NYSE:ECVT Ecovyst Q2 2025 Earnings Report $8.47 +0.27 (+3.29%) Closing price 03:59 PM EasternExtended Trading$8.46 -0.01 (-0.06%) As of 04:44 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. ProfileEarnings HistoryForecast Ecovyst EPS ResultsActual EPS$0.12Consensus EPS $0.12Beat/MissMet ExpectationsOne Year Ago EPS$0.12Ecovyst Revenue ResultsActual Revenue$200.10 millionExpected Revenue$204.27 millionBeat/MissMissed by -$4.17 millionYoY Revenue Growth+9.50%Ecovyst Announcement DetailsQuarterQ2 2025Date8/7/2025TimeBefore Market OpensConference Call DateThursday, August 7, 2025Conference Call Time11:00AM ETConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Ecovyst Q2 2025 Earnings Call TranscriptProvided by QuartrAugust 7, 2025 ShareLink copied to clipboard.Key Takeaways Positive Sentiment: ECOVIST delivered Q2 sales growth of 14% in EcoServices and adjusted EBITDA nearly $56 million, coming in above the high end of guidance despite some unplanned outages. Positive Sentiment: The Advanced Materials & Catalysts segment beat expectations on favorable sales timing and mix, with hydrocracking catalyst orders strong and sustainable fuels catalysts stable, supported by proposed RVO targets for 2026. Positive Sentiment: Completed the Wagaman sulfuric acid asset acquisition for $41 million; integration is underway and expected to generate meaningful synergies and support customer capacity growth. Neutral Sentiment: Repurchased 2.9 million shares for $22 million, raising net debt leverage to 3.5×, though management expects leverage to decline to around 3× by year-end. Positive Sentiment: Raised full-year consolidated sales guidance to $795 million–$835 million, narrowed adjusted EBITDA range to $242 million–$254 million, and upped free cash flow outlook to $70 million–$80 million. AI Generated. May Contain Errors.Conference Call Audio Live Call not available Earnings Conference CallEcovyst Q2 202500:00 / 00:00Speed:1x1.25x1.5x2xThere are 10 speakers on the call. Operator00:00:00Good morning. My name is Nikki, and I will be your conference operator today. Welcome to the ECOVEST Second Quarter twenty twenty five Earnings Call and Webcast. Please note, today's call is being recorded and should run for approximately one hour. Currently, all participants have been placed in a listen only mode to prevent any background noise. Operator00:00:24After the speakers' remarks, there will be a question and answer period. I would now like to hand the conference over to Gene Shields, Director of Investor Relations. Please go ahead. Speaker 100:01:00Thank you, operator. Good morning, and welcome to ECOVIST's second quarter twenty twenty five earnings call. With me on the call this morning are Curt Bidding, ECOVIST's Chief Executive Officer and Mike Phian, ECOVIST's Chief Financial Officer. Following our prepared remarks, we'll take your questions. Please note that some of the information we will share today is forward looking information, including information about the company's financial and operating performance, strategies, our anticipated end use demand trends and our 2025 financial outlook. Speaker 100:01:36This information is subject to risks and uncertainties that could cause the actual results and the 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 the company's filings with the SEC. Reconciliations of non GAAP financial measures mentioned in today's call with their corresponding GAAP measures can be found in our earnings release and in presentation materials posted in the Investors section of our website at ecovist.com. I'll now turn the call over to Kurt. Speaker 200:02:14Thank you, Gene, and good morning. The 2025 was another quarter of solid performance for ECOVIST. We achieved our financial objectives and we delivered on key initiatives that position us for future growth and unlock value for our stockholders. During the quarter, demand fundamentals across the majority of the end uses we serve remained stable. Ecoservices sales were up 14% compared to the 2024 with favorable pricing and the addition of the Wagaman site contributing to the increase. Speaker 200:02:48Results for our Advanced Materials and Catalysts segment came in favorable to our expectations and our guidance range, reflecting favorable sales timing and mix. In terms of strategic objectives, during the quarter, we closed the acquisition of the sulfuric acid production assets of Cornerstone Chemical Company. Integration of the Wagaman, Louisiana site is ongoing, and we expect to realize meaningful synergies and benefits upon full integration of the site into our existing network. The Wagaman site positions us well to meet the growth needs of our customers, and I want to publicly welcome the enthusiastic and engaged Wagam and team to ECOVIST. Additionally, with our focus on delivering value for our stockholders, during the second quarter, we also repurchased 2,900,000.0 shares of our common stock, totaling approximately $22,000,000 As is our usual practice, on Slide six, we provide our latest views on demand trends and our short and longer term outlook. Speaker 200:03:54As I noted earlier, demand fundamentals over the course of the second quarter were stable, and we continue to expect relative stability over the balance of the year. For Eco Services, high refinery utilization and positive alkaline economics continue to underpin demand for our regeneration services business. We believe the outlook for virgin sulfuric acid demand also remains positive. We continue to expect a stronger second half for sales into the nylon end use, and we expect second half sales into the mining sector to benefit as expansion projects come online. For our Advanced Silicas business, while there is some uncertainty regarding the effects of ongoing global macroeconomic challenges on the demand for polyethylene, we expect that our sales of polyethylene catalysts will increase this year compared to 2024. Speaker 200:04:48We also look forward to the completion of the Kansas City expansion project later this year. This expansion will support growth in customer demand as their expansion projects come online in 2026 and 2027. In addition, as we look to emerging technologies to provide meaningful growth opportunities such as advanced silicas for biocatalysis and carbon capture applications, customer engagement remains high with a number of trial programs underway, and we expect these to translate into further sales growth in 2026. Within the Zeolyst joint venture, current orders indicate that 2025 is projected to be a strong year for hydrocracking catalyst sales. We anticipate that sales of hydrocracking catalyst will surpass 2024 levels. Speaker 200:05:40Regarding our catalyst technologies utilized in the production of sustainable fuels, we anticipate that sales this year will remain in line with the prior year or show a slight increase. However, the longer term outlook is encouraging. The recently proposed RVO targets are expected to increase renewable diesel consumption in The United States from 3,300,000,000 gallons in 2025 to 5,600,000,000 gallons in 2026. Achieving the proposed 67% increase in renewable diesel usage will require the industry to operate at high utilization rates. We project that future growth in our sustainable fuels catalyst materials will be driven by increased utilization of existing capacity, new capacity expansions and the continual replacement cycle for catalyst materials. Speaker 200:06:34With our advanced catalyst technologies, we believe we are well positioned to support the rising demand for both renewable diesel and sustainable aviation fuel. I'll now turn the call over to Mike, who will review our second quarter results in more detail. Speaker 300:06:52Thank you, Kurt. Good morning. As a follow-up to our stronger than anticipated results in the first quarter, we exceeded our financial targets for the second quarter, providing for strong momentum as we move into the second half of the year. Our second quarter adjusted EBITDA was just under $56,000,000 coming in above the high end of our guidance range. Although unplanned and extended customer outages in the second quarter adversely affected sales volume for regeneration services, Eco Services landed within the midpoint of our segment guidance range. Speaker 300:07:28For our Advanced Materials and Catalysts segment, favorable sales timing and mix helped drive more favorable results in the quarter compared to our initial guidance. As we look to Slide nine, I'll highlight the major components of the period over period change in adjusted EBITDA. Pricing, excluding the pass through of higher sulfur costs, increased quarter over quarter, reflecting favorable contractual pricing for regeneration services and strong pricing for virgin sulfuric acid. The pass through effect of higher average sulfur costs on sales was approximately $20,000,000 with the pass through resulting in no material impact to adjusted EBITDA. Variable costs were favorable on product mix. Speaker 300:08:18Volume and customer mix were unfavorable during the quarter, driven by lower event driven niche custom catalyst sales in Advanced Silicas, along with unplanned and extended customer downtime within Eco Services, partially offset by the sales volume contribution from the Wagaman sulfuric acid assets. The remaining other component primarily represents higher manufacturing costs in Eco Services driven by general inflation and additional costs associated with the Wagaman acquisition, partially offset by lower turnaround costs. As we turn to our segment results on Page 10, I'll begin with a summary of the second quarter results for ECO Services. ECO Services sales were $176,000,000 up $22,000,000 compared to the prior year. The higher sales reflect the $20,000,000 pass through effect of higher sulfur costs, along with favorable contractual pricing for regeneration services, strong pricing for virgin sulfuric acid and the incremental sales contribution from the Wagaman sulfuric acid assets acquired during the second quarter. Speaker 300:09:35These factors were partially offset by lower regeneration services volume associated with unplanned and extended customer downtime during the quarter. Adjusted EBITDA for Eco Services was $49,800,000 essentially unchanged compared to the 2024, with favorable pricing and lower relative turnaround costs, largely offset by lower regeneration services volume and higher anticipated manufacturing costs driven by general inflation. Turning to Advanced Materials and Catalysts on Slide 11. Second quarter sales for Advanced Silicas were $24,000,000 compared to $29,000,000 in the year ago quarter, with the change largely driven by lower event driven custom catalyst sales. Sales of Advanced Silicas used in the production of polyethylene were essentially flat quarter over quarter. Speaker 300:10:36Our proportionate 50% share of second quarter sales for the Zeolyst joint venture was $28,000,000 compared to $29,000,000 in the prior year, with lower sales of hydrocracking and custom catalysts associated with order timing, partially offset by higher sales of catalyst materials used in the production of sustainable fuels and other specialty catalysts. Second quarter adjusted EBITDA for the Advanced Materials and Catalysts segment was $13,700,000 above our guidance range and down slightly compared to the $14,700,000 in the year ago quarter, with the decrease largely due to lower sales volume of event driven niche custom catalysts within Advanced Silicas. Turning to cash and leverage on Slide 12. Through the first six months, due to the timing of dividends from our Zeolyst joint venture and higher planned capital expenditures, our adjusted free cash flow was a use of $2,000,000 compared to $14,000,000 in 2024. In light of our expectations for the second half of the year, we have raised our guidance range for adjusted free cash flow to a range of 70,000,000 to $80,000,000 The 2025 was a quarter of unusually high cash deployment. Speaker 300:12:05As noted, we closed the acquisition of the Wagaman sulfuric acid assets with a total cash outlay of $41,000,000 including the $35,000,000 purchase price plus the customary working capital adjustments. And we repurchased $22,000,000 of common stock during the quarter. As a result, we closed the second quarter with cash on hand of $69,000,000 down from $128,000,000 as of 03/31/2025. Considering the lower cash balance at the end of the second quarter, our net debt leverage ratio rose to 3.5 times compared to the 3.2 times at the end of the prior quarter. Excluding the cash impact of the acquisition and the share repurchases, our ratio would have been 3.2 times. Speaker 300:13:02Total liquidity at quarter end, including availability under our ABL facility of approximately 8 As 52,000,000 we discussed on our last call, considering our current share price and associated valuation, we continue to believe that opportunistic share repurchases are a prudent and value enhancing use of capital. And while taking a more opportunistic approach to share repurchases will likely defer near term achievement of our target leverage ratio of two to 2.5 times, we anticipate ending 2025 with the leverage ratio consistent with the end of the prior year of around three times. I will now turn to our outlook for the remainder of 2025. We've had a solid start to the year with adjusted EBITDA for the first and second quarters coming in at the high end of our expectations, primarily due to favorable shifts in sales timing and mix within the AM and C business. As we look at the balance of the year, we expect demand fundamentals across the majority of the end uses that we serve to remain stable. Speaker 300:14:19However, we remain mindful that demand conditions in certain industrial end uses could change with potential areas of soft demand being our sales of advanced materials used in the production of polyethylene or sales of virgin sulfuric acid into nylon or other industrial end uses. In terms of overall guidance, with the exception of revisions and quarterly guidance associated with shifts in order timing, our expectations for the balance of the year remain largely unchanged. That said, we now expect that consolidated sales will be $795,000,000 to $835,000,000 up from our previous guidance range, with the increase reflecting the incremental sales associated with the acquisition of the Wagaman sulfuric acid assets, partially offset by lower expected sales of polyethylene catalysts within Advanced Silicas. While our updated expectations are for lower than originally planned sales of polyethylene catalysts, we continue to expect that our advanced materials used in the production of polyethylene will continue to outpace growth in global demand, with the expected sales in 2025 reflecting year over year growth compared to 2024. For the Zeolyst joint venture, sales in the 2025 were higher than originally anticipated due to positive shifts in sales timing, and we expect further positivity in the sales of hydrocracking catalysts. Speaker 300:15:57We are raising our guidance range for our 50% share of sales in the Zeolyst joint venture to a range of 125,000,000 to $140,000,000 providing for additional upside to our current forecast and offsetting the softer sales of polyethylene catalyst and advanced silicas. For consolidated adjusted EBITDA, we are maintaining the midpoint of our previous guidance range with some minor shifts among the segments in Corporate, and we are now narrowing the range to $242,000,000 to $254,000,000 to reflect our first half results and our expectations for the 2025. This guidance does not reflect any material contribution from the Wagaman sulfuric acid assets as we still anticipate that the sales contribution from Wagaman will largely be offset by incremental costs, including costs for integration and upgrading the facility in 2025. As mentioned earlier, we have also revised our expectations for adjusted free cash flow, narrowing the range to $70,000,000 to $80,000,000 and raising the midpoint by $5,000,000 to $75,000,000 You will also note minor revisions in guidance for other modeling items. We have tightened and lowered the midpoint of our guidance for interest expense, which is now expected to be in the range of 46,000,000 to $50,000,000 We have also increased our projection of depreciation and amortization expense, primarily related to Eco Services considering the addition of the Wagaman assets. Speaker 300:17:42Lastly, we have revised our expectations for adjusted net income and adjusted diluted income per share, while maintaining the per share midpoint of our previous guidance range. I'll now turn to specific guidance for the third quarter. We expect third quarter adjusted EBITDA for ECO Services to fall in the range of 63 to $69,000,000 For Advanced Materials and Catalyst, taking into account changes in order timing, we expect third quarter adjusted EBITDA to be in the range of 7,000,000 to $11,000,000 With the assumption that unallocated corporate expenses will be approximately $8,000,000 in the third quarter, we expect consolidated adjusted EBITDA for the third quarter to be in the range of $62 to $72,000,000 On Slide 14, we provide directional guidance for the fourth quarter. For Eco Services, stable demand fundamentals and favorable pricing are expected to continue in the fourth quarter, With the higher anticipated sales and lower expected turnaround costs, we expect segment adjusted EBITDA to be up on the order of 8,000,000 to $12,000,000 compared to the year for Advanced Materials and Catalyst due to shifts in sales timing between quarters, we now expect adjusted EBITDA to be in line with the 2024. Comparing to the prior year, we expect strong sales of polyethylene catalyst and advanced silicas along with higher sales of hydrocracking, specialty and custom catalysts, partially offset by lower sales of sustainable fuel catalysts within the Zeolyst joint venture. Speaker 300:19:26Lastly, with regard to planned turnaround activity for Eco Services, you will note that a turnaround previously planned for the third quarter of this year is now scheduled for the 2026, along with an expected turnaround in the fourth quarter related to the Wagaman facility. I will now turn the call back to Kurt for some closing remarks. Speaker 200:19:48Thank you, Mike. 2025 continues to provide a challenging operating environment for our industry, with companies in our sector facing issues that include global production overcapacity, pricing and margin pressures and disruption related to the evolving tariff landscape. In this environment, EcoVis has demonstrated consistent performance. Our strong results in the 2025 underscore the resilience of our distinctive businesses, which we attribute to our leading supply positions, long standing customer relationships, diverse geographic footprint and a portfolio of technologies that are highly valued by our customers. As we continue to move into the second half of the year, we have good momentum that we believe positions us well to deliver on our full year financial objectives. Speaker 200:20:40We expect high refinery utilization will continue to benefit our regeneration services business and that tailwinds and incremental demand in the mining sector will provide support for virgin sulfuric acid sales for the balance of the year. Within our Advanced Materials and Catalysts segment, we anticipate strong sales performance for hydrocracking catalysts in 2025, with projected sales exceeding those of 2024. This positive outlook is underpinned by a substantial order book and confirmed orders. We also continue to expect growth in our sales of polyethylene catalysts and supports, and we expect sales of catalysts used for sustainable fuel production to be flat to slightly up in 2025. Looking ahead, ECOVIS is well positioned to benefit from prevailing trends such as the onshoring of manufacturing, the increased need for clean fuels and growing mining operations for metals and minerals. Speaker 200:21:41We believe that our differentiated customer relationships and technological capabilities will enable us to translate the positive long term sector momentum into steady growth. ECOVIS' robust cash flow and resilient business model also enable us to further create value for our shareholders through growth investments such as the recent acquisition of the Wagaman plant as well as by returning capital via share repurchases. Lastly, we acknowledge the significant interest in the strategic review of our Advanced Materials and Catalysts segment. As communicated previously, we anticipate the process may extend through midyear twenty twenty five. We are making steady progress and expect to remain on this time line. Speaker 200:22:27We anticipate providing additional updates in the near future. At this time, I will ask the operator to open the line for questions. Operator00:22:37Thank you. We'll take our first question from Patrick Cunningham with Citi. Please go ahead. Your line is open. Speaker 400:23:02Hi, good morning Kurt and Mike. Just with the new EPA guidelines for increased renewable fuel volume, have you already seen initial indications from customers coming back with additional activity here? I guess any early indications or visibility into what this might mean for volumes in 2026? Speaker 200:23:24Hey, good morning, Patrick. Thank you for the question. So at this point, it's still early and those are I would say they're draft it's a draft RVO, so it has to be fully adopted. But we are certainly encouraged by the new requirements that were set. I mean, it's a as I said in my comments, up 67% increase year over year from 25% to 26%. Speaker 200:23:47We feel that really is going to drive utilization. There's one of the issues that industry has had in the last twelve months or so has been underutilization just with the low RIN credits and the uncertainty around the RVO. So pushing that RVO up should drive higher utilizations in 2026, which then should lead to higher utilization of catalyst, more change outs and eventually additional capacity being put online. So we're pretty positive in terms of the direction that it's headed. Speaker 400:24:23Understood. And then maybe just on potential outlook for polyethylene sales here. It seemed to have a mixed view with strong sales expectation, but there's some incremental caution on the trade uncertainty. How much of your year on year growth is tied to start ups? And have you heard any noise on potential delays in production or pressure on operating rates as a result of the current trade environment? Speaker 200:24:48No. I mean, clearly polyethylene utilization rates have been impacted across the globe with the tariff uncertainty and I'd say the lackluster global macroeconomic environment. And some of that is and there's some overcapacity in China that still weighs on the polyethylene industry. We still expect our sales to be up year over year, albeit probably falling short of what we had thought earlier this year. And obviously, in our AMAC segment, as we mentioned, that's being overcompensated by stronger hydrocracking and specialty catalyst sales. Speaker 200:25:27So we're cautious. I wouldn't say our sales this year aren't necessarily for new units, just our run rate with our existing customers. We are continuing with our Kansas City expansion that we're expecting those customers that are going to take the off take of that plant or that plant expansion to come online in 2026. Speaker 400:25:52Very helpful. Thank you so much. Operator00:25:56Thank you. Our next question comes from John McNulty with BMO Capital Markets. Please go ahead. Your line is open. Speaker 500:26:05Good morning. Thanks for taking my question. So now that you've finalized or settled on the Cornerstone business, I guess any update in terms of how you're thinking about some of these synergies come through and the earnings opportunities, say, in 2026? I know this year, there's some integration and some costs of upgrading, etcetera. But I guess how do you think about the contribution as we look out a year? Speaker 300:26:29Yes. John, thanks for the question. As we mentioned, this year we believe that we are going additional sales, of course, coming out of the acquisition, albeit kind of offset with some additional costs that we're incurring really to get that business up and running into our level of operations. For next year, we're not going to give directional or specific guidance yet, but we do believe that it is a very good acquisition for us, allowing for additional opportunities within the Gulf Coast among the other plants that we serve to help serve some of our customers along with the new customers that we see. The integration of the plant is going very well. Speaker 300:27:18We see opportunities both at the plant locations to improve what we see there along with looking at opportunities at our other plants as well. We also do see additional opportunities from a spot standpoint within the virgin sulfuric acid that will help us in next year as well. Speaker 500:27:41Got it. Okay. Fair enough. And then I guess you had mentioned early on that you've got some new areas where you're doing some trials and it looks like some of that may materialize as you look into 2026. I guess, you give us a little bit of color as to what those trials or those pilot programs are really focused on at this point? Speaker 500:28:01I know you had a bunch kind of in the hopper. Speaker 200:28:03Yes. That's primarily, I'd say, the AMAC segment, we talk about biocatalysis. There's been a lot of interest in that area that's obviously growing very rapidly. And the interest in using silicas as a carrier for the enzymes continues to be draw a lot of interest. So we've been working with a lot of customers, signing joint development agreements and so forth, working with them to get those products specked in. Speaker 200:28:35And I would point to Advanced Recycling, also their customer taking pilot samples of our catalysts that are obviously used in Advanced Recycling that help lower the energy intensity of that process and improve the pie oil product. So there's been good interest around that as well. Speaker 500:28:55Got it. Thanks very much for the color. Operator00:28:59Thank you. Our next question comes from David Begleiter with Deutsche Bank. Please go ahead. Your line is open. Speaker 600:29:06Thank you. Good morning. Kurt and Mike, just on the strategic review, can you remind us what you the process you're going through, what you're looking at? And what are the various options on table for this business and these assets? Thank you. Speaker 200:29:20Yes. So the yes, as we stated the Board thank you, Dave, for the question. As we stated last year, the review is really looking at a full spectrum of options to deliver really what we think is the most value for our shareholders in relations to the AMAC business, which that could be a whole of different types of options. Like we said on the call, that we're happy with where the progress is at. We're still moving forward with it. Speaker 200:29:52And we should have some further details on it in the near future. Speaker 600:29:57Got it. And just on leverage, given the uptick in the quarter, when would you expect to get to your leverage target assuming no M and A or other asset dispositions? Thank you. Speaker 300:30:09Yes. No, we definitely saw an uptick on the leverage up to 3.5 times, but that was primarily due to the acquisition of the Wagaman location along with some of the share repurchase activities, right? But if you look at our free cash flow target for the rest of the year, our expectations for the remainder of the year, leverage ratio will come down clearly into the range that we expected for the year, likely around a three times leverage. We're still targeting long term to be in the two to 2.5 times range. However, we do want to ensure that we take every dollar that we're making, put it back into organic growth opportunities. Speaker 300:30:55And then with the level of where our stock price is trading and the intrinsic value and long term growth potential of the business, we still see share repurchase as an opportunistic way to create shareholder value in the future. And then with the acquisition of the Wagaman location, we continue to see if there's options for additional bolt on opportunities in the future. Speaker 600:31:19Thank you. Operator00:31:22Thank you. Our next question comes from Alexey Yefremov with KeyBanc Capital Markets. Please go ahead. Your line is open. Speaker 700:31:32Thanks. Good morning, everyone. I just wanted to follow-up on the biofuels. Assuming the current proposal was approved in its current state, right, so about 67% as you said RVO growth next year. How should we think about sensitivity of your business to that growth? Speaker 700:31:54I mean, time, should your Catalyst business also grow in that same range by 60%, 70% or shouldn't be some smaller or larger number? Speaker 200:32:09Yes. Thanks for the question, Olesky. I think the way I would look at the RVO is really the proposed RVO changes is really reinjecting momentum back into the renewable fuels, which has stepped back, I would say, over the last twelve months with really overcapacity and lower RIN prices. So we believe that increased RVO was going to drive up the utilization, which will eventually lead to more frequent catalyst change outs and additional capacity coming online. I think the 67% is going to be a year over year step change for our business. Speaker 200:32:49Already, we've seen the business we believe that we're going to be flat to slightly up for this year. So we've seen, I would say, a stabilization of that. But we do think long term with that additional RVO will create some momentum and clearly translate into growth in that segment for us. But not I wouldn't look at the instantaneous year over year and try to apply that to our growth rate for any short period of time. Speaker 700:33:20Thanks. And on sulfuric acid, I think you're baking in some pickup in nylon later this year. And I know we've all been burned on maybe getting a little too optimistic there. So why include this? How much visibility do you have? Speaker 700:33:40And also any outlook for sort of mining nylon these industrial uses next year and for virgin sulfuric acid? Speaker 200:33:50Sure. Just on nylon, and I reask the question, if I don't answer it, you broke up a little bit on the first part of the nylon segment. But our view on nylon this year, Alewski, I think is we are going to be up year over year in that space, albeit it remains a somewhat tepid year in that industry. And then that's obviously widely reported. The global nylon market remains oversupplied. Speaker 200:34:21Where we're positioned, where our customers are positioned, particularly in the Gulf Coast, they've got some obviously, advantages over the rest of the world on a cost basis. So I think they benefit a little bit from that. So for us, in our virgin sulfuric, we believe it's going to be up year over year, albeit not certainly not a bumper year or anything along those lines. For mining, there's tremendous momentum in mining. There is new copper projects coming online this year, which we're going to participate in. Speaker 200:34:52All the mines and I'm sure you've read the headlines, there's multiple new mines being approved. And that's really being driven by the I wouldn't point to the tariffs, but the need for copper for data transmission, for electrical conductivity, related to the data centers that are being built and all the needs for electrification and green energy and so forth. So we view long term mining remains very, very, very positive, and we expect to have a stronger second half in mining as some of those new projects come online. Speaker 700:35:32Thank you. Operator00:35:35Thank you. We will move next with Hamed Khorsand with BWS Financial. Please go ahead. Your line is open. Speaker 800:35:50Hi. About Wagaman, it sounds like you're still putting some investments in there. Do you have a timeline as to when it would actually contribute to free cash flow? Speaker 300:36:03Yes. Hi, good morning, Hamed. Yes, I mean the free cash flow generation will follow the earnings, right? So we don't expect a significant amount of free cash flow to be generated this year. However, certainly with the synergies and the acquisition and the size of it, we expect it to generate positively in 2026. Speaker 800:36:26Okay. And then are you do you have any pricing power at all in the sulfuric acid for mining that you're talking about? Speaker 200:36:36Yes. I think our mining agreements, Hamed, are generally they're not spot in nature. They're longer term, not super long term, but there are pricing mechanisms in those where demand goes up actually the pricing can go up as well. So I would just say the overall momentum in mining and the demand for the sulfuric acid that's coming from that sector rising and rising is just kind of the tide that's lifting all boats. So it's creating positive momentum across the industry for sulfuric acid. Speaker 800:37:17Okay. Thank you. Operator00:37:21Thank you. And our next question comes from Laurent Alexander with Kayser. Please go ahead. Your line is open. Speaker 900:37:29Good morning. Could you give a little bit more detail on the order timing and how what that issues and what that might imply for the rhythm of 2026? And then secondly, can you talk a little bit about the polyethylene catalyst as capacity shuts in Europe and as you get newer plants built in Asia, is there any change in your revenue per ton of capacity? Is one better for you than the other? Speaker 600:38:00Thanks. Yes. Speaker 300:38:04Thanks for the question. On the first one, from an order timing standpoint, the order timing that we saw earlier in the year is expected to just shift from part of the latter part of the year. So we don't expect that to be materially different for next year. We do see higher expected sales of hydrocracking catalysts this year, and that's just demand driven. So the timing that we've been discussing for the first half of the year is just between second half and first half. Speaker 300:38:38So no impact on 2026. Speaker 200:38:41Yes. Thank you for the question, Laurence. Really, on polyethylene, as you point out, there's clearly capacity being rationalized in Europe. That's generally a pretty small exposure for us in terms of our customer base and where we see the growth. And as we refer to you, the Kansas City expansion, those are based on projects for North America and The Middle East. Speaker 200:39:08So there's really I don't think there's really a huge difference in terms of revenue per ton or anything. It's just more of the volumetric demand coming from those new sites is going to obviously going to pull up our sales and volume of sales into polyethylene catalysts and supports. Speaker 700:39:30Thank you. Operator00:39:34Thank you. And we have no further questions in queue at this time. This does conclude the EcoVist second quarter twenty twenty five earnings call and webcast. Thank you for your participation and you may disconnect at any time.Read morePowered by Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) Ecovyst Earnings HeadlinesEcovyst Inc. (ECVT) Q2 2025 Earnings Call Transcript2 hours ago | seekingalpha.comEcovyst Inc. Reports Q2 2025 Financial ResultsAugust 7 at 12:45 AM | tipranks.comGENIUS Act: Cancel Your Money?A new law called the GENIUS Act could quietly trigger the most radical shift in American finance in decades. Backed by the government but powered by private corporations, this initiative paves the way for digital dollars—programmable, trackable, and outside your control. Once embedded into apps, banks, and retail systems, opting out may no longer be possible. But there’s still time to protect your financial freedom—if you act before the system goes fully live.August 8 at 2:00 AM | Priority Gold (Ad)Ecovyst Reports Second Quarter 2025 ResultsAugust 7 at 7:50 AM | gurufocus.comEcovyst (ECVT) Q2 EPS Beats by 20%August 7 at 7:01 AM | fool.comEcovyst Reports Second Quarter 2025 ResultsAugust 7 at 6:00 AM | prnewswire.comSee More Ecovyst Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Ecovyst? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Ecovyst and other key companies, straight to your email. Email Address About EcovystEcovyst (NYSE:ECVT) offers specialty catalysts and services in the United States and internationally. The company operates in two segments, Ecoservices and Advanced Materials & Catalysts. The Ecoservices segment provides sulfuric acid recycling services and end-to-end logistics for production of alkylate for refineries; and virgin sulfuric acid for mining, water treatment, and industrial applications. The Advanced Materials & Catalysts segment offers advanced materials and specialty catalyst products and process solutions to producers and licensors of polyethylene and advanced silicas. This segment also supplies specialty zeolites and zeolite-based catalysts to customers for refining of oil primarily hydrocracking catalyst and dewaxing, sustainable fuels, and emission control systems for both on-road and non-road diesel engines. The company was formerly known as PQ Group Holdings Inc. and changed its name to Ecovyst Inc. in August 2021. 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There are 10 speakers on the call. Operator00:00:00Good morning. My name is Nikki, and I will be your conference operator today. Welcome to the ECOVEST Second Quarter twenty twenty five Earnings Call and Webcast. Please note, today's call is being recorded and should run for approximately one hour. Currently, all participants have been placed in a listen only mode to prevent any background noise. Operator00:00:24After the speakers' remarks, there will be a question and answer period. I would now like to hand the conference over to Gene Shields, Director of Investor Relations. Please go ahead. Speaker 100:01:00Thank you, operator. Good morning, and welcome to ECOVIST's second quarter twenty twenty five earnings call. With me on the call this morning are Curt Bidding, ECOVIST's Chief Executive Officer and Mike Phian, ECOVIST's Chief Financial Officer. Following our prepared remarks, we'll take your questions. Please note that some of the information we will share today is forward looking information, including information about the company's financial and operating performance, strategies, our anticipated end use demand trends and our 2025 financial outlook. Speaker 100:01:36This information is subject to risks and uncertainties that could cause the actual results and the 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 the company's filings with the SEC. Reconciliations of non GAAP financial measures mentioned in today's call with their corresponding GAAP measures can be found in our earnings release and in presentation materials posted in the Investors section of our website at ecovist.com. I'll now turn the call over to Kurt. Speaker 200:02:14Thank you, Gene, and good morning. The 2025 was another quarter of solid performance for ECOVIST. We achieved our financial objectives and we delivered on key initiatives that position us for future growth and unlock value for our stockholders. During the quarter, demand fundamentals across the majority of the end uses we serve remained stable. Ecoservices sales were up 14% compared to the 2024 with favorable pricing and the addition of the Wagaman site contributing to the increase. Speaker 200:02:48Results for our Advanced Materials and Catalysts segment came in favorable to our expectations and our guidance range, reflecting favorable sales timing and mix. In terms of strategic objectives, during the quarter, we closed the acquisition of the sulfuric acid production assets of Cornerstone Chemical Company. Integration of the Wagaman, Louisiana site is ongoing, and we expect to realize meaningful synergies and benefits upon full integration of the site into our existing network. The Wagaman site positions us well to meet the growth needs of our customers, and I want to publicly welcome the enthusiastic and engaged Wagam and team to ECOVIST. Additionally, with our focus on delivering value for our stockholders, during the second quarter, we also repurchased 2,900,000.0 shares of our common stock, totaling approximately $22,000,000 As is our usual practice, on Slide six, we provide our latest views on demand trends and our short and longer term outlook. Speaker 200:03:54As I noted earlier, demand fundamentals over the course of the second quarter were stable, and we continue to expect relative stability over the balance of the year. For Eco Services, high refinery utilization and positive alkaline economics continue to underpin demand for our regeneration services business. We believe the outlook for virgin sulfuric acid demand also remains positive. We continue to expect a stronger second half for sales into the nylon end use, and we expect second half sales into the mining sector to benefit as expansion projects come online. For our Advanced Silicas business, while there is some uncertainty regarding the effects of ongoing global macroeconomic challenges on the demand for polyethylene, we expect that our sales of polyethylene catalysts will increase this year compared to 2024. Speaker 200:04:48We also look forward to the completion of the Kansas City expansion project later this year. This expansion will support growth in customer demand as their expansion projects come online in 2026 and 2027. In addition, as we look to emerging technologies to provide meaningful growth opportunities such as advanced silicas for biocatalysis and carbon capture applications, customer engagement remains high with a number of trial programs underway, and we expect these to translate into further sales growth in 2026. Within the Zeolyst joint venture, current orders indicate that 2025 is projected to be a strong year for hydrocracking catalyst sales. We anticipate that sales of hydrocracking catalyst will surpass 2024 levels. Speaker 200:05:40Regarding our catalyst technologies utilized in the production of sustainable fuels, we anticipate that sales this year will remain in line with the prior year or show a slight increase. However, the longer term outlook is encouraging. The recently proposed RVO targets are expected to increase renewable diesel consumption in The United States from 3,300,000,000 gallons in 2025 to 5,600,000,000 gallons in 2026. Achieving the proposed 67% increase in renewable diesel usage will require the industry to operate at high utilization rates. We project that future growth in our sustainable fuels catalyst materials will be driven by increased utilization of existing capacity, new capacity expansions and the continual replacement cycle for catalyst materials. Speaker 200:06:34With our advanced catalyst technologies, we believe we are well positioned to support the rising demand for both renewable diesel and sustainable aviation fuel. I'll now turn the call over to Mike, who will review our second quarter results in more detail. Speaker 300:06:52Thank you, Kurt. Good morning. As a follow-up to our stronger than anticipated results in the first quarter, we exceeded our financial targets for the second quarter, providing for strong momentum as we move into the second half of the year. Our second quarter adjusted EBITDA was just under $56,000,000 coming in above the high end of our guidance range. Although unplanned and extended customer outages in the second quarter adversely affected sales volume for regeneration services, Eco Services landed within the midpoint of our segment guidance range. Speaker 300:07:28For our Advanced Materials and Catalysts segment, favorable sales timing and mix helped drive more favorable results in the quarter compared to our initial guidance. As we look to Slide nine, I'll highlight the major components of the period over period change in adjusted EBITDA. Pricing, excluding the pass through of higher sulfur costs, increased quarter over quarter, reflecting favorable contractual pricing for regeneration services and strong pricing for virgin sulfuric acid. The pass through effect of higher average sulfur costs on sales was approximately $20,000,000 with the pass through resulting in no material impact to adjusted EBITDA. Variable costs were favorable on product mix. Speaker 300:08:18Volume and customer mix were unfavorable during the quarter, driven by lower event driven niche custom catalyst sales in Advanced Silicas, along with unplanned and extended customer downtime within Eco Services, partially offset by the sales volume contribution from the Wagaman sulfuric acid assets. The remaining other component primarily represents higher manufacturing costs in Eco Services driven by general inflation and additional costs associated with the Wagaman acquisition, partially offset by lower turnaround costs. As we turn to our segment results on Page 10, I'll begin with a summary of the second quarter results for ECO Services. ECO Services sales were $176,000,000 up $22,000,000 compared to the prior year. The higher sales reflect the $20,000,000 pass through effect of higher sulfur costs, along with favorable contractual pricing for regeneration services, strong pricing for virgin sulfuric acid and the incremental sales contribution from the Wagaman sulfuric acid assets acquired during the second quarter. Speaker 300:09:35These factors were partially offset by lower regeneration services volume associated with unplanned and extended customer downtime during the quarter. Adjusted EBITDA for Eco Services was $49,800,000 essentially unchanged compared to the 2024, with favorable pricing and lower relative turnaround costs, largely offset by lower regeneration services volume and higher anticipated manufacturing costs driven by general inflation. Turning to Advanced Materials and Catalysts on Slide 11. Second quarter sales for Advanced Silicas were $24,000,000 compared to $29,000,000 in the year ago quarter, with the change largely driven by lower event driven custom catalyst sales. Sales of Advanced Silicas used in the production of polyethylene were essentially flat quarter over quarter. Speaker 300:10:36Our proportionate 50% share of second quarter sales for the Zeolyst joint venture was $28,000,000 compared to $29,000,000 in the prior year, with lower sales of hydrocracking and custom catalysts associated with order timing, partially offset by higher sales of catalyst materials used in the production of sustainable fuels and other specialty catalysts. Second quarter adjusted EBITDA for the Advanced Materials and Catalysts segment was $13,700,000 above our guidance range and down slightly compared to the $14,700,000 in the year ago quarter, with the decrease largely due to lower sales volume of event driven niche custom catalysts within Advanced Silicas. Turning to cash and leverage on Slide 12. Through the first six months, due to the timing of dividends from our Zeolyst joint venture and higher planned capital expenditures, our adjusted free cash flow was a use of $2,000,000 compared to $14,000,000 in 2024. In light of our expectations for the second half of the year, we have raised our guidance range for adjusted free cash flow to a range of 70,000,000 to $80,000,000 The 2025 was a quarter of unusually high cash deployment. Speaker 300:12:05As noted, we closed the acquisition of the Wagaman sulfuric acid assets with a total cash outlay of $41,000,000 including the $35,000,000 purchase price plus the customary working capital adjustments. And we repurchased $22,000,000 of common stock during the quarter. As a result, we closed the second quarter with cash on hand of $69,000,000 down from $128,000,000 as of 03/31/2025. Considering the lower cash balance at the end of the second quarter, our net debt leverage ratio rose to 3.5 times compared to the 3.2 times at the end of the prior quarter. Excluding the cash impact of the acquisition and the share repurchases, our ratio would have been 3.2 times. Speaker 300:13:02Total liquidity at quarter end, including availability under our ABL facility of approximately 8 As 52,000,000 we discussed on our last call, considering our current share price and associated valuation, we continue to believe that opportunistic share repurchases are a prudent and value enhancing use of capital. And while taking a more opportunistic approach to share repurchases will likely defer near term achievement of our target leverage ratio of two to 2.5 times, we anticipate ending 2025 with the leverage ratio consistent with the end of the prior year of around three times. I will now turn to our outlook for the remainder of 2025. We've had a solid start to the year with adjusted EBITDA for the first and second quarters coming in at the high end of our expectations, primarily due to favorable shifts in sales timing and mix within the AM and C business. As we look at the balance of the year, we expect demand fundamentals across the majority of the end uses that we serve to remain stable. Speaker 300:14:19However, we remain mindful that demand conditions in certain industrial end uses could change with potential areas of soft demand being our sales of advanced materials used in the production of polyethylene or sales of virgin sulfuric acid into nylon or other industrial end uses. In terms of overall guidance, with the exception of revisions and quarterly guidance associated with shifts in order timing, our expectations for the balance of the year remain largely unchanged. That said, we now expect that consolidated sales will be $795,000,000 to $835,000,000 up from our previous guidance range, with the increase reflecting the incremental sales associated with the acquisition of the Wagaman sulfuric acid assets, partially offset by lower expected sales of polyethylene catalysts within Advanced Silicas. While our updated expectations are for lower than originally planned sales of polyethylene catalysts, we continue to expect that our advanced materials used in the production of polyethylene will continue to outpace growth in global demand, with the expected sales in 2025 reflecting year over year growth compared to 2024. For the Zeolyst joint venture, sales in the 2025 were higher than originally anticipated due to positive shifts in sales timing, and we expect further positivity in the sales of hydrocracking catalysts. Speaker 300:15:57We are raising our guidance range for our 50% share of sales in the Zeolyst joint venture to a range of 125,000,000 to $140,000,000 providing for additional upside to our current forecast and offsetting the softer sales of polyethylene catalyst and advanced silicas. For consolidated adjusted EBITDA, we are maintaining the midpoint of our previous guidance range with some minor shifts among the segments in Corporate, and we are now narrowing the range to $242,000,000 to $254,000,000 to reflect our first half results and our expectations for the 2025. This guidance does not reflect any material contribution from the Wagaman sulfuric acid assets as we still anticipate that the sales contribution from Wagaman will largely be offset by incremental costs, including costs for integration and upgrading the facility in 2025. As mentioned earlier, we have also revised our expectations for adjusted free cash flow, narrowing the range to $70,000,000 to $80,000,000 and raising the midpoint by $5,000,000 to $75,000,000 You will also note minor revisions in guidance for other modeling items. We have tightened and lowered the midpoint of our guidance for interest expense, which is now expected to be in the range of 46,000,000 to $50,000,000 We have also increased our projection of depreciation and amortization expense, primarily related to Eco Services considering the addition of the Wagaman assets. Speaker 300:17:42Lastly, we have revised our expectations for adjusted net income and adjusted diluted income per share, while maintaining the per share midpoint of our previous guidance range. I'll now turn to specific guidance for the third quarter. We expect third quarter adjusted EBITDA for ECO Services to fall in the range of 63 to $69,000,000 For Advanced Materials and Catalyst, taking into account changes in order timing, we expect third quarter adjusted EBITDA to be in the range of 7,000,000 to $11,000,000 With the assumption that unallocated corporate expenses will be approximately $8,000,000 in the third quarter, we expect consolidated adjusted EBITDA for the third quarter to be in the range of $62 to $72,000,000 On Slide 14, we provide directional guidance for the fourth quarter. For Eco Services, stable demand fundamentals and favorable pricing are expected to continue in the fourth quarter, With the higher anticipated sales and lower expected turnaround costs, we expect segment adjusted EBITDA to be up on the order of 8,000,000 to $12,000,000 compared to the year for Advanced Materials and Catalyst due to shifts in sales timing between quarters, we now expect adjusted EBITDA to be in line with the 2024. Comparing to the prior year, we expect strong sales of polyethylene catalyst and advanced silicas along with higher sales of hydrocracking, specialty and custom catalysts, partially offset by lower sales of sustainable fuel catalysts within the Zeolyst joint venture. Speaker 300:19:26Lastly, with regard to planned turnaround activity for Eco Services, you will note that a turnaround previously planned for the third quarter of this year is now scheduled for the 2026, along with an expected turnaround in the fourth quarter related to the Wagaman facility. I will now turn the call back to Kurt for some closing remarks. Speaker 200:19:48Thank you, Mike. 2025 continues to provide a challenging operating environment for our industry, with companies in our sector facing issues that include global production overcapacity, pricing and margin pressures and disruption related to the evolving tariff landscape. In this environment, EcoVis has demonstrated consistent performance. Our strong results in the 2025 underscore the resilience of our distinctive businesses, which we attribute to our leading supply positions, long standing customer relationships, diverse geographic footprint and a portfolio of technologies that are highly valued by our customers. As we continue to move into the second half of the year, we have good momentum that we believe positions us well to deliver on our full year financial objectives. Speaker 200:20:40We expect high refinery utilization will continue to benefit our regeneration services business and that tailwinds and incremental demand in the mining sector will provide support for virgin sulfuric acid sales for the balance of the year. Within our Advanced Materials and Catalysts segment, we anticipate strong sales performance for hydrocracking catalysts in 2025, with projected sales exceeding those of 2024. This positive outlook is underpinned by a substantial order book and confirmed orders. We also continue to expect growth in our sales of polyethylene catalysts and supports, and we expect sales of catalysts used for sustainable fuel production to be flat to slightly up in 2025. Looking ahead, ECOVIS is well positioned to benefit from prevailing trends such as the onshoring of manufacturing, the increased need for clean fuels and growing mining operations for metals and minerals. Speaker 200:21:41We believe that our differentiated customer relationships and technological capabilities will enable us to translate the positive long term sector momentum into steady growth. ECOVIS' robust cash flow and resilient business model also enable us to further create value for our shareholders through growth investments such as the recent acquisition of the Wagaman plant as well as by returning capital via share repurchases. Lastly, we acknowledge the significant interest in the strategic review of our Advanced Materials and Catalysts segment. As communicated previously, we anticipate the process may extend through midyear twenty twenty five. We are making steady progress and expect to remain on this time line. Speaker 200:22:27We anticipate providing additional updates in the near future. At this time, I will ask the operator to open the line for questions. Operator00:22:37Thank you. We'll take our first question from Patrick Cunningham with Citi. Please go ahead. Your line is open. Speaker 400:23:02Hi, good morning Kurt and Mike. Just with the new EPA guidelines for increased renewable fuel volume, have you already seen initial indications from customers coming back with additional activity here? I guess any early indications or visibility into what this might mean for volumes in 2026? Speaker 200:23:24Hey, good morning, Patrick. Thank you for the question. So at this point, it's still early and those are I would say they're draft it's a draft RVO, so it has to be fully adopted. But we are certainly encouraged by the new requirements that were set. I mean, it's a as I said in my comments, up 67% increase year over year from 25% to 26%. Speaker 200:23:47We feel that really is going to drive utilization. There's one of the issues that industry has had in the last twelve months or so has been underutilization just with the low RIN credits and the uncertainty around the RVO. So pushing that RVO up should drive higher utilizations in 2026, which then should lead to higher utilization of catalyst, more change outs and eventually additional capacity being put online. So we're pretty positive in terms of the direction that it's headed. Speaker 400:24:23Understood. And then maybe just on potential outlook for polyethylene sales here. It seemed to have a mixed view with strong sales expectation, but there's some incremental caution on the trade uncertainty. How much of your year on year growth is tied to start ups? And have you heard any noise on potential delays in production or pressure on operating rates as a result of the current trade environment? Speaker 200:24:48No. I mean, clearly polyethylene utilization rates have been impacted across the globe with the tariff uncertainty and I'd say the lackluster global macroeconomic environment. And some of that is and there's some overcapacity in China that still weighs on the polyethylene industry. We still expect our sales to be up year over year, albeit probably falling short of what we had thought earlier this year. And obviously, in our AMAC segment, as we mentioned, that's being overcompensated by stronger hydrocracking and specialty catalyst sales. Speaker 200:25:27So we're cautious. I wouldn't say our sales this year aren't necessarily for new units, just our run rate with our existing customers. We are continuing with our Kansas City expansion that we're expecting those customers that are going to take the off take of that plant or that plant expansion to come online in 2026. Speaker 400:25:52Very helpful. Thank you so much. Operator00:25:56Thank you. Our next question comes from John McNulty with BMO Capital Markets. Please go ahead. Your line is open. Speaker 500:26:05Good morning. Thanks for taking my question. So now that you've finalized or settled on the Cornerstone business, I guess any update in terms of how you're thinking about some of these synergies come through and the earnings opportunities, say, in 2026? I know this year, there's some integration and some costs of upgrading, etcetera. But I guess how do you think about the contribution as we look out a year? Speaker 300:26:29Yes. John, thanks for the question. As we mentioned, this year we believe that we are going additional sales, of course, coming out of the acquisition, albeit kind of offset with some additional costs that we're incurring really to get that business up and running into our level of operations. For next year, we're not going to give directional or specific guidance yet, but we do believe that it is a very good acquisition for us, allowing for additional opportunities within the Gulf Coast among the other plants that we serve to help serve some of our customers along with the new customers that we see. The integration of the plant is going very well. Speaker 300:27:18We see opportunities both at the plant locations to improve what we see there along with looking at opportunities at our other plants as well. We also do see additional opportunities from a spot standpoint within the virgin sulfuric acid that will help us in next year as well. Speaker 500:27:41Got it. Okay. Fair enough. And then I guess you had mentioned early on that you've got some new areas where you're doing some trials and it looks like some of that may materialize as you look into 2026. I guess, you give us a little bit of color as to what those trials or those pilot programs are really focused on at this point? Speaker 500:28:01I know you had a bunch kind of in the hopper. Speaker 200:28:03Yes. That's primarily, I'd say, the AMAC segment, we talk about biocatalysis. There's been a lot of interest in that area that's obviously growing very rapidly. And the interest in using silicas as a carrier for the enzymes continues to be draw a lot of interest. So we've been working with a lot of customers, signing joint development agreements and so forth, working with them to get those products specked in. Speaker 200:28:35And I would point to Advanced Recycling, also their customer taking pilot samples of our catalysts that are obviously used in Advanced Recycling that help lower the energy intensity of that process and improve the pie oil product. So there's been good interest around that as well. Speaker 500:28:55Got it. Thanks very much for the color. Operator00:28:59Thank you. Our next question comes from David Begleiter with Deutsche Bank. Please go ahead. Your line is open. Speaker 600:29:06Thank you. Good morning. Kurt and Mike, just on the strategic review, can you remind us what you the process you're going through, what you're looking at? And what are the various options on table for this business and these assets? Thank you. Speaker 200:29:20Yes. So the yes, as we stated the Board thank you, Dave, for the question. As we stated last year, the review is really looking at a full spectrum of options to deliver really what we think is the most value for our shareholders in relations to the AMAC business, which that could be a whole of different types of options. Like we said on the call, that we're happy with where the progress is at. We're still moving forward with it. Speaker 200:29:52And we should have some further details on it in the near future. Speaker 600:29:57Got it. And just on leverage, given the uptick in the quarter, when would you expect to get to your leverage target assuming no M and A or other asset dispositions? Thank you. Speaker 300:30:09Yes. No, we definitely saw an uptick on the leverage up to 3.5 times, but that was primarily due to the acquisition of the Wagaman location along with some of the share repurchase activities, right? But if you look at our free cash flow target for the rest of the year, our expectations for the remainder of the year, leverage ratio will come down clearly into the range that we expected for the year, likely around a three times leverage. We're still targeting long term to be in the two to 2.5 times range. However, we do want to ensure that we take every dollar that we're making, put it back into organic growth opportunities. Speaker 300:30:55And then with the level of where our stock price is trading and the intrinsic value and long term growth potential of the business, we still see share repurchase as an opportunistic way to create shareholder value in the future. And then with the acquisition of the Wagaman location, we continue to see if there's options for additional bolt on opportunities in the future. Speaker 600:31:19Thank you. Operator00:31:22Thank you. Our next question comes from Alexey Yefremov with KeyBanc Capital Markets. Please go ahead. Your line is open. Speaker 700:31:32Thanks. Good morning, everyone. I just wanted to follow-up on the biofuels. Assuming the current proposal was approved in its current state, right, so about 67% as you said RVO growth next year. How should we think about sensitivity of your business to that growth? Speaker 700:31:54I mean, time, should your Catalyst business also grow in that same range by 60%, 70% or shouldn't be some smaller or larger number? Speaker 200:32:09Yes. Thanks for the question, Olesky. I think the way I would look at the RVO is really the proposed RVO changes is really reinjecting momentum back into the renewable fuels, which has stepped back, I would say, over the last twelve months with really overcapacity and lower RIN prices. So we believe that increased RVO was going to drive up the utilization, which will eventually lead to more frequent catalyst change outs and additional capacity coming online. I think the 67% is going to be a year over year step change for our business. Speaker 200:32:49Already, we've seen the business we believe that we're going to be flat to slightly up for this year. So we've seen, I would say, a stabilization of that. But we do think long term with that additional RVO will create some momentum and clearly translate into growth in that segment for us. But not I wouldn't look at the instantaneous year over year and try to apply that to our growth rate for any short period of time. Speaker 700:33:20Thanks. And on sulfuric acid, I think you're baking in some pickup in nylon later this year. And I know we've all been burned on maybe getting a little too optimistic there. So why include this? How much visibility do you have? Speaker 700:33:40And also any outlook for sort of mining nylon these industrial uses next year and for virgin sulfuric acid? Speaker 200:33:50Sure. Just on nylon, and I reask the question, if I don't answer it, you broke up a little bit on the first part of the nylon segment. But our view on nylon this year, Alewski, I think is we are going to be up year over year in that space, albeit it remains a somewhat tepid year in that industry. And then that's obviously widely reported. The global nylon market remains oversupplied. Speaker 200:34:21Where we're positioned, where our customers are positioned, particularly in the Gulf Coast, they've got some obviously, advantages over the rest of the world on a cost basis. So I think they benefit a little bit from that. So for us, in our virgin sulfuric, we believe it's going to be up year over year, albeit not certainly not a bumper year or anything along those lines. For mining, there's tremendous momentum in mining. There is new copper projects coming online this year, which we're going to participate in. Speaker 200:34:52All the mines and I'm sure you've read the headlines, there's multiple new mines being approved. And that's really being driven by the I wouldn't point to the tariffs, but the need for copper for data transmission, for electrical conductivity, related to the data centers that are being built and all the needs for electrification and green energy and so forth. So we view long term mining remains very, very, very positive, and we expect to have a stronger second half in mining as some of those new projects come online. Speaker 700:35:32Thank you. Operator00:35:35Thank you. We will move next with Hamed Khorsand with BWS Financial. Please go ahead. Your line is open. Speaker 800:35:50Hi. About Wagaman, it sounds like you're still putting some investments in there. Do you have a timeline as to when it would actually contribute to free cash flow? Speaker 300:36:03Yes. Hi, good morning, Hamed. Yes, I mean the free cash flow generation will follow the earnings, right? So we don't expect a significant amount of free cash flow to be generated this year. However, certainly with the synergies and the acquisition and the size of it, we expect it to generate positively in 2026. Speaker 800:36:26Okay. And then are you do you have any pricing power at all in the sulfuric acid for mining that you're talking about? Speaker 200:36:36Yes. I think our mining agreements, Hamed, are generally they're not spot in nature. They're longer term, not super long term, but there are pricing mechanisms in those where demand goes up actually the pricing can go up as well. So I would just say the overall momentum in mining and the demand for the sulfuric acid that's coming from that sector rising and rising is just kind of the tide that's lifting all boats. So it's creating positive momentum across the industry for sulfuric acid. Speaker 800:37:17Okay. Thank you. Operator00:37:21Thank you. And our next question comes from Laurent Alexander with Kayser. Please go ahead. Your line is open. Speaker 900:37:29Good morning. Could you give a little bit more detail on the order timing and how what that issues and what that might imply for the rhythm of 2026? And then secondly, can you talk a little bit about the polyethylene catalyst as capacity shuts in Europe and as you get newer plants built in Asia, is there any change in your revenue per ton of capacity? Is one better for you than the other? Speaker 600:38:00Thanks. Yes. Speaker 300:38:04Thanks for the question. On the first one, from an order timing standpoint, the order timing that we saw earlier in the year is expected to just shift from part of the latter part of the year. So we don't expect that to be materially different for next year. We do see higher expected sales of hydrocracking catalysts this year, and that's just demand driven. So the timing that we've been discussing for the first half of the year is just between second half and first half. Speaker 300:38:38So no impact on 2026. Speaker 200:38:41Yes. Thank you for the question, Laurence. Really, on polyethylene, as you point out, there's clearly capacity being rationalized in Europe. That's generally a pretty small exposure for us in terms of our customer base and where we see the growth. And as we refer to you, the Kansas City expansion, those are based on projects for North America and The Middle East. Speaker 200:39:08So there's really I don't think there's really a huge difference in terms of revenue per ton or anything. It's just more of the volumetric demand coming from those new sites is going to obviously going to pull up our sales and volume of sales into polyethylene catalysts and supports. Speaker 700:39:30Thank you. Operator00:39:34Thank you. And we have no further questions in queue at this time. This does conclude the EcoVist second quarter twenty twenty five earnings call and webcast. Thank you for your participation and you may disconnect at any time.Read morePowered by