Good morning, my name is Madison, and I will be your conference operator today. Welcome to the Ecovyst First Quarter 2025 Earnings Call and Webcast. Please note, today's call is being recorded and should run approximately one hour. Currently, all participants have been placed in a listen-only mode to prevent any background noise. After the speaker's remarks, there will be a question and answer period. [Operator Instructions] I would now like to hand the conference over to Gene Shiels, Director of Investor Relations. Please go ahead.

Thank you, operator. Good morning, and welcome to Ecovyst’s first quarter 2025 earnings call. With me on the call this morning are Kurt Bitting, Ecovyst’s Chief Executive Officer, and Mike Feehan, Ecovyst’s Chief Financial Officer. Following our prepared remarks, we'll take your questions. Please note that some of the information shared today is forward-looking information, including information about the company's financial and operating performance, strategy, demand trends, and our 2025 quarterly and full-year financial outlook. This information is subject to risks and uncertainties that could cause the actual results and implementation of the company's plans to vary materially. Any forward-looking information shared today speaks only as of this date. These risks are discussed in our filings with the SEC. Reconciliations of non-GAAP financial measures mentioned in today's call with their corresponding GAAP measures can be found in this morning's earnings release and in presentation materials posted in the Investor's section of our website at ecovyst.com. I'll now turn the call over to Kurt.

Thank you, Gene, and good morning. Our results for the first quarter came in ahead of our expectations and provided a solid start to the year reflecting the continued resilience of our core and industrial businesses. At the top line, Ecoservices sales were up modestly and in line with our expectations given the heavy turnaround activity that we previewed during the fourth quarter call. Sales were lower as anticipated for region and virgin sulfuric acid volume associated with turnarounds at our sites as well as customer facilities. For advanced silicas, sales were in line with the prior year driven by higher-niche custom catalysts, while sales of advanced silicas used in the production of polyethylene were lower as customers pulled orders into the fourth quarter of 2024. Sales in the Zeolyst joint venture exceeded our expectations on favorable hydrocracking and specialty catalyst timing. Adjusted EBITDA for the first quarter was $39 million, above the high end of our guidance range of $24 million to $34 million, driven by the strong results from our Zeolyst joint venture. While lower than year-ago quarter, this was largely due to the anticipated implications of turnaround activity for Ecoservices. As we move into the second quarter, and with the majority of turnaround activity and costs behind us, we expect higher volume with favorable contractual pricing within Ecoservices driven by sequential growth in regeneration volume expected as we move into the summer driving season. As Mike will highlight in a moment, with historical stability of Ecoservices and our other businesses, we continue to expect strong cash generation this year, which would provide for optionality as we look to invest in growth initiatives and consider other capital allocation priorities. While the first quarter adjusted free cash flow reflected factors including lower dividends from the zealous joint venture due…

Thank you, Kurt. Good morning. Our stronger than anticipated first quarter results were largely driven by the favorable sales timing within the Zeolyst joint venture that Kurt referenced. While adjusted EBITDA for Ecoservices came in toward the lower end of our guidance range, we saw a favorable customer-driven shift in sales timing into the first quarter for hydrocracking and specialty catalyst, helping drive more favorable results in the quarter compared to our initial guidance. Total sales for the first quarter, including our proportionate 50% share of sales from the zealous joint venture, were $200 million, up nearly 9%, with sales of Ecoservices and advanced silicas each up 1%, and sales for the Zeolyst joint venture up 60%. Adjusted EBITDA for the first quarter was $39 million, led by the higher volume in the Zeolyst joint venture, largely offset by lower earnings in Ecoservices related to the higher planned turnaround costs and lower sales volume associated with turnaround activity. Turning to Slide 10, I'll highlight the major components of the change in adjusted EBITDA for the first quarter. Sulfur costs increased approximately $7 million quarter over quarter, which were passed through in price, resulting in no material impact to adjusted EBITDA. The $2 million unfavorable net price impact, when combining price and variable costs, was primarily driven by the timing and contractual pass-through of certain costs, including energy and other index costs within Ecoservices. Volume and mix were favorable, driven by the higher sales volume in the Zeolyst joint venture, partially offset by lower volume in Ecoservices as a result of the turnaround activity at our sites and our customers' facilities. The remaining other component primarily represents increased manufacturing costs in Ecoservices associated with planned turnaround costs, less favorable absorption of fixed costs associated with inventory timing, and general inflation. I'll…

Thank you, Mike. The challenging environment our industry faced in 2024 has continued into 2025, with perhaps more near-term uncertainty presented by the recent escalation of tariffs. However, we believe Ecovyst remains well-positioned to deliver in the current environment. Although we see potential for near-term softness in industrial demand related to the secondary impacts from the tariffs, the longer-term demand fundamentals for the majority of end uses we serve remains intact. For Ecoservices, we continue to project growth in 2025, driven by the aforementioned high refiner utilization and favorable demand in mining. For our advanced materials and catalyst segment, we have a solid start to the year with strong sales of hydrocracking and specialty catalysts. Regarding the current tariffs, we anticipate $2 million to $3 million in direct EBITDA impacts. Additionally, our sales of advanced silicas may face near-term softer demand fundamentals resulting from slower macroeconomic conditions and customer timing. However, we currently observe the potential for upside in hydrocracking catalyst sales, which we believe will balance our full-year expectations for this segment. Overall, we currently believe both segments are positioned to deliver on their financial objectives for the year. As a result, we are maintaining our prior guidance range for full-year 2025 adjusted EBITDA. In our fourth quarter earnings call, I stated that in 2025, we would maintain our focus on capturing growth opportunities and on delivering value for our shareholders. I believe we are demonstrating progress on these commitments. Last month, we announced an agreement to acquire the sulfuric acid assets of Cornerstone Chemical Company. We believe the acquisition will significantly enhance Ecoservice's Gulf Coast network and provide a significant addition to our existing capacity on an extremely attractive cost basis that will enable us to serve our customers' future growth needs for both virgin sulfuric acid and for regeneration services. We expect the acquisition to close this quarter, and we look forward to welcoming the Cornerstone team to Ecovyst. In terms of creating value for our shareholders, the strategic review of our advanced materials and catalyst segment is underway, and we still expect the process to run through mid-year. As we indicated in late February, we will share more when the process is complete or when we determine that further disclosure is required or beneficial. Lastly, we believe Ecovyst remains well-positioned for growth. We are a leading provider across the varied end uses we serve. We have resilient businesses with attractive margins, strong cash generation, and clear strategic direction. Given our ongoing commitment to enhancing shareholder value and in light of our current valuation, we believe opportunistic share repurchases will result in value creation for our shareholders. At this time, I will ask the operator to open the line for questions.

Thank you. [Operator Instructions] And we will take our first question from John McNulty with BMO Capital Markets. Please go ahead.

Yeah, good morning. Thanks for taking my question. And first off, just really hugely helpful on the color around the quarters and on the turnarounds too, so I definitely appreciate the help there. On the polyethylene catalyst front, I guess maybe two questions on that. Have you already started to see a slowdown tied to the tariffs and kind of some of the macro confusion at this point, or is that just something you're potentially worrying about? And I guess the other question on polyethylene, I know you've got this 2026 facility coming up. Have you seen or heard any delays from those potential customers that you've locked in around the ramps of their platform, just given kind of what's going on in the global macro?

Hey, John, good morning. Thank you. Thanks for the question and thanks for the comments. So really on polyethylene, we haven't seen anything to date in terms of, you know, any cracks or anything regarding the tariffs or the overall knock-on effects on the macro. It's just something that we keep our eye on. Obviously, it's more globally traded than our other products, and we talk about sulfuric acid or some of the other things that we're into. And, no, we have not heard of or seen any delays in terms of the customers that are expanding and putting in new production, which is leading to our capacity expansion in Kansas City.

Okay, got it. And then just thinking about the tariffs, I mean it sounds like you don't really have much exposure, at least direct exposure at this point. When you think about the end markets that you serve, we don't know exactly where the tariffs are going to go, but if the U.S. kind of keeps this somewhat isolationist view or approach, do you see opportunities for increased volume from your U.S. customer base or in the end is it kind of net out to neutral? I guess how are you thinking about that?

Yeah, well, I mean if you look at Ecovyst as a whole, you know, 75% of the sales, consolidated sales, are really in the Ecoservices business, which really leans into U.S. manufacturing. So, I would say from a general direction, we benefit from U.S. manufacturing being positive. But if you look at the individual segments, regeneration, refinery looks to be strong. Mining, you know, is really being driven at this point from just the overall trends towards AI and electrification, data centers, which is really pushing for metals and materials. And then you look at other areas where we play into industrial spaces for things like nylon used for auto or wire coding and so forth. So generally I think we would benefit. And then in terms of the AMAC side, I mean, we also produce a lot in the U.S., which we benefit from. But we also have global production, right, where we service some of the other markets, which allows us to largely avoid the large impacts of tariffs.

Got it. Thanks very much for the call.

And your next question comes from the line of Patrick Cunningham with Citi. Please go ahead.

Hi. Good morning. Can you help us understand the structural price environment for sulfuric in the first quarter here and maybe expectations for virgin pricing going forward? Prices seem to be moving up pretty rapidly here. Is there any of that sort of structural price movement embedded in the guide beyond pass-through for the balance of the year?

Yeah. No, thank you, Patrick, for the question. So, when you look at overall sulfuric prices and so forth, a lot of that's being driven by the increase in sulfur prices that was witnessed in first quarter. And I think we had talked about it previously on the call. There was obviously a tremendous amount of U.S. refining turnaround work that took place in the first quarter, which led to a lot of the sulfur price increases. We saw a knock-on sulfur and another sulfur increase here in the second quarter. So, as you know, our business, we pass through those sulfur prices across to our customers on a quarterly basis. So, we don't largely get impacted by any sulfur increases. We do see overall U.S. demand for sulfuric acid is, again, looks pretty firm, especially in terms of things like mining. But the Ecoservices business is largely contracted, you know, 90-plus percent. So, our pricing and so forth is largely mechanical and based on indices and sulfur pass-throughs. But around the increments there certainly is opportunity as the market looks healthy going into the rest of the year.

Appreciate that. Very helpful. And then, I appreciate the commentary on the Cornerstone acquisition as it relates to 2025. But any sort of expectations on the potential EBITDA contribution for 2026? And after you work through integration, turnaround, how does sort of adding another asset to the network maybe help whether it's absorbing volume impact or getting additional fixed cost efficiencies, just trying to understand that a bit better.

Yeah, sure. I mean, we're not going to guide through the specifics on the EBITDA, and again, we expect to close on it here in the second quarter. What I've told, what I've told people and I've told the people internally is, this is a situation where it's, one plus one equals three, right, in terms of our sulfuric acid network, where it's going to give us the ability to fill the gaps in when we typically may have to pass on volume opportunities or control our volumes as we store up inventory when we take our own turnarounds. Adding another facility to our network, certainly in the Gulf Coast, so you're talking roughly a 15% bump in our Gulf Coast sulfuric acid capacity, which is our largest and biggest market, clearly. It just gives us the ability to fill those gaps in a lot more and service our customers, service Cornerstone customers more reliably, but also take advantage of opportunities that we may not have been able to take advantage of otherwise.

Understood. Thank you so much.

And your next question comes from the line of Aleksey Yefremov with KeyBanc Capital Markets. Please go ahead.

Thanks. Good morning, everyone. This is Ryan Doughty on for Aleksey. Congrats on a nice quarter, and I echo the same comments that John had earlier. Really appreciate the commentary kind of on the second half by quarter. It's very helpful. I guess just first question, I guess to dig in on the 2025 guidance just a little bit. It's still pretty second half weighted. So I wanted to understand, are some of these orders locked in just given like the uncertainty that's going on in the market? I want to get a better understanding for what's kind of giving you guys' confidence at this stage.

Yeah. Hey, Ryan, thanks for the question. Yeah, I think so from a 2025 guidance, you know, we did talk about this on the previous call that we expect it to be back end loaded. And a lot of the reasons that we talked about before was more of a cost structure perspective versus more of a volume risk. There was more cost at the Ecoservices for the turnaround activities for which 80% of that will be done in the first half. The AM&C business is more timing related, right. So again, we're not worried from a volume standpoint. We do see as Kurt mentioned risk, because of the knock on effective terrorists in the macro economic environment that we are in. But a lot of our end markets are still very strong and don't have the same level of risk that others do. We also see that within our AM&C business there's some positivity coming out of the hydrocracking catalyst side. We see strong pricing, as Kurt mentioned in the Ecoservices side to help guide us through the rest of the year. So while it is back end loaded, we do feel very comfortable not because there's any bond as much volume risk is that this more less cost pricing contracts going up and having the timing aspects that we talked about before within the AM&C business.

Very helpful. Thank you. And just going back to the Cornerstone acquisition, I understand you guys aren't going to talk about just kind of what the underlying you've done with the businesses, but how are you guys thinking about the synergy potential of just merging this asset kind of with your existing asset base in the Gulf coast? And how quickly do you think you guys could start delivering on those synergies? Thanks.

Yeah. Thanks for, thanks for the question. So the synergies as we see in Cornerstone is there's, there's obviously a tremendous amount of networking synergies is I tell people we've got barges that pass that facility every single day of the year. So it gives us another supply point and it allows us to access again, opportunity that we would either Cornerstone or Ecovyst wouldn't be able to take advantage of just because it just gives us more collective capacity to service our general Gulf coast network. And there's also going to be a lot of, I would call maybe horizontal synergies between the plants. We obviously have been making sulfuric acid, I think since 1890 have a lot of experience in that. So we'll be able to bring a lot of manufacturing expertise, operational excellence expertise to that site that was quite frankly run as a standalone sulfuric acid site. So it's going to be joining a family of a lot of sulfuric acid experience. So we do expect to capture networking, and those kinds of horizontal industrial synergies pretty quickly.

Thank you. And your next question comes from the line of Lawrence Alexander with Jefferies, please go ahead.

Hey, this is Dan Rizzo on for Lawrence. And I'm sorry if I missed this, but just to kind of add to what you just talked about, is there other revenue synergies there as well? Is there, I'm questioning, is that something that's really not part of it?

No, I think we look at it, we don't really reference revenue synergies as marketing and networking synergies, right. So we operate a lot of our plants will service multiple customers, both share customers and so forth. And because we have a lot of very large customers. So plugging that in, we'll be able to help service each other's, each other's customers. Obviously we have a -- our commercial team markets, the most sulfuric acid in the United States and the most regeneration services in North America. So we'll be taking that on as well. So I would say there would be some marketing synergies in addition to those networking synergies.

And are there other, this is a one-off, are there other opportunities potentially, obviously potentially for kind of increasing your network in that region or just elsewhere?

Certainly. We're always looking, our sulfuric acid, we run at very high utilization rates, the industry runs at pretty high utilization rates. So we're always looking to increase our capacity, whether that's through organic de-bottlenecking and expansions or inorganic opportunities as well.

Thank you.

Thank you. And our next question comes from Hamed Khorsand with BWS Financial. Please go ahead.

Hi, good morning. So about hydrocracking and what you're seeing there, you saw some downtrend for a good year or so. How is this natural or is this inventory restocking? Do you have any clarity there?

Thanks for the question, Hamed. This is really, we've had two things. There's no real restocking in this segment. It's based on refining turnaround activity. So we've seen some of those refinery turnarounds are now coming to a cycle where they're going to be conducting turnarounds. Additionally, we've won, I would say, additional business with our mock product. We've been able to capture new refineries. There's been a nice uptake of that product as it's been rolled out in the last few years. And as these turnarounds hit new, refineries hit new cycles, new turnaround cycles, we've gotten more uptake on the mock. So it's a combination of the timing of those turnarounds as well as good uptake of our new mock product.

Great. And then could you just comment on the Ecoservices, the contractual pricing? How set is that given the market dynamics?

Sure. I mean, well, about 90, I would say, really, our regeneration contracts are 100% really under contract, and those rotate with just market indices and labor indices and pass-throughs and those sorts of things. We do obviously have contracts that roll off every given year, and there's some of that happening this year, which is giving us an uplift in regeneration prices, and that's booked. The virgin sulfuric acid, roughly 90%, is under contract, and so those contracts will run the span of the year, giving us the ability to pass through the sulfur and so forth. And we do maintain, I would say, about 10% of our business. It's on 30-day pricing for things like distribution or spot business where we have the ability to move the price much quicker based on whatever the market is doing.

Thank you.

Thank you. And we have no further questions in queue at this time. This does conclude the Ecovyst first quarter 2025 earnings call and webcast. Thank you for your participation, and you may disconnect at any time.