Net

Other expense (income), net for the three months ended March 31, 2024 was expense of $0.2 million, a decrease of $0.6 million, as compared to income of $0.4 million for the three months ended March 31, 2023.

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

Provision for Income Taxes

The provision for income taxes for the three months ended September 30, 2023 was $7.9 million, compared to a $9.0 million provision for the three months ended September 30, 2022.

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

The Company’s quarter over quarter effective income tax rate has fluctuated primarily due to the impact of the Section 162m Compensation disallowance on the Company’s annualized effective tax rate, discrete tax benefit related to a stock compensation shortfall and a discrete tax benefit associated with state and local tax law changes.

The provision for income taxes for the three months ended March 31, 2024 was $1.2 million, compared to a $0.9 million for the three months ended March 31, 2023.

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 three 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.

For the foregoing reasons, net income was $16.6 million for the three months ended September 30, 2023, compared to $21.3 million for the three months ended September 30, 2022.

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.

Net Income (Loss)

For the foregoing reasons, n et income was $1.2 million for the three months ended March 31, 2024, compared to net loss of $1.5 million for the three months ended March 31, 2023.

Adjusted EBITDA

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Three months ended

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March 31, Change

2024 2023 $ %

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Ecoservices $ 41.5 $ 36.8 $ 4.7 12.8 %

Catalyst Technologies (2)

Advanced Materials & Catalysts (2)

11.1 13.0 (1.9) (14.6) %

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

(2) The Adjusted EBITDA from the Zeolyst Joint Venture included in the Catalyst Technologies segment was $9.6 million for the three months ended September 30, 2023, which includes $4.7 million of equity in net income, excluding $1.6 million of amortization of investment in affiliate step-up plus $3.3 million of joint venture depreciation, amortization and interest.

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

Adjusted EBITDA for the three months ended September 30, 2023 was $54.7 million, a decrease of $9.4 million, or 14.7%, compared to $64.1 million for the three months ended September 30, 2022.

The decrease in Adjusted EBITDA was a result of lower virgin sulfuric acid sales volume and higher costs associated with increased maintenance and networking costs arising from production downtime in July at our Dominguez site.

Catalyst Technologies:

Adjusted EBITDA for the three months ended September 30, 2023 was $16.4 million, a decrease of $2.9 million, or 15.0%, compared to $19.3 million for the three months ended September 30, 2022.

The decrease in Adjusted EBITDA was primarily a result of lower sales of silica-based catalysts, partially offset by the impact of higher sales in the Zeolyst Joint Venture and higher pricing.

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

(2) The Adjusted EBITDA for the Advanced Materials & Catalysts segment includes our 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 $6.9 million for the three months ended March 31, 2024, which includes $2.1 million of equity in net

income, excluding $1.6 million of amortization of investment in affiliate step-up plus $3.3 million of joint venture depreciation, amortization and interest.

The Adjusted EBITDA from the Zeolyst Joint Venture included in the Advanced Materials & Catalysts segment was $5.4 million for the three months ended March 31, 2023, which includes $0.2 million of equity in net income, excluding $1.6 million of amortization of investment in affiliate step-up plus $3.6 million of joint venture depreciation, amortization and interest.

Adjusted EBITDA for the three months ended March 31, 2024 was $41.5 million, an increase of $4.7 million, or 12.8%, compared to $36.8 million for the three mo nths ended March 31, 2023.

The increase in Adjusted EBITDA was primarily a result of higher sales volume for virgin sulfuric acid and for regeneration services.

Advanced Materials & Catalysts:

Adjusted EBITDA for the three months ended March 31, 2024 was $11.1 million, a decrease of $1.9 million or 14.6%, compared to $13.0 million for the three mo nths ended March 31, 2023 .

The decrease was primarily a result of lower sales volume of advanced silicas used for the production of polyethylene in Advanced Silicas, partially offset by higher sales of catalysts used in sustainable fuel production and growth in customized catalyst applications within the Zeolyst Joint Venture.

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

Three months ended

September 30,

(in millions)

Reconciliation of net income to Adjusted EBITDA

Net income $ 16.6 $ 21.3

Provision for income taxes 7.9 9.0

Interest expense, net 11.8 9.5

Depreciation and amortization 21.3 19.6

EBITDA 57.6 59.4

Joint venture depreciation, amortization and interest (a)

Amortization of investment in affiliate step-up (b)

Net loss on asset disposals (c)

Foreign currency exchange loss (d)

LIFO benefit (e)

Transaction and other related costs (f)

Equity-based compensation 3.5 4.7

Restructuring, integration and business optimization expenses (g)

Adjusted EBITDA $ 67.9 $ 75.4

(a) We use Adjusted EBITDA as a performance measure to evaluate our financial results.

Because our Catalyst Technologies segment includes our 50% interest in the Zeolyst Joint Venture, we include an adjustment for our 50% proportionate share of depreciation, amortization and interest expense of the Zeolyst Joint Venture.

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

and Eco Services Operations LLC in May 2016.

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

Amortization is primarily related to the fair value adjustments associated with intangible assets, including customer relationships and technical know-how.

(c) When asset disposals occur, we remove the impact of net gain/loss of the disposed asset because such impact primarily reflects the non-cash write-off of long-lived assets no longer in use.

(d) Reflects the exclusion of the foreign currency transaction gains and losses in the statements of income related to the non-permanent intercompany debt denominated in local currency translated to U.S.

(e) Represents non-cash adjustments to the Company’s LIFO reserves for certain inventories in the U.S.

that are valued using the LIFO method, effectively reflecting the results as if these inventories were valued using the FIFO method, which we believe provides a means of comparison to other companies that may not use the same basis of accounting for inventories.

(f) Relates to certain transaction costs, including debt financing, due diligence and other costs related to transactions that are completed, pending or abandoned, that we believe are not representative of our ongoing business operations.

(g) Includes the impact of restructuring, integration and business optimization expenses, which are incremental costs that are not representative of our ongoing business operations.

(h) Other consists of adjustments for items that are not core to our ongoing business operations.

These adjustments include environmental remediation and other legal costs, expenses for capital and franchise taxes, and defined benefit pension and postretirement plan (benefits) costs, for which our obligations are under plans that are frozen.

Also included in this amount are adjustments to eliminate the benefit realized in cost of goods sold of the allocation of a portion of the contract manufacturing payments under the five-year agreement with the buyer of the Performance Chemicals business to the financing obligation under the failed sale-leaseback.

Included in this line-item are rounding discrepancies that may arise from rounding from dollars (in thousands) to dollars (in millions).

Adjusted Net Income

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

Three months ended September 30,

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

(in millions)

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

Net income $ 24.5 $ 7.9 $ 16.6 $ 30.3 $ 9.0 $ 21.3

Amortization of investment in affiliate step-up (b)

1.6 0.5 1.1 1.6 0.5 1.1

Net loss on asset disposals (c)

1.0 0.3 0.7 0.5 0.2 0.3

Foreign currency exchange loss (d)

0.8 0.2 0.6 1.0 0.2 0.8

LIFO benefit (e)

— — — (0.4) (0.1) (0.3)

Transaction and other related costs (f)

0.2 0.1 0.1 1.8 0.5 1.3

Equity-based compensation 3.5 0.3 3.2 4.7 0.1 4.6

Restructuring, integration and business optimization expenses (g)

0.3 0.1 0.2 2.3 0.7 1.6

(0.4) (0.1) (0.3) 0.6 0.2 0.4

Adjusted Net Income $ 31.5 $ 9.3 $ 22.2 $ 42.4 $ 11.3 $ 31.1

(1) We define adjusted net income as net income adjusted for non-operating income or expense and the impact of certain non-cash or other items that are included in net income that we do not consider indicative of our ongoing operating performance.

Adjusted net income is presented as a key performance indicator as we believe it will enhance a prospective investor’s understanding of our results of operations and financial condition.

Adjusted net income may not be comparable with net income or adjusted net income as defined by other companies.

(2) Refer to the Adjusted EBITDA notes above for more information with respect to each adjustment.

The adjustments to net income are shown net of applicable tax rates as determined by the calculation of our quarterly tax provision under interim financial reporting for the three months ended September 30, 2023 and September 30, 2022, except for the foreign currency exchange (gain) loss and equity-based compensation.

The tax effect on equity-based compensation is derived by removing the tax effect of any equity-based compensation expense disallowed as a result of its inclusion within IRC Sec.

162(m), and adding the tax effect of equity-based stock compensation shortfall recorded as a discrete item.

The tax effect of the foreign currency exchange (gain) loss is derived from tax effecting the actual year to date foreign currency exchange (gain) loss by the respective local country statutory rates which is recorded as a discrete item.

Results of Operations

Nine Months Ended September 30, 2023 Compared to the Nine Months Ended September 30, 2022

The following is a summary of our financial performance for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022.

• Sales decreased $119.1 million to $518.3 million.

The decrease in sales was primarily due to lower sales volume and the result of the pass-through of lower sulfur costs within our virgin sulfuric acid product group.

• Gross profit decreased $24.7 million to $150.6 million.

The decrease in gross profit was primarily due to higher manufacturing costs and lower sales volume.

Operating Income

• Operating income decreased by $8.5 million to $73.9 million.

The decrease in operating income was due to a decrease in gross profit, offset by lower selling, general and administrative expenses and other operating expenses.

Equity in Net Income of Affiliated Companies

• Equity in net income of affiliated companies for the nine months ended September 30, 2023 was $16.3 million, compared to $17.4 million for the nine months ended September 30, 2022.

The decrease of $1.1 million was due to lower earnings from the Zeolyst Joint Ventur e during the nine months ended September 30, 2023.

The following is our unaudited condensed consolidated statements of income and a summary of financial results for the nine months ended September 30, 2023 and 2022:

Nine months ended

September 30, Change

2023 2022 $ %

(in millions, except percentages)

Sales $ 518.3 $ 637.4 $ (119.1) (18.7) %

Cost of goods sold 367.7 462.2 (94.5) (20.4) %

Gross profit 150.6 175.3 (24.7) (14.1) %

Gross profit margin 29.1 % 27.5 %

Selling, general and administrative expenses 59.5 67.8 (8.3) (12.2) %

Other operating expense, net 17.2 25.1 (7.9) (31.5) %

Operating income 73.9 82.4 (8.5) (10.3) %

Operating income margin 14.3 % 12.9 %

Equity in net (income) from affiliated companies (16.3) (17.4) 1.1 (6.3) %

Interest expense, net 30.8 26.9 3.9 14.5 %

Other expense, net 0.6 2.5 (1.9) (76.0) %

Income before income taxes 58.8 70.4 (11.6) (16.5) %

Provision for income taxes 17.6 22.0 (4.4) (20.0) %

Effective tax rate 29.9 % 31.2 %

Net income $ 41.2 $ 48.4 $ (7.2) (14.9) %

Nine months ended

September 30, Change

2023 2022 $ %

(in millions, except percentages)

Ecoservices $ 443.4 $ 542.7 $ (99.3) (18.3) %

Catalyst Technologies 74.9 94.7 (19.8) (20.9) %

Total sales $ 518.3 $ 637.4 $ (119.1) (18.7) %

Ecoservices :

Sales in Ecoservices for the nine months ended September 30, 2023 were $443.4 million, a decrease of $99.3 million, or 18.3%, compared to sales of $542.7 million for the nine months ended September 30, 2022.

The decrease in sales reflects lower sales volume of $60.3 million and the negative impact associated with the pass-through of sulfur costs of approximately $75 million, offset by higher average selling pricing of $39.0 million, after adjusting for the impact of the pass-through of sulfur costs.

Sales volume was lower primarily due to lower virgin sulfuric acid sales associated with the adverse impact of Winter Storm Elliott earlier in the year, extended maintenance turnaround activity at our facilities that limited our ability to produce inventory in advance of significant planned turnaround activity to meet customer demand, and lower end use demand of virgin sulfuric acid, primarily into the production of nylon intermediates during the nine months ended September 30, 2023.

Catalyst Technologies:

Sales in Catalyst Technologies for the nine months ended September 30, 2023 were $74.9 million, a decrease of $19.8 million, or 20.9%, compared to sales of $94.7 million for the nine months ended September 30, 2022.

The decrease in sales was due to lower sales volume of $26.0 million, lower average selling prices of $6.4 million and the unfavorable effects of foreign currency of $0.2 million.

The decrease in sales volume was primarily driven by lower end use demand for polyethylene catalysts during the nine months ended September 30, 2023.

The lower average selling prices were driven by customer mix.

Gross profit for the nine months ended September 30, 2023 was $150.6 million, a decrease of $24.7 million, or 14.1%, compared to $175.3 million for the nine months ended September 30, 2022.

The decrease in gross profit is primarily driven by lower sales volume of $23.6 million as well as unfavorable manufacturing costs of $43.5 million, partially offset by favorable average selling prices of $42.4 million, exclusive of the pass-through of sulfur costs.

Sales volume was lower primarily due to lower virgin sulfuric acid sales and lower polyethylene catalysts sales.

The unfavorable manufacturing costs was primarily driven by costs related to the extended maintenance turnaround activity, planned turnaround activity, and higher unplanned repair and maintenance costs.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the nine months ended September 30, 2023 was $59.5 million, a decrease of $8.3 million, as compared to $67.8 million for the nine months ended September 30, 2022.

The decrease in selling, general and administrative expenses was mainly due to a decrease in other compensation-related expenses of $7.3 million and a decrease in stock-based compensation expense of $4.9 million due to fewer overall awards granted and outstanding for the nine months ended September 30, 2023 as compared to the prior year period.

This was partly offset by an increase in professional fees of $3.6 million primarily related to consulting and recruiting charges.

Other Operating Expense, Net

Other operating expense, net for the nine months e nded September 30, 2023 was $17.2 million, a decrease of $7.9 million, compared to $25.1 million for the nine months ended September 30, 2022.

The decrease in other operating expense, net was mainly driven by a decrease of $4.0 million in transactions costs, primarily associated with the sale of the Performance Chemicals business and a decrease of $5.4 million i n restructuring, integration and business optimization costs driven by severance charges incurred in the prior period from contracts associated with fo rmer executives.

This was also offset by an increase in net losses on asset disposals of $2.2 million, primarily associated with costs related to Winter Storm Elliott.

Equity in Net Income of Affiliated Companies

Equity in net income of affiliated companies for the nine months ended September 30, 2023 was $16.3 million, compared to $17.4 million for the nine months ended September 30, 2022.

The decrease was due to lower earnings from the Zeolyst Joint Ventur e during the nine months ended September 30, 2023 .

Interest Expense, Net

Interest expense, net for the nine months ended September 30, 2023 was $30.8 million, an increase of $3.9 million, as compared to $26.9 million for the nine months ended September 30, 2022.

The increase in interest expense, net was primarily due to year over year increase in variable rates, which was partially offset by lower outstanding debt during the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022 and the benefits associated with our interest rate caps, which included an adjustment related to prior year interest rate amortization.

Other Expense, Net

Other expense, net for the nine months ended September 30, 2023 was $0.6 million, a decrease of $1.9 million, as compared to $2.5 million for the nine months ended September 30, 2022.

The decrease in other expense, net primarily consisted of favorable foreign currency exchange of $2.2 million mainly related to the non-permanent intercompany debt denominated in local currency and translated to the U.S.

Provision for Income Taxes

The provision for income taxes for the nine months ended September 30, 2023 was $17.6 million, compared to a $22.0 million for the nine months ended September 30, 2022.

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

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

The difference between the U.S.

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

For the foregoing reasons, n et income was $41.2 million for the nine months ended September 30, 2023, compared to $48.4 million for the nine months ended September 30, 2022.

Adjusted EBITDA

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

Nine months ended

September 30, Change

2023 2022 $ %

(in millions, except percentages)

Adjusted EBITDA:

Ecoservices $ 151.6 $ 173.4 $ (21.8) (12.6) %

Catalyst Technologies (2)

54.7 57.7 (3.0) (5.2) %

Unallocated corporate expenses (16.2) (23.5) 7.3 (31.1) %

Total $ 190.1 $ 207.6 $ (17.5) (8.4) %

(1) We define Adjusted EBITDA as EBITDA adjusted for certain items as noted in the reconciliation below.

Our management evaluates the performance of our segments and allocates resources based primarily on Adjusted EBITDA.

Adjusted EBITDA does not represent cash flow for periods presented and should not be considered as an alternative to net income as an indicator of our operating performance or as an alternative to cash flows as a source of liquidity.

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

(2) The Adjusted EBITDA from the Zeolyst Joint Venture included in the Catalyst Technologies segment is $31.3 million for the nine months ended September 30, 2023, which includes $16.4 million of equity in net income, excluding $4.8 million of amortization of investment in affiliate step-up plus $10.1 million of joint venture depreciation, amortization and interest.

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

Adjusted EBITDA for the nine months ended September 30, 2023 was $151.6 million, a decrease of $21.8 million, or 12.6%, compared to $173.4 million for the nine mo nths ended September 30, 2022.

The decrease in Adjusted EBITDA was primarily a result of lower virgin sulfuric acid sales volume related to Winter Storm Elliott and the extended maintenance turnaround activity, higher unplanned repair and maintenance costs and costs associated with planned turnaround activity, partially offset by higher pricing for regeneration services.

Catalyst Technologies:

Adjusted EBITDA for the nine months ended September 30, 2023 was $54.7 million, a decrease of $3.0 million or 5.2%, compared to $57.7 million for the nine mo nths ended September 30, 2022 .

The decrease was primarily a result of a decrease in sales volume offset by continued strong pricing.

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

Nine months ended

September 30,

(in millions)

Reconciliation of net income to Adjusted EBITDA

Net income $ 41.2 $ 48.4

Reconciliation of net income (loss) to Adjusted EBITDA

Net income (loss) $ 1.2 $ (1.5)

Provision for income taxes 1.2 0.9

5 unchanged sentences

Net loss on asset disposals (c)

Foreign currency exchange (gain) loss (d)

LIFO expense (e)

Foreign currency exchange loss (gain) (d)

LIFO (benefit) expense (e)

Transaction and other related costs (f)

3 unchanged sentences

(a) We use Adjusted EBITDA as a performance measure to evaluate our financial results.

Because our Advanced Materials & Catalysts segment includes our 50% interest in the Zeolyst Joint Venture, we include an adjustment for our 50% proportionate share of depreciation, amortization and interest expense of the Zeolyst Joint Venture.

14 unchanged sentences

Summarized Adjusted Net Income information is shown below in the following table:

Nine months ended September 30,

Three months ended March 31,

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

(in millions)

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

Net income $ 58.8 $ 17.6 $ 41.2 $ 70.4 $ 22.0 $ 48.4

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

Net income (loss) $ 2.4 $ 1.2 $ 1.2 $ (0.6) $ 0.9 $ (1.5)

Amortization of investment in affiliate step-up (b)

2 unchanged sentences

0.6 0.1 0.5 1.2 0.3 0.9

Foreign currency exchange (gain) loss (d)

Foreign currency exchange loss (gain) (d)

0.2 0.1 0.1 (0.7) (0.1) (0.6)

LIFO expense (e)

LIFO (benefit) expense (e)

(1.1) (0.3) (0.8) 1.4 0.4 1.0

10 unchanged sentences

(2) Refer to the Adjusted EBITDA notes above for more information with respect to each adjustment.

The adjustments to net income are shown net of applicable tax rates of 27.4% and 27.7% for the nine months ended September 30, 2023 and 2022, respectively, except for the foreign currency exchange (gain) loss and equity-based compensation.

The adjustments to net income are shown net of applicable tax rates of 24.6% and 25.6% for the three months ended March 31, 2024 and 2023, respectively, except equity-based compensation.

The tax effect on equity-based compensation is derived by removing the tax effect of any equity-based compensation expense disallowed as a result of its inclusion within IRC Sec.

162(m), and adding the tax effect of equity-based stock compensation shortfall recorded as a discrete item.

Financial Condition, Liquidity and Capital Resources

6 unchanged sentences

We may, from time to time, increase borrowings under our ABL Facility to meet our future cash needs.

As of September 30, 2023, we had cash and cash equivalents of $38.3 million and availability of $70.8 million under our ABL Facility, after giving effect to $4.0 million of outstanding letters of credit, for a total available liquidity of $109.1 million.

We did not have any revolving credit facility borrowings as of September 30, 2023.

As of September 30, 2023, we were in compliance with all covenants under our debt agreements.

As of March 31, 2024, we had cash and cash equivalents of $103.1 million and availability of $70.2 million under our ABL Facility, after giving effect to $4.0 million of outstanding letters of credit, for a total available liquidity of $173.3 million.

We did not have any revolving credit facility borrowings as of March 31, 2024.

As of March 31, 2024, we were in compliance with all covenants under our debt agreements.

Our ABL Facility has one financial covenant with two ratios to maintain.

4 unchanged sentences

revolving credit facility against a $15.0 million threshold.

As of September 30, 2023, we were in compliance with the financial covenant under the ABL Facility.

As of March 31, 2024, we were in compliance with the financial covenant under the ABL Facility.

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

1 unchanged sentence

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

The Company was in compliance with all debt covenants under the 2021 Term Loan Facility and the ABL Facility as of September 30, 2023.

Included in our cash and cash equivalents balance as of September 30, 2023 was $8.5 million of cash and cash equivalents in foreign jurisdictions.

The Company was in compliance with all debt covenants under the 2021 Term Loan Facility and the ABL Facility as of March 31, 2024.

Included in our cash and cash equivalents balance as of March 31, 2024 was $11.4 million of cash and cash equivalents in foreign jurisdictions.

Depending on foreign cash balances, we have certain flexibility to repatriate funds should the need arise.

4 unchanged sentences

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

As reported, our cash interest paid for the nine months ended September 30, 2023 and 2022 was approximately $28.5 million and $24.4 million, respectively.

As reported, our cash interest paid for the three months ended March 31, 2024 and 2023 was approximately $12.6 million and $15.2 million, respectively.

Before any impact of hedges, a one percent change in assumed interest rates for our variable interest credit facilities would have an annual impact of approximately $8.8 million on interest expense.

1 unchanged sentence

For more information about our interest rate cap agreements, refer to Note 12 — Financial Instrument of our condensed consolidated financials statements included in Part 1, Item 1 — Financial Statements (Unaudited).

The Company’s off-balance sheet arrangements include $4.0 million of outstanding letters of credit on our ABL Facility as of September 30, 2023.

Nine months ended

September 30,

Off-Balance Sheet Arrangements

The Company’s off-balance sheet arrangements include $4.0 million of outstanding letters of credit on our ABL Facility as of March 31, 2024.

Three months ended

(in millions)

7 unchanged sentences

Cash and cash equivalents at end of period $ 103.1 $ 61.6

Nine months ended

September 30,

(in millions)

Net income $ 41.2 $ 48.4

Non-cash and non-working capital related activities (1)

Changes in working capital (35.0) (42.5)

Other operating activities (5.2) (2.8)

Net cash provided by operating activities $ 73.4 $ 109.3

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

Nine months ended

September 30,

(in millions)

Working capital changes that (used) provided cash:

Receivables $ (8.9) $ (28.4)

Inventories (3.9) 3.2

Prepaids and other current assets 0.9 (5.2)

Accounts payable (3.7) 2.0

Accrued liabilities (19.4) (14.1)

$ (35.0) $ (42.5)

Nine months ended

September 30,

(in millions)

Purchases of property, plant and equipment $ (53.6) $ (39.5)

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

Business combinations, net of cash acquired — (0.5)

Other, net — 0.1

Net cash used in investing activities $ (53.6) $ (43.6)

Nine months ended

September 30,

(in millions)

Cash repayments on debt obligations $ (6.8) $ (6.8)

Repurchases of common shares (78.7) (73.7)

Tax withholdings on equity award vesting (3.4) (0.3)

Repayment of financing obligation (2.1) (1.8)

Net cash used in financing activities $ (90.5) $ (82.6)

Net cash provided by operating activities was $73.4 million for the nine months ended September 30, 2023, compared to $109.3 million for the nine months ended September 30, 2022.

Cash generated by operating activities, other than changes in working capital was lower by $43.4 million during the nine months ended September 30, 2023, as compared to the same period in the prior year primarily due to a decrease in dividends received from affiliated companies and deferred income tax provision.

The increase in cash from working capital during the nine months ended September 30, 2023 of $7.5 million was favorable, compared to the nine months ended September 30, 2022 primarily due to favorable changes in receivables and prepaids and other current assets, offset by unfavorable changes in inventories, accounts payable and accrued liabilities.

The favorable change in receivables was driven by the collection of sales.

The favorable change in prepaid and other current assets primarily relates to the timing of non-trade receivables from related parties and the interest rate cap agreements.

The unfavorable change in accrued liabilities mainly relates to payments for other compensation-related liabilities in the current period offset by higher income tax payments in the prior period.

The unfavorable change in accounts payable is due to the timing of vendor payments.

Net cash provided by operating activities was $36.5 million for the three months ended March 31, 2024, compared to $4.1 million for the three months ended March 31, 2023.

Cash generated by operating activities, other than changes in working capital was higher by $27.2 million during the three months ended March 31, 2024, as compared to the same period in the prior year primarily due to dividends received from the Zeolyst Joint Venture.

The increase in cash from working capital during the three months ended March 31, 2024 of $5.2 million was favorable, compared to the three months ended March 31, 2023 primarily due to favorable changes in prepaids and other current assets and accrued liabilities, offset by unfavorable changes in receivables, inventories and accounts payable.

The favorable change in prepaid and other current assets primarily relates to the timing of miscellaneous receivables and non-trade receivables from related parties.

The favorable change in accrued liabilities mainly relates to lower payments for variable employee compensation liabilities partially offset by higher payments for taxes in the current period.

The unfavorable change in receivables was driven by the timing of collection of sales.

The unfavorable change in inventory was primarily due to the timing of sales orders and inventory build.

Net cash used in investing activities was $53.6 million for the nine months ended September 30, 2023, compared to $43.6 million during the same period in 2022.

Cash used in investing activities consisted of $53.6 million and $39.5 million to fund capital expenditures during the nine months ended September 30, 2023 and 2022, respectively.

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

Net cash used in financing activities was $90.5 million for the nine months ended September 30, 2023, compared to $82.6 million during the same period in 2022.

Net cash used in financing activities was primarily driven by the Company repurchases of common stock of $78.7 million during the nine months ended September 30, 2023, compared to $73.7 million during the nine months ended September 30, 2022.

September 30,

The unfavorable change in accounts payable was due to the timing of vendor payments.

Net cash used in investing activities was $17.4 million for the three months ended March 31, 2024, compared to $18.7 million during the same period in 2023.

Cash used in investing activities consisted of $17.4 million and $18.7 million to fund capital expenditures during the three months ended March 31, 2024 and 2023, respectively.

Net cash used in financing activities was $4.2 million for the three months ended March 31, 2024, compared to $33.6 million during the same period in 2023.

Net cash used in financing activities was primarily driven by the Company repurchases of common stock of $29.9 million during the three months ended March 31, 2023.

2024 December 31,

8 unchanged sentences

Total long-term debt, excluding current portion $ 857.3 $ 858.9

As of September 30, 2023, our total debt was $879.8 million, excluding the original issue discount of $6.5 million and deferred financing costs of $3.6 million for our senior secured credit facilities.

Our net debt as of September 30, 2023 was $841.5 million, including cash and cash equivalents of $38.3 million.

As of March 31, 2024, our total debt was $875.3 million, excluding the original issue discount of $5.8 million and deferred financing costs of $3.2 million for our senior secured credit facilities.

Our net debt as of March 31, 2024 was $772.2 million, including cash and cash equivalents of $103.1 million.

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

3 unchanged sentences

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

Nine months ended

September 30,

Three months ended

(in millions)

3 unchanged sentences

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

Maintenance capital expenditures were higher in the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022 due to extended turnaround activities and additional expenditures incurred related to Winter Storm Elliott impacting our manufacturing facilities.

Growth capital expenditures were slightly lower in the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022 due to the completion of several expansion projects in 2022.

Critical Accounting Policies and Estimates

8 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 2. Management’s Discussion and Analysis