What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-02 compared with 2024-11-01 · 135 added, 307 removed, 245 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, potential strategic acquisitions or divestitures, potential increased borrowing under our credit facilities, 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.

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 strategic review of our Advanced Materials & Catalysts segment, potential increased borrowing under our credit facilities, 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.

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• disruption, failure or cyber security breaches affecting or targeting computers and infrastructure used by us or our business partners may adversely impact our business and operations;

• significant trade developments, including tariffs, have had and may continue to have an adverse effect on us;

• that we have a material weakness in our internal control over financial reporting and that we may identify additional material weaknesses in the future;

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

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We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Form 10-Q to conform these statements to actual results or to changes in our expectations.

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

We are a leading integrated and innovative global provider of advanced materials, specialty catalysts, virgin sulfuric acid and sulfuric acid regeneration services.

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

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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, 2024, the Company repurchased 552,081 shares on the open market at an average price of $9.05 per share, for a total of $5.0 million excluding brokerage commissions and accrued excise tax.

As of September 30, 2024, $229.6 million was available for share repurchases under the program.

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 by an equity sponsor in March and May 2023, the Company repurchased 7,000,000 shares of its common stock in the offerings from underwriters at a weighted average price of $10.48 per share concurrently with the close of the offerings, for a total of $73.4 million, excluding accrued excise tax.

The Company did not repurchase any of its common stock pursuant to the stock repurchase program during the three months ended March 31, 2025 and 2024.

As of March 31, 2025, $229.6 million was available for share repurchases under the program.

For possible future repurchases, the actual timing, number, and nature of shares repurchased will depend on a variety of factors, including stock price, trading volume, and general business and market conditions and may be conducted through negotiated transactions, open market repurchases or other means, including through Rule 10b-18 trading plans or accelerated share repurchases.

Key Performance Indicators

Adjusted EBITDA and Adjusted Net Income

Adjusted EBITDA and Adjusted Net Income are financial measures that are not prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and that we use to evaluate our operating performance, for business planning purposes and to measure our performance relative to that of our competitors.

Adjusted EBITDA and Adjusted Net Income are presented as key performance indicators as we believe these financial measures will enhance a prospective investor’s understanding of our results of operations and financial condition.

EBITDA consists of net income attributable to continuing operations before interest, taxes, depreciation and amortization.

Adjusted EBITDA consists of EBITDA adjusted for (i) non-operating income or expense, (ii) the impact of certain non-cash, nonrecurring or other items included in net income and EBITDA that we do not consider indicative of our ongoing operating performance, and (iii) depreciation, amortization and interest of our 50% share of the Zeolyst Joint Venture.

Adjusted Net Income consists of net income adjusted for (i) non-operating income or expense and (ii) the impact of certain non-cash, nonrecurring or other items included in net income that we do not consider indicative of our ongoing operating performance.

Adjusted EBITDA, Adjusted Net Income and Net Debt

Adjusted EBITDA, Adjusted Net Income and Net Debt are financial measures that are not prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and that we use to evaluate our operating performance, for business planning purposes and to measure our performance relative to that of our competitors.

Adjusted EBITDA, Adjusted Net Income, and Net Debt are presented as key performance indicators as we believe these financial measures will enhance a prospective investor’s understanding of our results of operations and financial condition.

EBITDA consists of net (loss) income attributable to continuing operations before interest, taxes, depreciation and amortization.

Adjusted EBITDA consists of EBITDA adjusted for (i) non-operating income or expense, (ii) the impact of certain non-cash, nonrecurring or other items included in net (loss) income and EBITDA that we do not consider indicative of our ongoing operating performance, and (iii) depreciation, amortization and interest of our 50% share of the Zeolyst Joint Venture.

Adjusted Net Income consists of net (loss) income adjusted for (i) non-operating income or expense and (ii) the impact of certain non-cash, nonrecurring or other items included in net (loss) income that we do not consider indicative of our ongoing operating performance.

Net Debt consists of total debt less cash and cash equivalents.

We believe that these non-GAAP financial measures provide investors with useful financial metrics to assess our operating performance from period-to-period by excluding certain items that we believe are not representative of our core business.

You should not consider Adjusted EBITDA or Adjusted Net Income in isolation or as alternatives to the presentation of our financial results in accordance with GAAP.

The presentation of Adjusted EBITDA and Adjusted Net Income financial measures may differ from similar measures reported by other companies and may not be comparable to other similarly titled measures.

You should not consider Adjusted EBITDA, Adjusted Net Income, or Net Debt in isolation or as alternatives to the presentation of our financial results in accordance with GAAP.

The presentation of Adjusted EBITDA, Adjusted Net Income and Net Debt financial measures may differ from similar measures reported by other companies and may not be comparable to other similarly titled measures.

In evaluating Adjusted EBITDA and Adjusted Net Income, you should be aware that we are likely to incur expenses similar to those eliminated in this presentation in the future and that certain of these items could be considered recurring in nature.

Our presentation of Adjusted EBITDA and Adjusted Net Income should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items.

Reconciliations of Adjusted EBITDA and Adjusted Net Income to GAAP net income are included in the results of operations discussion that follows for each of the respective periods.

Reconciliations of Adjusted EBITDA, Adjusted Net Income to GAAP net (loss) income and Net Debt to GAAP total debt are included in this “Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations” for each of the respective periods.

Key Factors and Trends Affecting Operating Results and Financial Condition

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

Within the Zeolyst Joint Venture, included in our Advanced Materials & Catalysts segment, we may also experience demand fluctuations based upon the timing of some of our customer’s fixed bed catalyst replacements or the timing of sales of catalysts used in the production of sustainable fuels.

Within the Zeolyst Joint Venture, included in our Advanced Materials & Catalysts segment, we may also experience demand fluctuations based upon the timing of our customer’s fixed bed catalyst replacements.

Our Ecoservices and Advanced Materials & Catalysts segments continued to benefit from positive demand trends for our products and services in the majority of end uses we serve.

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For our Advanced Materials & Catalysts segment, global polyethylene demand remained positive, supporting our sales of polyethylene catalysts and catalysts supports.

Within the Zeolyst Joint Venture, hydrocracking catalyst sales continued to reflect demand fluctuations driven by customer order timing associated by the timing of fixed bed catalyst replacement cycles and sales of niche-custom catalysts, which tend to be event driven, continued to reflect variability in customer order patterns.

With a current imbalance between the production capacity for renewable diesel and current demand, we continue to expect lower demand in the near to mid-term for catalyst sales into the production of renewable diesel.

In addition, given various macro-economic conditions which have adversely impacted sales of heavy-duty diesel vehicles, we reduced our expectations for sales of emission control catalysts.

Cost of Goods Sold

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The primary raw materials for our Ecoservices segment include spent sulfuric acid, sulfur, acids, bases (including sodium hydroxide, or “caustic soda”) and certain metals.

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

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

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

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chemical plant construction cost index) and natural gas.

Over 80% of our Ecoservices segment sales for the year ended December 31, 2023 were under contracts featuring quarterly price adjustments.

About 90% of our Ecoservices segment sales for the year ended December 31, 2024 were under contracts featuring quarterly price adjustments.

The price adjustments generally reflect actual costs for producing acid and tend to protect us from volatility in labor, fixed costs and raw material pricing.

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Our joint venture, the Zeolyst Joint Venture, manufactures high-performance, specialty, zeolite-based catalysts, used in emission control, refining and petrochemical industry applications and by the broader chemicals industry.

Demand for the Zeolyst Joint Venture products fluctuates based upon the timing of our customer’s fixed bed catalyst replacements.

We share proportionally in the management of our joint venture with the other parties to such joint venture.

Our regeneration services product group, which is a part of our 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.

These demand fluctuations generally result in higher sales and working capital requirements in the second and third quarter.

These demand fluctuations generally result in higher sales and working capital requirements in the second and third quarters.

Foreign Currency

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 5% of our sales for the nine months ended September 30, 2024 and approximately 6% for the year ended December 31, 2023 were 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, 2025 and for the year ended December 31, 2024 in currencies other than the U.S.

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

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Results of Operations

Three Months Ended September 30, 2024 Compared to the Three Months Ended September 30, 2023

The following is a summary of our financial performance for the three months ended September 30, 2024 compared to the three months ended September 30, 2023.

Three Months Ended March 31, 2025 Compared to the Three Months Ended March 31, 2024

The following is a summary of our financial performance for the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

• Sales increased $1.7 million to $162.2 million.

The increase in sales was primarily due to the result of higher average selling prices for regeneration services and higher sales volume of virgin sulfuric acid.

• Gro ss profit increased $1.5 million to $54.7 million.

The increase in gross profit was primarily due to higher average selling pricing and higher sales volume, partially offset by unfavorable manufacturing costs.

Operating Income

• Operating income decreased by $0.4 million to $31.6 million.

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

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

• Gross profit decreased $13.6 million to $25.6 million.

The decrease in gross profit was primarily due to increased manufacturing costs driven by higher turnaround costs and inflation as well as lower sales volume.

Operating (Loss) Income

• Operating (loss) income decreased by $14.8 million to $0.9 million.

The decrease in operating (loss) income was due to a decrease in gross profit and higher other operating expense, net, partially offset by lower selling, general and administrative expenses.

Equity in Net Income of Affiliated Companies

• Equity in net income of affiliated companies for the three months ended September 30, 2024 was a net loss of $0.9 million, compared to net income of $4.7 million for the three months ended September 30, 2023.

The decrease of $5.6 million was due to lower earnings generated by the Zeolyst Joint Venture for the three months ended September 30, 2024, driven by lower sales volume.

The following is our unaudited condensed consolidated statements of income and a summary of financial results for the three months ended September 30, 2024 and 2023:

• Equity in net income of affiliated companies for the three months ended March 31, 2025 was $8.9 million, compared to $2.1 million for the three months ended March 31, 2024.

The increase of $6.8 million was due to higher earnings from the Zeolyst Joint Ventur e during the three months ended March 31, 2025, driven by higher sales volume.

The following is our unaudited condensed consolidated statements of (loss) income and a summary of financial results for the three months ended March 31, 2025 and 2024:

Three months ended

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Other operating expense, net 5.2 3.7 1.5 40.5 %

Operating income 31.6 32.0 (0.4) (1.3) %

Operating income margin 17.6 % 18.4 %

Operating (loss) income (0.9) 13.9 (14.8) (106.5) %

Operating (loss) income margin (0.6) % 8.7 %

Equity in net (income) from affiliated companies (8.9) (2.1) (6.8) 323.8 %

Interest expense, net 11.0 13.4 (2.4) (17.9) %

Debt modification and extinguishment costs 1.0 — 1.0 NM

Other expense, net 0.2 0.2 — — %

Income before income taxes 18.8 24.5 (5.7) (23.3) %

Provision for income taxes 4.5 7.9 (3.4) (43.0) %

(Loss) income before income taxes (4.2) 2.4 (6.6) (275.0) %

(Benefit) provision for income taxes (0.6) 1.2 (1.8) (150.0) %

Effective tax rate 13.3 % 49.1 %

Net income $ 14.3 $ 16.6 $ (2.3) (13.9) %

Net (loss) income $ (3.6) $ 1.2 $ (4.8) NM

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Total sales $ 162.2 $ 160.5 $ 1.7 1.1 %

Sales in Ecoservices for the three months ended September 30, 2024 were $153.9 million, an increase of $6.3 million, or 4.3%, compared to sales of $147.6 million for the three months ended September 30, 2023.

The increase in sales was due to higher average selling prices of $3.0 million and higher sales volume of $3.3 million.

The impact associated with the pass-through of lower sulfur costs was immaterial for the three months ended September 30, 2024.

Average selling prices were higher primarily due to favorable contractual pricing in regeneration services.

The increase in sales volume was primarily related to the increased demand for virgin sulfuric acid.

Ecoservices :

Sales in Ecoservices for the three months ended March 31, 2025 were $143.1 million, an increase of $1.5 million, or 1.1%, compared to sales of $141.6 million for the three months ended March 31, 2024.

The change in sales reflects higher average selling prices of $6.0 million, inclusive of the impact associated with the pass-through of higher sulfur costs of approximately $7 million, offset by lower sales volume of $4.5 million.

Average selling prices were higher primarily due to the pass-through of sulfur costs and favorable contract-pricing for regeneration services, partially offset by the pass-through of lower energy and other indexed costs.

Sales volume of virgin sulfuric acid and regeneration services were lower for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, driven by maintenance turnaround activity at our facilities and our customers’ facilities during the first quarter of 2025.

Advanced Materials & Catalysts:

Sales in Advanced Materials & Catalysts for the three months ended September 30, 2024 were $25.3 million, a decrease of $0.4 million, or 1.6%, compared to sales of $25.7 million for the three months ended September 30, 2023.

The decrease of $0.4 million was primarily due to the timing of niche custom catalysts sales, partially offset by higher advanced silicas used for the production of polyethylene.

Gross profit for the three months ended September 30, 2024 was $54.7 million, an increase of $1.5 million, or 2.8%, compared to $53.2 million for the three months ended September 30, 2023.

The increase in gross profit was primarily due to higher average selling prices of $3.0 million, higher sales volume and mix of $3.3 million, partially offset by unfavorable manufacturing costs of $4.8 million.

Average selling prices were higher primarily due to the favorable contractual pricing in regeneration services.

The increase in sales volume was primarily related to higher demand for virgin sulfuric acid and higher advanced silicas used for the production of polyethylene.

Higher manufacturing costs were driven by general inflation, higher planned maintenance costs and costs associated with our manufacturing plant reliability improvement program in Ecoservices.

Sales in Advanced Materials & Catalysts for the three months ended March 31, 2025 were $19.1 million, an increase of $0.2 million, or 1.1%, compared to sales of $18.9 million for the three months ended March 31, 2024.

The change in sales was primarily due to higher sales of niche custom catalysts associated with order timing, partially offset by lower sales of advanced silicas used for the production of polyethylene compared to the three months ended March 31, 2024.

Gross profit for the three months ended March 31, 2025 was $25.6 million, a decrease of $13.6 million, or 34.7%, compared to $39.2 million for the three months ended March 31, 2024.

The decrease in gross profit was primarily driven by unfavorable manufacturing costs of $10.3 million, lower average selling prices of $1.0 million, exclusive of the approximately $7 million of pass-through of higher sulfur costs, and lower sales volume of $2.3 million.

Average selling prices were lower primarily due to the pass-through of lower energy and other indexed costs.

The higher manufacturing costs were primarily driven by planned maintenance turnaround costs and general inflation.

The decrease in sales volume was primarily related to maintenance turnaround activity at our facilities and our customers’ facilities during the first quarter of 2025.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three months ended September 30, 2024 were $20.0 million, an increase of $3.1 million, compared to $16.9 million for the three months ended September 30, 2023.

The increase in selling, general and administrative expenses was primarily due to an increase in other compensation-related expenses of $3.7 million, offset by a decrease of $0.5 million in stock compensation due to fewer overall awards granted and outstanding for the three months ended September 30, 2024.

Selling, general and administrative expenses for the three months ended March 31, 2025 were $21.3 million, a decrease of $0.3 million, as compared to $21.6 million for the three months ended March 31, 2024.

The decrease in selling, general and administrative expenses was mainly due to a decrease in stock compensation of $0.6 million and professional fees of $0.5 million, partially offset by an increase in other compensation-related expenses of $0.5 million and other expenses of $0.3 million.

Other Operating Expense, Net

Other operating ex pense, net for the three months ended September 30, 2024 was $3.1 million, a decrease of $1.2 million, compared to $4.3 million for the three months ended September 30, 2023.

The decrease in other operating expense, net was primarily due to a decrease in net loss from asset disposals of $0.8 million compared to the prior year.

Other operating expense, net for the three months e nded March 31, 2025 was $5.2 million, an increase of $1.5 million, compared to $3.7 million for the three months ended March 31, 2024.

The increase in other operating expense, net was mainly driven by an increase of $1.8 million in transaction costs, partially offset by 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, 2024 was a net loss of $0.9 million, compared to net income of $4.7 million for the three months ended September 30, 2023.

The decrease was due to $5.6 million of lower earnings from the Zeolyst Joint Venture during the three months ended September 30, 2024, as compared to the three months ended September 30, 2023.

The decrease in earnings from the Zeolyst Joint Venture was due to lower sales volume of catalysts used in the production of sustainable fuels and emission control applications, partially offset by higher sales of hydrocracking catalysts and custom catalysts.

Equity in net income of affiliated companies for the three months ended March 31, 2025 was $8.9 million, compared to $2.1 million for the three months ended March 31, 2024.

The increase in earnings from the Zeolyst Joint Venture was driven by higher hydrocracking catalyst and specialty catalyst sales, partially offset by lower sales of catalysts used in emission control and customized catalyst applications during the three months ended March 31, 2025 compared to the prior year.

Interest Expense, Net

Interest expense, net for the three month s ended September 30, 2024 was $11.3 million, a decrease of $0.5 million, as compared to $11.8 million for the three months ended September 30, 2023.

The decrease in interest expense, net was primarily due to the period over period decrease in the interest rate spread on the term loan during the three months ended September 30, 2024, as compared to the three months ended September 30, 2023.

Interest expense, net for the three months ended March 31, 2025 was $11.0 million, a decrease of $2.4 million, as compared to $13.4 million for the three months ended March 31, 2024.

The decrease in interest expense, net was primarily due to the year over year decrease in variable rates in part due to the reduction in our spread associated with the 2025 Term Loan refinancing transactions and lower outstanding debt during the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, partially offset by lower benefit from our interest rate caps.

Debt Modification and Extinguishment Costs

Debt modification and extinguishment costs for the three months ended March 31, 2025 were $1.0 million .

On January 30, 2025, we amended our existing senior secured term loan facility to reduce the applicable interest rates.

The Company evaluated the terms of the amendment in accordance with ASC 470-50 Debt - Modification and Extinguishment and determined that the amendment was a modification of debt.

As a result, we recorded $1.0 million of third-party financing fees within debt modification and extinguishment costs in the condensed consolidated statements of (loss) income during the three months ended March 31, 2025.

Other Expense, Net

Other expense, net for the three months ended September 30, 2024 was $0.6 million, an increase of $0.2 million, as compared to $0.4 million for the three months ended September 30, 2023.

The increase in other expense, net primarily relates to lower other income of $0.4 million during the three months ended September 30, 2024, as compared to the three months ended September 30, 2023, partially offset by a decrease in foreign currency exchange of $0.2 million mainly related to the remeasurement effects of monetary assets and liabilities, denominated in foreign currency.

Provision for Income Taxes

The provision for income taxes for the three months ended September 30, 2024 was $4.5 million, compared to $7.9 million for the three months ended September 30, 2023.

The effective income tax rate for the three months ended September 30, 2024 was 24.0%, compared to 32.3% for the three months ended September 30, 2023.

The Company’s quarter over quarter effective income tax rate has fluctuated primarily due to a reduced discrete tax impact relative to pre-tax book income.

The discrete tax items relate to a stock compensation shortfall, tax expense associated with the recording of accrued penalties and interest on historical uncertain tax positions and a tax benefit related to state tax refunds associated with prior tax years recorded during the current quarter.

Other expense, net was $0.2 million for the three months ended March 31, 2025 and 2024 .

(Benefit) Provision for Income Taxes

The benefit for income taxes for the three months ended March 31, 2025 was $0.6 million, compared to a $1.2 million provision for income taxes for the three months ended March 31, 2024.

The effective income tax rate for the three months ended March 31, 2025 was 13.3%, compared to 49.1% for the three months ended March 31, 2024.

The Company’s effective income tax rate for the three months ended March 31, 2025 and 2024, respectively, fluctuated primarily due to a reduced discrete tax impact relative to pre-tax book income, and a reduction to the discrete tax expense related to accrued penalties and interest on historical uncertain tax positions that expired due to statute of limitations 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, 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 associated with historical uncertain tax positions.

During the fourth quarter of 2024, the Company expects to recognize $8,023 of previously net unrecognized tax benefits, excluding interest and penalties, primarily due to the expiration of statutes of limitations during October 2024.

For the foregoing reasons, net income was $14.3 million for the three months ended September 30, 2024, compared to $16.6 million for the three months ended September 30, 2023.

federal statutory income tax rate and the Company’s effective income tax rate for the three months ended March 31, 2025 was mainly due to state and local taxes and a discrete shortfall tax expense related to stock compensation.

Net (Loss) Income

For the foregoing reasons, n et loss was $3.6 million for the three months ended March 31, 2025, compared to net income of $1.2 million for the three months ended March 31, 2024.

Adjusted EBITDA

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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 does not represent cash flow for periods presented and should not be considered as an alternative to net (loss) 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 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 $3.3 million for the three months ended September 30, 2024, which includes $0.9 million of equity in net loss, excluding $0.6 million of amortization of investment in affiliate step-up plus $3.6 million of joint venture depreciation, amortization and interest.

The Adjusted EBITDA from the Zeolyst Joint Venture included in the Advanced Materials & Catalysts 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.

Adjusted EBITDA for the three months ended September 30, 2024 was $55.1 million, an increase of $0.4 million, or 0.7%, compared to $54.7 million for the three months ended September 30, 2023.

The increase in Adjusted EBITDA was a result of favorable contractual pricing for regeneration services and higher sales volume of virgin sulfuric acid, partially offset by higher manufacturing costs associated with inflation, increased planned maintenance costs and costs associated with the manufacturing plant reliability improvement program.

The Adjusted EBITDA from the Zeolyst Joint Venture included in the Advanced Materials & Catalysts segment was $12.7 million for the three months ended March 31, 2025, which includes $8.9 million of equity in net income, excluding $0.6 million of amortization of investment in affiliate step-up plus $3.2 million of joint venture depreciation, amortization and interest.

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.

Adjusted EBITDA for the three months ended March 31, 2025 was $28.5 million, a decrease of $13.0 million, or 31.3%, compared to $41.5 million for the three mo nths ended March 31, 2024.

The decrease in Adjusted EBITDA was driven by approximately $8 million of higher manufacturing costs associated with planned maintenance turnaround costs, the timing of fixed cost absorption, and general inflation, approximately $3 million of lower volume driven by the maintenance turnaround activity at our facilities and our customers’ facilities, and approximately $2 million of unfavorable net pricing, reflecting the timing and contractual pass-through of certain costs, including energy and other indexed costs.

Advanced Materials & Catalysts:

Adjusted EBITDA for the three months ended September 30, 2024 was $10.9 million, a decrease of $5.5 million, or 33.5%, compared to $16.4 million for the three months ended September 30, 2023.

The decrease in Adjusted EBITDA was primarily a result of lower sales volume within the Zeolyst Joint Venture associated with catalysts used in the production of sustainable fuels and emission control applications, partially offset by higher sales of hydrocracking catalysts and custom catalysts.

In Advanced Silicas, favorable mix and increased sales of advanced silicas used for the production of polyethylene helped drive higher Adjusted EBITDA.

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

Adjusted EBITDA for the three months ended March 31, 2025 was $17.5 million, an increase of $6.4 million or 57.7%, compared to $11.1 million for the three mo nths ended March 31, 2024 .

The increase in Adjusted EBITDA was primarily a result of higher sales volume within the Zeolyst Joint Venture driven by higher hydrocracking catalyst and specialty catalyst sales, partially offset by lower sales of catalysts used in emission control and customized catalyst applications.

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

Three months ended

September 30,

(in millions)

Reconciliation of net income to Adjusted EBITDA

Net income $ 14.3 $ 16.6

Provision for income taxes 4.5 7.9

Reconciliation of net (loss) income to Adjusted EBITDA

Net (loss) income $ (3.6) $ 1.2

(Benefit) provision for income taxes (0.6) 1.2

Interest expense, net 11.0 13.4

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Amortization of investment in affiliate step-up (b)

Debt modification and extinguishment costs 1.0 —

Net loss on asset disposals (c)

6 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.

Because our Advanced Materials & Catalysts segment reflects our 50% portion of the earnings from 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.

3 unchanged sentences

(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 remeasurement effects of monetary assets and liabilities, including non-permanent intercompany debt, denominated in foreign currency.

(d) Reflects the exclusion of the foreign currency transaction gains and losses in the statements of (loss) income related to the remeasurement effects of monetary assets and liabilities, including non-permanent intercompany debt, denominated in foreign currency.

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

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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

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 $ 18.8 $ 4.5 $ 14.3 $ 24.5 $ 7.9 $ 16.6

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

Net (loss) income $ (4.2) $ (0.6) $ (3.6) $ 2.4 $ 1.2 $ 1.2

Amortization of investment in affiliate step-up (b)

0.6 0.1 0.5 1.6 0.4 1.2

Debt modification and extinguishment costs 1.0 0.3 0.7 — — —

Net loss on asset disposals (c)

11 unchanged sentences

Adjusted Net Income $ 1.6 $ 0.4 $ 1.2 $ 7.0 $ 1.9 $ 5.1

(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, 2024 and September 30, 2023, except for 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.

Results of Operations

Nine Months Ended September 30, 2024 Compared to the Nine Months Ended September 30, 2023

The following is a summary of our financial performance for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.

• Sales increased $4.2 million to $522.5 million.

The increase in sales was primarily due to higher sales volume of regeneration services and virgin sulfuric acid, partially offset by lower average selling price as a result of the pass-through of lower costs in Ecoservices and lower sales volume of advanced silicas.

• Gross profit decreased $3.0 million to $147.6 million.

The decrease in gross profit was primarily due to lower average selling price and unfavorable manufacturing costs, partially offset by higher sales volume and favorable variable costs.

Operating Income

• Operating income decreased by $0.5 million to $73.4 million.

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

Equity in Net Income of Affiliated Companies

• Equity in net income of affiliated companies for the nine months ended September 30, 2024 was $2.5 million, compared to $16.3 million for the nine months ended September 30, 2023.

The decrease of $13.8 million was due to lower earnings from the Zeolyst Joint Ventur e during the nine months ended September 30, 2024, driven by lower sales volume.

The following is our unaudited condensed consolidated statements of income and a summary of financial results for the nine months ended September 30, 2024 and 2023:

Nine months ended

September 30, Change

2024 2023 $ %

(in millions, except percentages)

Sales $ 522.5 $ 518.3 $ 4.2 0.8 %

Cost of goods sold 374.9 367.7 7.2 2.0 %

Gross profit 147.6 150.6 (3.0) (2.0) %

Gross profit margin 28.2 % 29.1 %

Selling, general and administrative expenses 64.3 59.5 4.8 8.1 %

Other operating expense, net 9.9 17.2 (7.3) (42.4) %

Operating income 73.4 73.9 (0.5) (0.7) %

Operating income margin 14.0 % 14.3 %

Equity in net (income) from affiliated companies (2.5) (16.3) 13.8 (84.7) %

Interest expense, net 37.6 30.8 6.8 22.1 %

Debt extinguishment costs 4.6 — 4.6 NM

Other expense, net 1.1 0.6 0.5 83.3 %

Income before income taxes 32.6 58.8 (26.2) (44.6) %

Provision for income taxes 8.8 17.6 (8.8) (50.0) %

Effective tax rate 26.9 % 29.9 %

Net income $ 23.8 $ 41.2 $ (17.4) (42.2) %

Nine months ended

September 30, Change

2024 2023 $ %

(in millions, except percentages)

Ecoservices $ 449.4 $ 443.4 $ 6.0 1.4 %

Advanced Materials & Catalysts 73.1 74.9 (1.8) (2.4) %

Total sales $ 522.5 $ 518.3 $ 4.2 0.8 %

Ecoservices :

Sales in Ecoservices for the nine months ended September 30, 2024 were $449.4 million, an increase of $6.0 million, or 1.4%, compared to sales of $443.4 million for the nine months ended September 30, 2023.

The change in sales reflects higher sales volume of $36.4 million, offset by lower average selling prices of $30.4 million, inclusive of the negative impact associated with the pass-through of lower sulfur costs of approximately $7 million.

Sales volume was higher primarily due to increased virgin sulfuric acid and regeneration services sales for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, which had the adverse impact of Winter Storm Elliott and extended maintenance turnaround activity at our facilities in 2023, as well as strong demand for regeneration services in the gulf coast in 2024.

Average selling prices were lower primarily due to the pass-through of lower costs, including sulfur, natural gas, freight and other variable costs.

Advanced Materials & Catalysts:

Sales in Advanced Materials & Catalysts for the nine months ended September 30, 2024 were $73.1 million, a decrease of $1.8 million, or 2.4%, compared to sales of $74.9 million for the nine months ended September 30, 2023.

The decrease in sales was primarily due to lower sales volume of advanced silicas used for the production of polyethylene compared to the nine months ended September 30, 2023.

Gross profit for the nine months ended September 30, 2024 was $147.6 million, a decrease of $3.0 million, or 2.0%, compared to $150.6 million for the nine months ended September 30, 2023.

The decrease in gross profit was primarily driven by lower average selling prices of $23.0 million, exclusive of the approximately $7 million of pass-through of sulfur costs and unfavorable manufacturing costs, partially offset by favorable variable costs and higher sales volume of $14.3 million.

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

The higher manufacturing costs were primarily driven by planned maintenance turnaround costs, general inflation and costs associated with the manufacturing plant reliability improvement program in Ecoservices.

The increase in sales volume was primarily related to higher demand for both regeneration services and virgin sulfuric acid.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the nine months ended September 30, 2024 were $64.3 million, an increase of $4.8 million, as compared to $59.5 million for the nine months ended September 30, 2023.

The increase in selling, general and administrative expenses was mainly due to an increase in other compensation-related expenses of $9.7 million, partially offset by a decrease in stock compensation of $2.1 million, professional fees of $0.5 million and other expenses of $2.0 million.

Other Operating Expense, Net

Other operating expense, net for the nine months e nded September 30, 2024 was $9.9 million, a decrease of $7.3 million, compared to $17.2 million for the nine months ended September 30, 2023.

The decrease in other operating expense, net was mainly driven by a decrease of $2.6 million in transaction costs, a decrease of $1.7 million in restructuring, integration and business optimization costs and a decrease in net losses on asset disposals of $2.5 million.

Equity in Net Income of Affiliated Companies

Equity in net income of affiliated companies for the nine months ended September 30, 2024 was $2.5 million, compared to $16.3 million for the nine months ended September 30, 2023.

The decrease in earnings from the Zeolyst Joint Venture was driven by lower sales of catalysts used in the production of sustainable fuels and emission control applications, partially offset by higher hydrocracking catalyst sales during the nine months ended September 30, 2024 compared to the prior year.

Interest Expense, Net

Interest expense, net for the nine months ended September 30, 2024 was $37.6 million, an increase of $6.8 million, as compared to $30.8 million for the nine months ended September 30, 2023.

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 nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023 and the benefits associated with our interest rate caps.

Debt Extinguishment Costs

Debt extinguishment costs for the nine months ended September 30, 2024 were $4.6 million .

On June 12, 2024, we amended our existing senior secured term loan facility to reduce the applicable interest rates and extend the maturity of the facility to June 2031.

The Company evaluated the terms of the amendment in accordance with ASC 470-50 Debt - Modification and Extinguishment and determined that the amendment was primarily a modification of debt.

As a result, we recorded $4.5 million of third-party financing fees as debt extinguishment costs in the condensed consolidated income statement during the nine months ended September 30, 2024.

In addition, previously unamortized deferred financing costs and original issue discount of $0.1 million associated with the existing senior secured term loan facility were written off as debt extinguishment costs for the nine months ended September 30, 2024.

Other Expense, Net

Other expense, net for the nine months ended September 30, 2024 was $1.1 million, an increase of $0.5 million, as compared to $0.6 million for the nine months ended September 30, 2023.

The increase in other expense, net primarily consisted of an increase in foreign currency exchange of $0.6 million mainly related to the remeasurement effects of monetary assets and liabilities, denominated in foreign currency .

Provision for Income Taxes

The provision for income taxes for the nine months ended September 30, 2024 was $8.8 million, compared to $17.6 million for the nine months ended September 30, 2023.

The effective income tax rate for the nine months ended September 30, 2024 was 26.9%, compared to 29.9% for the nine months ended September 30, 2023.

The Company’s effective income tax rate for the nine months ended September 30, 2024 was different from the effective tax rate for the nine months ended September 30, 2023 primarily due to a reduced discrete tax impact relative to pre-tax book income.

The discrete tax items relate to a stock compensation shortfall recognized discretely in the respective quarters, tax expense associated with the recording of accrued penalties and interest on historical uncertain tax positions and a tax benefit related to state tax refunds associated with prior tax years recorded during the current quarter.

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, 2024 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 on historical uncertain tax positions and recording a tax benefit related to tax refunds associated with prior years.

For the foregoing reasons, n et income was $23.8 million for the nine months ended September 30, 2024, compared to $41.2 million for the nine months ended September 30, 2023.

Adjusted EBITDA

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

Nine months ended

September 30, Change

2024 2023 $ %

(in millions, except percentages)

Adjusted EBITDA (1)

Ecoservices $ 146.3 $ 151.6 $ (5.3) (3.5) %

Advanced Materials & Catalysts (2)

36.8 54.7 (17.9) (32.7) %

Unallocated corporate expenses (20.8) (16.2) (4.6) (28.4) %

Total $ 162.3 $ 190.1 $ (27.8) (14.6) %

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

(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 $15.8 million for the nine months ended September 30, 2024, which includes $2.5 million of equity in net income, excluding $3.2 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 Advanced Materials & Catalysts segment was $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.

Adjusted EBITDA for the nine months ended September 30, 2024 was $146.3 million, a decrease of $5.3 million, or 3.5%, compared to $151.6 million for the nine mo nths ended September 30, 2023.

The decrease in Adjusted EBITDA was primarily a result of higher turnaround and planned maintenance costs and unfavorable net pricing, reflecting the timing and contractual pass-through of certain costs including energy and other indexed costs.

This was partially offset by higher sales volume of both virgin sulfuric acid and regeneration services.

Advanced Materials & Catalysts:

Adjusted EBITDA for the nine months ended September 30, 2024 was $36.8 million, a decrease of $17.9 million or 32.7%, compared to $54.7 million for the nine mo nths ended September 30, 2023 .

The decrease in Adjusted EBITDA was primarily a result of lower sales volume within the Zeolyst Joint Venture associated with catalysts used in the production of sustainable fuels and emission control applications, partially offset by higher hydrocracking catalyst sales through the nine months ended September 30, 2024 compared to prior year.

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 $ 23.8 $ 41.2

Provision for income taxes 8.8 17.6

Interest expense, net 37.6 30.8

Depreciation and amortization 66.8 62.5

EBITDA 137.0 152.1

Joint venture depreciation, amortization and interest (a)

Amortization of investment in affiliate step-up (b)

Debt extinguishment costs 4.6 —

Net loss on asset disposals (c)

Foreign currency exchange loss (gain) (d)

LIFO (benefit) expense (e)

Transaction and other related costs (f)

Equity-based compensation 10.5 12.6

Restructuring, integration and business optimization expenses (g)

Adjusted EBITDA $ 162.3 $ 190.1

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

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.

(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:

Nine months ended September 30,

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 $ 32.6 $ 8.8 $ 23.8 $ 58.8 $ 17.6 $ 41.2

Amortization of investment in affiliate step-up (b)

3.2 0.8 2.4 4.8 1.3 3.5

Debt extinguishment costs 4.6 1.2 3.4 — — —

Net loss on asset disposals (c)

0.8 0.2 0.6 3.3 0.9 2.4

Foreign currency exchange loss (gain) (d)

0.1 — 0.1 (0.4) (0.1) (0.3)

LIFO (benefit) expense (e)

(3.2) (0.8) (2.4) 2.5 0.7 1.8

Transaction and other related costs (f)

0.2 0.1 0.1 2.8 0.8 2.0

Equity-based compensation 10.5 2.1 8.4 12.6 1.1 11.5

Restructuring, integration and business optimization expenses (g)

0.9 0.2 0.7 2.4 0.7 1.7

(1.9) (0.6) (1.3) (0.1) — (0.1)

Adjusted Net Income $ 47.8 $ 12.0 $ 35.8 $ 86.7 $ 23.0 $ 63.7

(1) We define Adjusted Net Income as net (loss) income adjusted for non-operating income or expense and the impact of certain non-cash or other items that are included in net (loss) 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.

Adjusted Net Income may not be comparable with net (loss) 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 of 25.1% and 27.4% for the nine months ended September 30, 2024 and 2023, respectively, except for equity-based compensation.

The adjustments to net (loss) income are shown net of applicable tax rates of 23.8% and 24.6% for the three months ended March 31, 2025 and 2024, respectively, except for 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.

8 unchanged sentences

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

As of September 30, 2024, we had cash and cash equivalents of $123.5 million and availability of $64.5 million under our ABL Facility, after giving effect to $3.3 million of outstanding letters of credit, for a total available liquidity of $188.0 million.

We did not have any revolving credit facility borrowings as of September 30, 2024.

As of September 30, 2024, we were in compliance with all covenants under our debt agreements.

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

The first ratio compares the total ABL availability against a threshold:

the greater of 10% of the line cap (which is defined as the lesser of our revolving loan commitments and the value of our assets) or $20.0 million.

The greater of this threshold cannot be greater than the total availability of the ABL Facility.

The second ratio compares the ABL Facility availability of the U.S.

As of March 31, 2025, we had cash and cash equivalents of $127.5 million and availability of $73.6 million under our ABL Facility, after giving effect to $3.3 million of outstanding letters of credit, for a total available liquidity of $201.1 million.

We did not have any revolving credit facility borrowings as of March 31, 2025.

As of March 31, 2025, we were in compliance with all covenants under our debt agreements.

Prior to April 10, 2025, our ABL Facility had one financial covenant with two ratios to maintain.

The first ratio compared the total ABL availability against a threshold:

the greater of 10% of the line cap (which was defined as the lesser of our revolving loan commitments and the value of our assets) or $10.0 million.

The greater of this threshold could not be greater than the total availability of the ABL Facility.

The second ratio compared the ABL Facility availability of the U.S.

revolving credit facility against a $7.5 million threshold.

As of September 30, 2024, we were in compliance with the financial covenant under the ABL Facility.

As of March 31, 2025, we were in compliance with the financial covenant under the ABL Facility.

On April 10, 2025, we amended the ABL Facility to, among other things, reallocate all European revolving loan commitments thereunder as U.S.

revolving loan commitments.

As a result of the amendment, on and after April 10, 2025, the U.S.

revolving credit facility comprises all availability of the ABL Facility, and we are only required to comply with the first ratio described above.

The 2025 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 2024 Term Loan Facility and the ABL Facility as of September 30, 2024.

Included in our cash and cash equivalents balance as of September 30, 2024 was $18.2 million of cash and cash equivalents in foreign jurisdictions.

The Company was in compliance with all debt covenants under the 2025 Term Loan Facility and the ABL Facility as of March 31, 2025.

Included in our cash and cash equivalents balance as of March 31, 2025 was $6.4 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, 2024 and 2023 was approximately $37.0 million and $28.5 million, respectively.

As reported, our cash interest paid for the three months ended March 31, 2025 and 2024 was approximately $12.3 million and $12.6 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 $8.7 million on interest expense.

2 unchanged sentences

Off-Balance Sheet Arrangements

The Company’s off-balance sheet arrangements include $3.3 million of outstanding letters of credit on our ABL Facility as of September 30, 2024.

Nine months ended

September 30,

The Company’s off-balance sheet arrangements include $3.3 million of outstanding letters of credit on our ABL Facility as of March 31, 2025.

Three months ended

(in millions)

7 unchanged sentences

Cash and cash equivalents at end of period $ 127.5 $ 103.1

Net cash provided by operating activities was $106.4 million for the nine months ended September 30, 2024, compared to $73.4 million for the nine months ended September 30, 2023.

Cash generated by operating activities, other than changes in working capital, was higher by $13.5 million during the nine months ended September 30, 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 nine months ended September 30, 2024 of $19.5 million was favorable compared to the nine months ended September 30, 2023 primarily due to favorable changes in receivables and accrued liabilities, partially offset by unfavorable changes in inventories, prepaids and other current assets and accounts payable.

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

The favorable change in accrued liabilities mainly relates to the timing of payments for variable employee compensation liabilities and non-trade payables from related parties.

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

Net cash provided by operating activities was $10.3 million for the three months ended March 31, 2025, compared to $36.5 million for the three months ended March 31, 2024.

Cash generated by operating activities, other than changes in working capital, was lower by $23.6 million during the three months ended March 31, 2025, as compared to the same period in the prior year primarily due to dividends received from the Zeolyst Joint Venture.

The decrease in cash from working capital during the three months ended March 31, 2025 of $2.6 million was unfavorable compared to the three months ended March 31, 2024 primarily due to unfavorable changes in receivables, accrued liabilities, prepaids and other current assets and accounts payable, partially offset by favorable changes in inventories.

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

The unfavorable change in accrued liabilities mainly relates to the timing of payments for taxes and non-trade payables from related parties.

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

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

Net cash used in investing activities was $56.2 million for the nine months ended September 30, 2024, compared to $53.6 million during the same period in 2023.

Net cash used in investing activities consisted of $51.7 million and $53.6 million to fund capital expenditures during the nine months ended September 30, 2024 and 2023, respectively.

The Company paid $4.5 million to complete a minority equity investment in Pajarito during the nine months ended September 30, 2024.

Net cash used in financing activities was $15.1 million for the nine months ended September 30, 2024, compared to $90.5 million during the same period in 2023.

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

September 30,

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

Net cash used in investing activities was $24.3 million for the three months ended March 31, 2025, compared to $17.4 million during the same period in 2024.

Net cash used in investing activities consisted of $24.3 million and $17.4 million to fund capital expenditures during the three months ended March 31, 2025 and 2024, respectively.

Net cash used in financing activities was $4.5 million for the three months ended March 31, 2025, compared to $4.2 million during the same period in 2024.

The unfavorable change in net cash used in financing activities was primarily driven by higher tax withholdings on equity award vesting during the during the three months ended March 31, 2025.

2025 December 31,

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Total long-term debt, excluding current portion $ 850.2 $ 852.1

As of September 30, 2024, our total debt was $873.0 million, excluding the original issue discount of $7.4 million and deferred financing costs of $2.9 million for our senior secured credit facilities.

Our net debt as of September 30, 2024 was $749.5 million, including cash and cash equivalents of $123.5 million.

As of March 31, 2025, our total debt was $868.6 million, excluding the original issue discount of $7.0 million and deferred financing costs of $2.7 million for our senior secured credit facilities.

Our net debt as of March 31, 2025 was $741.1 million, which reflects our total debt less cash and cash equivalents of $127.5 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 lower in the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023 due to extended turnaround activities and additional expenditures incurred related to Winter Storm Elliott impacting our manufacturing facilities in 2023.

Growth capital expenditures were higher in the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023 primarily due to the planned expansion of the Kansas City, Kansas silica catalyst production facility.

Maintenance capital expenditures were higher in the three months ended March 31, 2025, compared to the three months ended March 31, 2024 due to turnaround activities in the first quarter of 2025.

Growth capital expenditures were higher in the three months ended March 31, 2025, compared to the three months ended March 31, 2024 primarily due to the planned expansion of the Kansas City, Kansas silica catalyst production facility.

Critical Accounting Policies and Estimates

7 unchanged sentences

As of October 1, 2024, the date of the Company’s most recent quantitative assessments, the fair values of each of the Company’s reporting units and the fair values of the Company’s indefinite-lived trade names and trademarks exceeded their respective carrying values.

During the nine months ended September 30, 2024, the Company did not identify any events or circumstances that would more likely than not reduce the fair value of the Company’s reporting units or intangible assets below their respective carrying values.

Although the estimated fair value of the Advanced Materials & Catalysts reporting unit exceeded its carrying value on October 1, 2023 by over 30%, the Company has experienced unfavorable effects on current operations resulting from certain macroeconomic and industry factors in specific end uses during the nine months ended September 30, 2024.

During the three months ended March 31, 2025, the Company did not identify any events or circumstances that would more likely than not reduce the fair value of the Company’s reporting units or intangible assets below their respective carrying values.

The estimated fair value of the Advanced Materials & Catalysts reporting unit exceeded its carrying value on October 1, 2024 by over 15%.

Prolonged unfavorable effects could adversely impact the estimated fair value of the Advanced Materials & Catalysts reporting unit in future periods and may result in impairment charges.

2 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