Ecovyst Inc

Previous wording

Advanced Materials & Catalysts: We are a global supplier of finished silica catalyst, catalyst supports and functionalized silicas necessary to produce high performing plastics and to enable sustainable chemistry. This segment includes our 50% interest in the Zeolyst Joint Venture, where we are a leading global supplier of zeolites used for catalysts that support the production of sustainable fuels, remove nitrogen oxides from diesel engine emissions and are broadly applied inrefining and petrochemical processes.

Current wording

Advanced Materials & Catalysts: We are a global supplier of finished silica catalyst, catalyst supports and functionalized silicas necessary to produce high performing plastics and to enable sustainable chemistry through our Advanced Silicas business. This segment also includes our 50% interest in the Zeolyst Joint Venture, where we are a leading global supplier of specialty zeolites used in catalysts that supports the production of sustainable fuels, remove nitrogen oxides from diesel engine emissions and that are broadly applied inrefining and petrochemical processes.

Previous wording

Effective November 28, 2023, the Company renamed the Catalyst Technologies segment to Advanced Materials & Catalysts. Beginning with the year ended December 31, 2023, the segment results and disclosures included in the Company’s consolidated financial statements reflect the new segment name for all periods presented. This change to the Company’s segment name does not change the Company’s consolidated balance sheets, statements of income or cash flows for the prior periods or the way the Company’s chief operating decision maker (“CODM”) evaluated the business.

Current wording

Effective November 28, 2023, the Company renamed the Catalyst Technologies segment to Advanced Materials & Catalysts. Beginning with the year ended December 31, 2023, the segment results and disclosures included in the Company’s consolidated financial statements reflect the new segment name for all periods presented. This change to the Company’s segment name does not change the Company’s consolidated balance sheets, statements of income or cash flows for the prior periods or the way the Company’s chief operating decision maker (“CODM,” or the Company’s Chief Executive Officer) evaluated the business.

Previous wording

In 2023, we served global customers across many end uses and, as of December 31, 2023, operated out of ten strategically located manufacturing facilities.

Current wording

In 2024, we served global customers across many end uses and, as of December 31, 2024, operated out of ten strategically located owned manufacturing facilities.

Previous wording

On December 14, 2020, we completed the sale of our Performance Materials business to Potters Buyer, LLC, an affiliate of The Jordan Company, L.P. Effective on August 1, 2021, we completed the sale of our Performance Chemicals business to Sparta Aggregator L.P., a partnership with Koch Minerals & Trading, LLC and Cerberus Capital Management, L.P. The results of operations, financial condition, and cash flows for the Performance Materials and Performance Chemicals businesses are presented herein as discontinued operations for the 2022 and 2021 periods presented. Refer to Note 4 of our consolidated financial statements for additional information.

Current wording

Effective on August 1, 2021, we completed the sale of our Performance Chemicals business to Sparta Aggregator L.P., a partnership with Koch Minerals & Trading, LLC and Cerberus Capital Management, L.P. The results of operations, financial condition, and cash flows for the Performance Chemicals business are presented herein as discontinued operations for the 2022 period presented. Refer to Note 4 of our consolidated financial statements for additional information.

Previous wording

We continue to monitor the developments in Russia and Ukraine, as well as the related economic sanctions and export controls imposed on certain industry sectors. Although the current conflict has created global economic and political uncertainties and affected certain supply chain disruptions, we do not believe we have significant exposure in those countries. We have no operations in Russia or Ukraine. We had no sales to customers in Ukraine and Russia in December 31, 2023 and our sales to a customer in Russia were immaterial for the year ended December 31, 2022 and 2% for the year ended December 31, 2021. We also did not make any purchases from suppliers in Russia or Ukraine. As Russia’s invasion of Ukraine continues to unfold, we will continue to monitor compliance with sanctions imposed by the U.S. government and other countries.

Current wording

We continue to monitor the developments in Russia and Ukraine, as well as the related economic sanctions and export controls imposed on certain industry sectors. Although the current conflict has created global economic and political uncertainties and affected certain supply chain disruptions, we do not believe we have significant exposure in those countries. We have no operations in Russia or Ukraine. We had no sales to customers or purchases from suppliers in Ukraine and Russia for the years ended December 31, 2024 and 2023. Our sales to a customer in Russia were immaterial and we did not make any purchases from suppliers for the year ended December 31, 2022. As Russia’s invasion of Ukraine continues to unfold, we will continue to monitor compliance with sanctions imposed by the U.S. government and other countries.

Previous wording

We continue to monitor the developments in the Middle East. Although the Company experienced shipment delays, the impact remained immaterial on our business.

Current wording

We also continue to monitor the developments in the Middle East. Although the Company experienced shipment delays during the year, the impact remained immaterial to our business.

Previous wording

On April 27, 2022, the Board approved a stock repurchase program that authorized the Company to purchase up to $450 million of the Company’s common stock over the four-year period from the date of approval. During the year-ended December 31, 2023, the Company repurchased 541,494 shares on the open market at an average price of $9.85 per share, for a total of $5.3 million, excluding brokerage commissions and accrued excise tax. Additionally, in connection with secondary offerings of the Company’s common stock in March and May 2023, the Company repurchased 7,000,000 shares of its common stock sold in the offerings from the underwriters at a weighted average price of $10.48 per share concurrently with the closing of the offerings, for a total of $73.4 million, excluding accrued excise tax.

Current wording

On April 27, 2022, the Board approved a stock repurchase program that authorized the Company to purchase up to $450.0 million of the Company’s common stock over the four-year period from the date of approval. For the year ended December 31, 2024, the Company repurchased 552,081 shares on the open market at an average price of $9.05 per share, for a total of $5.0 million excluding brokerage commissions and accrued excise tax. As of December 31, 2024, $229.6 million was available for share repurchases under the program.

Previous wording

During the year-ended December 31, 2022, the Company repurchased 1,970,763 shares on the open market at an average price of $9.82 per share, for a total of $19.4 million, excluding brokerage commissions. Additionally, in connection with secondary offerings of the Company’s common stock in August and November 2022, the Company repurchased 14,500,000 shares of its common stock sold in the offerings from the underwriters at a weighted average price of $8.09 per share concurrently with the closing of the offerings, for a total of $117.3 million.

Current wording

During the year ended December 31, 2023, the Company repurchased 541,494 shares on the open market at an average price of $9.85 per share, for a total of $5.3 million, excluding brokerage commissions and accrued excise tax. Additionally, in connection with secondary offerings of the Company’s common stock by an equity sponsor in March and May 2023, the Company repurchased 7,000,000 shares of its common stock in the offerings from underwriters at a weighted average price of $10.48 per share concurrently with the close of the offerings, for a total of $73.4 million, excluding accrued excise tax.

Previous wording

Our zeolite catalysts product group operates through the Zeolyst Joint Venture, which we account for as an equity method investment in accordance with accounting principles generally accepted in the United States (“GAAP”). We do not record sales by the Zeolyst Joint Venture as revenue and such sales are not consolidated within our results of operations. However, net income and Adjusted EBITDA reflects our share of the earnings of the Zeolyst Joint Venture that have been recorded as equity in net income from affiliated companies in our consolidated statements of income and includes Zeolyst Joint Venture adjustments on a proportionate basis based on our 50% ownership interest.

Current wording

Our zeolite catalysts product group operates through the Zeolyst Joint Venture, which we account for as an equity method investment in accordance with accounting principles generally accepted in the United States (“GAAP”). We do not record sales by the Zeolyst Joint Venture as revenue and such sales are not consolidated within our results of operations. However, net income and Adjusted EBITDA for the Company’s Advanced Materials & Catalysts segment reflects our 50% portion of the earnings from the Zeolyst Joint Venture that have been recorded as equity in net income in our consolidated statements of income and includes Zeolyst Joint Venture adjustments on a proportionate basis based on our 50% ownership interest.

Previous wording

Adjusted EBITDA and adjusted net income are financial measures that are not prepared in accordance with GAAP and that we use to evaluate our operating performance, for business planning purposes and to measure our performance relative to that of our competitors. Adjusted EBITDA and adjusted net income are presented as key performance indicators as we believe these financial measures will enhance a prospective investor’s understanding of our results of operations and financial condition. EBITDA consists of net income (loss) attributable to continuing operations before interest, taxes, depreciation and amortization. Adjusted EBITDA consists of EBITDA adjusted for (i) non-operating income or expense, (ii) the impact of certain non-cash, nonrecurring or other items included in net income (loss) and EBITDA that we do not consider indicative of our ongoing operating performance, and (iii) depreciation, amortization and interest of our 50% share of the Zeolyst Joint Venture. Adjusted net income consists of net income (loss) adjusted for (i) non-operating income or expense and (ii) the impact of certain non-cash, nonrecurring or other items included in net income (loss) that we do not consider indicative of our ongoing operating performance. We believe that these non-GAAP financial measures provide investors with useful financial metrics to assess our operating performance from period-to-period by excluding certain items that we believe are not representative of our core business.

Current wording

Adjusted EBITDA and Adjusted Net Income are financial measures that are not prepared in accordance with GAAP and that we use to evaluate our operating performance, for business planning purposes and to measure our performance relative to that of our competitors. Adjusted EBITDA and Adjusted Net Income are presented as key performance indicators as we believe these financial measures will enhance a prospective investor’s understanding of our results of operations and financial condition. EBITDA consists of net (loss) income attributable to continuing operations before interest, taxes, depreciation and amortization. Adjusted EBITDA consists of EBITDA adjusted for (i) non-operating income or expense, (ii) the impact of certain non-cash, nonrecurring or other items included in net (loss) income and EBITDA that we do not consider indicative of our ongoing operating performance, and (iii) depreciation, amortization and interest of our 50% share of the Zeolyst Joint Venture. Adjusted Net Income consists of net (loss) income adjusted for (i) non-operating income or expense and (ii) the impact of certain non-cash, nonrecurring or other items included in net (loss) income that we do not consider indicative of our ongoing operating performance. We believe that these non-GAAP financial measures provide investors with useful financial metrics to assess our operating performance from period-to-period by excluding certain items that we believe are not representative of our core business.

Previous wording

You should not consider Adjusted EBITDA or adjusted net income in isolation or as alternatives to the presentation of our financial results in accordance with GAAP. The presentation of Adjusted EBITDA and adjusted net income financial measures may differ from similar measures reported by other companies and may not be comparable to other similarly titled measures. In evaluating Adjusted EBITDA and adjusted net income, you should be aware that we are likely to incur expenses similar to those eliminated in this presentation in the future and that certain of these items could be considered recurring in nature. Our presentation of Adjusted EBITDA and adjusted net income should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items. Reconciliations of Adjusted EBITDA and adjusted net income to GAAP net income (loss) are included in the results of operations discussion that follows for each of the respective periods.

Current wording

You should not consider Adjusted EBITDA or Adjusted Net Income in isolation or as alternatives to the presentation of our financial results in accordance with GAAP. The presentation of Adjusted EBITDA and Adjusted Net Income financial measures may differ from similar measures reported by other companies and may not be comparable to other similarly titled measures. In evaluating Adjusted EBITDA and Adjusted Net Income, you should be aware that we are likely to incur expenses similar to those eliminated in this presentation in the future and that certain of these items could be considered recurring in nature. Our presentation of Adjusted EBITDA and Adjusted Net Income should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items. Reconciliations of Adjusted EBITDA and Adjusted Net Income to GAAP net (loss) income are included in the results of operations discussion that follows for each of the respective periods.

Previous wording

The primary raw materials for our Ecoservices segment include spent sulfuric acid, sulfur, acids, bases (including sodium hydroxide, or “caustic soda”), and certain metals. Spent sulfuric acid for our Ecoservices segment is supplied by customers for a nominal charge as part of their contracts. The primary raw materials used in the manufacture of products in our Advanced Materials & Catalysts segment include sodium silicate and cesium hydroxide. During the second quarter of 2023, inflationary pressures began to ease, which reduced the cost of goods for sulfur, energy, logistics and other raw materials.

Current wording

The primary raw materials for our Ecoservices segment include spent sulfuric acid, sulfur, acids, bases (including sodium hydroxide, or “caustic soda”) and certain metals. Spent sulfuric acid for our Ecoservices segment is supplied by customers as part of their contracts. The primary raw materials used in the manufacture of products in our Advanced Materials & Catalysts segment include sodium silicate and cesium hydroxide.

Previous wording

Most of our Ecoservices contracts feature take-or-pay volume protection and/or quarterly price adjustments for commodity inputs, labor, the Chemical Engineering Index (U.S. chemical plant construction cost index) and natural gas. Over 80% of our Ecoservices segment sales for the year ended December 31, 2023 were under contracts featuring quarterly price adjustments. The price adjustments generally reflect actual costs for producing acid and tend to protect us from volatility in labor, fixed costs and raw material pricing. The take-or-pay volume protection allows us to cover fixed costs through intermittent, temporary production issues at customer refineries.

Current wording

Most of our Ecoservices contracts feature take-or-pay volume protection and/or quarterly price adjustments for commodity inputs, labor, the Chemical Engineering Index (U.S. chemical plant construction cost index) and natural gas. About 90% of our Ecoservices segment sales for the year ended December 31, 2024 were under contracts featuring quarterly price adjustments. The price adjustments generally reflect actual costs for producing acid and tend to protect us from volatility in labor, fixed costs and raw material pricing. The take-or-pay volume protection allows us to cover fixed costs through intermittent, temporary production issues at customer refineries.

Previous wording

Our regeneration services product group, which is a part of our Ecoservices segment, typically experiences seasonal fluctuations as a result of higher demand for gasoline products in the summer months and lower demand in the winter months. These demand fluctuations results in higher sales and working capital requirements in the second and third quarters.

Current wording

Our regeneration services product group, which is a part of our Ecoservices segment, typically experiences seasonal fluctuations as a result of higher demand for gasoline products in the summer months and lower demand in the winter months. These demand fluctuations generally result in higher sales and working capital requirements in the second and third quarters.

Previous wording

As a global business, we are subject to the impact of gains and losses on currency translations, which occur when the financial stat ements of foreign operations are translated into U.S. dollars. We operate in various geographies with approximately 6% of our sales for the years ended December 31, 2023 and 2022 in currencies other than the U.S. dollar. Because our consolidated financial results are reported in U.S. dollars, sales or earnings generated in currencies other than the U.S. dollar can result in a significant increase or decrease in the amount of those sales and earnings when translated to U.S. dollars. The foreign currency to which we have the most significant exchange rate exposure is the British Pound.

Current wording

As a global business, we are subject to the impact of gains and losses on currency translations, which occur when the financial stat ements of foreign operations are translated into U.S. dollars. We operate in various geographies with approximately 5% and 6% of our sales for the years ended December 31, 2024 and 2023, respectively are in currencies other than the U.S. dollar. Because our consolidated financial results are reported in U.S. dollars, sales or earnings generated in currencies other than the U.S. dollar can result in a significant increase or decrease in the amount of those sales and earnings when translated to U.S. dollars. The foreign currency to which we have the most significant exchange rate exposure is the British pound.

Previous wording

Operating income decreased $7.7 million to $96.7 million. The decrease in operating income was primarily due to the decrease in gross profit, offset by lower selling, general and administrative expenses and other operating expenses.

Current wording

Operating income increased $1.3 million to $98.0 million. The increase in operating income was primarily due to the increase in gross profit.

Previous wording

Ecoservices: Sales in Ecoservices for the year ended December 31, 2023 were $584.8 million, a decrease of $117.7 million, or 16.8%, compared with sales of $702.5 million for the year ended December 31, 2022. Thedecrease in sales reflects lower sales volume of$52.1 million and the negative impact associated with the pass-through of lower sulfur costs of approximately$86 million, offset by higher average selling pricing of$20.4 million, after adjusting for the impact of the pass-through of lower sulfur costs.

Current wording

Ecoservices: Sales in Ecoservices for the year ended December 31, 2024 were $598.3 million, an increase of $13.5 million, or 2.3%, compared with sales of $584.8 million for the year ended December 31, 2023. Theincrease in sales reflects higher sales volume of$42.4 million, partially offset by lower average selling pricing of 28.9 million, inclusive ofthe negative impact associated with the pass-through of lower sulfur costs of approximately$7 million.

Previous wording

Sales volume was lower primarily due to lower virgin sulfuric acid sales associated with the adverse impact of Winter Storm Elliott earlier in the year, extended maintenance turnaround activity at our facilities and lower end use demand of virgin sulfuric acid, primarily in the production of nylon intermediates. Favorable pricing continued to benefit Ecoservices, driven by higher contractual and index pricing within regeneration services, as well as the pass-through of higher freight costs.

Current wording

Sales volume increased driven by higher virgin sulfuric acid and regeneration services sales for the year ended December 31, 2024 as compared to the year ended December 31, 2023, which had the adverse impact of Winter Storm Elliott and extended maintenance turnaround activity at our facilities in 2023, as well as strong demand for regeneration services in the gulf coast in 2024. Average selling prices were lower primarily due to the pass-through of lower costs, including sulfur, natural gas, freight and other variable costs, partially offset by favorable contract-pricing for regeneration services.

Previous wording

Advanced Materials & Catalysts: Sales in Advanced Materials & Catalysts for the year ended December 31, 2023 were $106.3 million, a decrease of $11.4 million, or 9.7%, compared with sales of $117.7 million for the year ended December 31, 2022. The decrease in sales was primarily due to lower sales volume of $24.2 million, partially offset by higher average selling prices of $12.4 million and the effects of foreign currency translation of $0.4 million.

Current wording

Advanced Materials & Catalysts: Sales in Advanced Materials & Catalysts for the year ended December 31, 2024 were $106.2 million, a decrease of $0.1 million, compared with sales of $106.3 million for the year ended December 31, 2023. The change in sales was primarily due to lower sales volume and mix of $0.4 million, partially offset by higher average selling prices of $0.3 million.

Previous wording

Gross profit for the year ended December 31, 2023 was $197.9 million, a decrease of $26.8 million, or 11.9%, compared with $224.7 million for the year ended December 31, 2022. The decrease in gross profit is primarily driven by lower sales volume of $30.1 million as well as unfavorable manufacturing costs of $29.5 million, partially offset by favorable average selling prices of $32.8 million, exclusive of the pass-through of sulfur costs.

Current wording

Gross profit for the year ended December 31, 2024 was $201.5 million, an increase of $3.6 million, or 1.8%, compared with $197.9 million for the year ended December 31, 2023. The increase in gross profit is primarily driven by higher sales volume and mix of $22.8 million, unfavorable manufacturing costs of $2.4 million and lower average selling prices of $21.6 million, exclusive of the pass-through of sulfur costs.

Previous wording

Other operating expense, net for the year ended December 31, 2023 was $22.0 million, a decrease of $13.0 million, or 37.1%, compared with $35.0 million for the year ended December 31, 2022. The decrease in other operating expense, net was mainly driven by severance charges incurred in the prior period from contracts associated with former executivesand residual costs from thesale of the Performance Chemicals business and other transactions costs for the year ended December 31, 2022.

Current wording

Other operating expense, net for the year ended December 31, 2024 was $19.6 million, a decrease of $2.4 million compared with $22.0 million for the year ended December 31, 2023. The decrease in other operating expense, net was mainly driven by smaller losses on asset disposals during the year ended December 31, 2024 and residual costs from thesale of the Performance Chemicals business and other transactions costs that occurred during the year ended December 31, 2023. The Company recorded an impairment on an intangible asset of $3.9 million during the year ended December 31, 2024.

Previous wording

Interest expense, net for the year ended December 31, 2023 was $44.7 million, an increase of $7.5 million, as compared with $37.2 million for the year ended December 31, 2022. The increase in interest expense was due to year over year increase in variable rates, which was partially offset by lower outstanding debt for the year ended December 31, 2023, as compared tothe year ended December 31, 2022. This was offset by the benefits associated with our interest rate caps, which included an adjustment related to prior year interest rate amortization.

Current wording

Interest expense, net for the year ended December 31, 2024 was $49.4 million, an increase of $4.7 million, as compared with $44.7 million for the year ended December 31, 2023. The increase in interest expense, net was primarily due to year over year increase in variable rates and the decrease in the benefits associated with our interest rate caps, partially offset by lower outstanding debt for the year ended December 31, 2024, as compared tothe year ended December 31, 2023 and thereductions in our spread associated with the June 2024 refinancing.

Previous wording

The provision for income taxes for the year ended December 31, 2023 was $10.8 million compared with $24.9 million for the year ended December 31, 2022. The effective income tax rate for the year ended December 31, 2023 was 13.2% compared to 26.3% for the year ended December 31, 2022. The difference between the U.S. federal statutory income tax rate and our effective income tax rate for the year ended December 31, 2023 was mainly due to the impact of a valuation allowance release connected to our state investment tax credit carryovers, foreign tax credit benefit, the Section 162(m) deduction limitation for “covered” employees with compensation in excess of $1 million, along with the tax deductibility of stock compensation. The difference between the U.S. federal statutory income tax rate and our effective income tax rate for the year ended December 31, 2022 was mainly due the impact of the Section 162(m) deduction limitation for “covered” employees with compensation in excess of $1 million, along with the tax deductibility of stock compensation.

Current wording

The provision for income taxes for the year ended December 31, 2024 was $1.6 million compared with $10.8 million for the year ended December 31, 2023. The effective income tax rate for the year ended December 31, 2024 was (32.5)% compared to 13.2% for the year ended December 31, 2023. The difference between the U.S. federal statutory income tax rate and our effective income tax rate for the year ended December 31, 2024 was mainly due to the impact of the tax deductibility of the impairment of investment in affiliated companies, the statute of limitations expiration related to prior year uncertain tax positions, foreign tax credit benefit and research and development tax credit benefit. The difference between the U.S. federal statutory income tax rate and our effective income tax rate for the year ended December 31, 2023 was mainly due the impact of a valuation allowance release connected to our state investment tax credit carryovers, foreign tax credit benefit, the Section 162(m) deduction limitation for “covered” employees with compensation in excess of $1 million, along with the tax deductibility of stock compensation.

Previous wording

For the foregoing reasons, net income was $71.2 million for the year ended December 31, 2023 as compared to $73.7 million for the year ended December 31, 2022.

Current wording

For the foregoing reasons, net loss was $6.7 million for the year ended December 31, 2024 as compared to net income of $71.2 million for the year ended December 31, 2023.

Previous wording

(2)The Adjusted EBITDA from the Zeolyst Joint Venture included in the Advanced Materials & Catalysts segment was $50.5 million for the year ended December 31, 2023, which includes $30.7 million of equity in net income, excluding $6.4 million of amortization of investment in affiliate step-up plus $13.4 million of joint venture depreciation, amortization and interest. The Adjusted EBITDA from the Zeolyst Joint Venture included in the Advanced Materials & Catalysts segment was $50.3 million for the year ended December 31, 2022, which includes $27.9 million of equity in net income, excluding $6.4 million of amortization of investment in affiliate step-up plus $16.0 million of joint venture depreciation, amortization and interest.

Current wording

The Adjusted EBITDA from the Zeolyst Joint Venture included in the Advanced Materials & Catalysts segment was $50.5 million for the year ended December 31, 2023, which includes $30.6 million of equity in net income, excluding $6.4 million of amortization of investment in affiliate step-up plus $13.4 million of joint venture depreciation, amortization and interest.

Previous wording

A reconciliation of net income attributable to Ecovyst Inc. to Adjusted EBITDA is as follows:

Current wording

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

Previous wording

(a)We use Adjusted EBITDA as a performance measure to evaluate our financial results. Because our Advanced Materials & Catalysts segment includes our 50% interest in the Zeolyst Joint Venture, we include an adjustment for our 50% proportionate share of depreciation, amortization and interest expense of the Zeolyst Joint Venture.

Current wording

(a)We use Adjusted EBITDA as a performance measure to evaluate our financial results. Because our Advanced Materials & Catalysts segment reflects our 50% portion of the earnings from the Zeolyst Joint Venture, we include an adjustment for our 50% proportionate share of depreciation, amortization and interest expense of the Zeolyst Joint Venture.

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous wording

(e)Represents non-cash adjustments to the Company’s LIFO reserves for certain inventories in the U.S. that are valued using the LIFO method, effectively reflecting the results as if these inventories were valued using the FIFO method, which we believe provides a means of comparison to other companies that may not use the same basis of accounting for inventories.

Current wording

(f)Represents non-cash adjustments to the Company’s LIFO reserves for certain inventories in the U.S. that are valued using the LIFO method, effectively reflecting the results as if these inventories were valued using the FIFO method, which we believe provides a means of comparison to other companies that may not use the same basis of accounting for inventories.

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous wording

(h)Other consists of adjustments for items that are not core to our ongoing business operations. These adjustments include environmental remediation and other legal costs, expenses for capital and franchise taxes, and defined benefit pension and postretirement plan (benefits) costs, for which our obligations are under plans that are frozen. Also included in this amount are adjustments to eliminate the benefit realized in cost of goods sold of the allocation of a portion of the contract manufacturing payments under the five-year agreement with the buyer of the Performance Chemicals business to the financing obligation under the failed sale-leaseback. Included in this line-item are rounding discrepancies that may arise from rounding from dollars (in thousands) to dollars (in millions).

Current wording

(i)Other consists of adjustments for items that are not core to our ongoing business operations. These adjustments include environmental remediation and other legal costs, expenses for capital and franchise taxes, and defined benefit pension and postretirement plan (benefits) costs, for which our obligations are under plans that are frozen. Also included in this amount are adjustments to eliminate the benefit realized in cost of goods sold of the allocation of a portion of the contract manufacturing payments under the five-year agreement with the buyer of the Performance Chemicals business to the financing obligation under the failed sale-leaseback. Included in this line-item are rounding discrepancies that may arise from rounding from dollars (in thousands) to dollars (in millions).

Previous wording

(1)We define adjusted net income as net income attributable to Ecovyst Inc. adjustedfor non-operating income or expense and the impact of certain non-cash or other items that are included in net income that we do not consider indicative of our ongoing operating performance. Adjusted net income is presented as a key performance indicator as we believe it will enhance a prospective investor’s understanding of our results of operations and financial condition. Adjusted net income may not be comparable with net income or adjusted net income as defined by other companies.

Current wording

(1)We define Adjusted Net Income as net (loss) income adjustedfor non-operating income or expense and the impact of certain non-cash or other items that are included in net (loss) income that we do not consider indicative of our ongoing operating performance. Adjusted Net Income is presented as a key performance indicator as we believe it will enhance a prospective investor’s understanding of our results of operations and financial condition. Adjusted Net Income may not be comparable with net (loss) income or Adjusted Net Income as defined by other companies.

Previous wording

The adjustments to net income attributable to Ecovyst Inc. are shown net of each applicable statutory tax rates of 25.4% and 23.9% for the year ended December 31, 2023 and 2022, respectively, except for equity-based compensation. The tax effect on equity-based compensation is derived by removing the tax effect of any equity-based compensation expense disallowed as a result of its inclusion within IRC Sec. 162(m), and adding the tax effect of equity-based stock compensation shortfall recorded as a discrete item.

Current wording

The adjustments to net income are shown net of applicable tax rates of 25.3% and 25.4% for the years ended December 31, 2024 and 2023, respectively, except for equity-based compensation and the impairment of investment in affiliated companies. The tax effect on equity-based compensation is derived by removing the tax effect of any equity-based compensation expense disallowed as a result of its inclusion within IRC Sec. 162(m) and adding the tax effect of equity-based compensation shortfall recorded as a discrete item. The tax effect on the impairment of investment in affiliated companies is derived by removing the tax impact of the non-deductible component specific to goodwill.

Previous wording

Our primary sources of liquidity consist of cash flows from operations, existing cash balances as well as funds available under our asset based lending revolving credit facility (“ABL Facility”). We expect that ongoing requirements for debt service and capital expenditures will be funded from these sources of funds. Our primary liquidity requirements include funding working capital requirements (primarily inventory and accounts receivable, net of accounts payable and other accrued liabilities), debt service requirements and capital expenditures. Our capital expenditures include both maintenance of business, which include spending on maintenance and HSE initiatives as well as growth, which includes spending to drive organic sales growth and cost savings initiatives.

Current wording

Our primary sources of liquidity consist of cash flows from operations, existing cash balances as well as funds available under our asset based lending revolving credit facility (“ABL Facility”). We expect that ongoing requirements for debt service and capital expenditures will be funded from these sources of funds. Our primary liquidity requirements include funding working capital requirements (primarily inventory and accounts receivable, net of accounts payable and other accrued liabilities), debt service requirements and capital expenditures. Our capital expenditures include both maintenance of business, which include spending on maintenance and health, safety and environmental initiatives as well as growth, which includes spending to drive organic sales growth and cost savings initiatives.

Previous wording

We believe that our existing cash, cash equivalents and cash flows from operations, combined with availability under our ABL Facility, will be sufficient to meet our presently anticipated future cash needs for at least the next twelve months. We may also pursue strategic acquisition or divestiture opportunities, which may impact our future cash requirements. We may, from time to time, increase borrowings under our ABL Facility to meet our future cash needs. As of December 31, 2023, we had cash and cash equivalents of $88.4 million and availability of $63.8 million under our ABL Facility, after giving effect to $4.0 million of outstanding letters of credit, for a total available liquidity of $152.2 million. As of December 31, 2023, we did not have any revolving credit facility borrowings and were in compliance with all covenants under our debt agreements.

Current wording

We believe that our existing cash and cash equivalents and cash flows from operations, combined with availability under our ABL Facility, will be sufficient to meet our presently anticipated future cash needs for at least the next twelve months. We may also pursue strategic acquisition or divestiture opportunities, which may impact our future cash requirements. We may, from time to time, increase borrowings under our ABL Facility to meet our future cash needs. As of December 31, 2024, we had cash and cash equivalents of $146.0 million and availability of $75.2 million under our ABL Facility, after giving effect to $3.3 million of outstanding letters of credit, for a total available liquidity of $221.2 million. We did not have any revolving credit facility borrowings as of December 31, 2024. As of December 31, 2024, we were in compliance with all covenants under our debt agreements.

Previous wording

The 2021 Term Loan Facility and the ABL Facility contain various restrictive covenants. Each limits the ability of the Company and its restricted subsidiaries to incur certain indebtedness or liens, merge, consolidate or liquidate, dispose of certain property, make investments or declare or pay dividends, make optional payments, modify certain debt instruments, enter into certain transactions with affiliates, enter into certain sales and leasebacks, and certain other non-financial restrictive covenants. The ABL Facility also contains one financial covenant which applies when minimum availability under the ABL Facility exceeds a certain threshold. During such time, the Company is required to maintain a fixed-charge coverage ratio of at least 1.0 to 1.0. The Company was in compliance with all debt covenants under the 2021 Term Loan Facility and the ABL Facility as of December 31, 2023 and 2022, respectively.

Current wording

The 2024 Term Loan Facility and the ABL Facility contain various restrictive covenants. Each limits the ability of the Company and its restricted subsidiaries to incur certain indebtedness or liens, merge, consolidate or liquidate, dispose of certain property, make investments or declare or pay dividends, make optional payments, modify certain debt instruments, enter into certain transactions with affiliates, enter into certain sales and leasebacks and certain other non-financial restrictive covenants. During such time, the Company is required to maintain a fixed-charge coverage ratio of at least 1.0 to 1.0. The Company was compliant with all debt covenants under the 2024 Term Loan Facility and the ABL Facility as of December 31, 2024 and 2023, respectively.

Previous wording

Included in our cash and cash equivalents balance as of December 31, 2023 was $10.7 million of cash and cash equivalents in foreign jurisdictions. Depending on foreign cash balances, we have certain flexibility to repatriate funds should the need arise. Should the need arise, we would repatriate the funds in the most tax efficient manner from those subsidiaries. Repatriation of foreign cash is generally not subject to U.S. federal income taxes at the time of cash distribution. However, foreign earnings may still be taxed for state income tax purposes, as well as subject to certain foreign withholding tax obligations, when cash amounts are distributed back to the U.S.

Current wording

Included in our cash and cash equivalents balance as of December 31, 2024 was $9.6 million of cash and cash equivalents in foreign jurisdictions. Depending on foreign cash balances, we have certain flexibility to repatriate funds should the need arise. Should the need arise, we would repatriate the funds in the most tax efficient manner from those subsidiaries. Repatriation of foreign cash is generally not subject to U.S. federal income taxes at the time of cash distribution. However, foreign earnings may still be taxed for state income tax purposes, as well as subject to certain foreign withholding tax obligations, when cash amounts are distributed back to the U.S.

Previous wording

As of December 31, 2023, our total indebtedness was $877.5 million, with up to $63.8 million of available borrowings under our ABL. Our liquidity requirements are significant, primarily due to debt service requirements. As reported, our cash interest expense for the years ended December 31, 2023, 2022 and 2021 was approximately $42.1 million, $35.4 million and $59.0 million, respectively. Before any impact of hedges, a one percent change in assumed interest rates for our variable interest credit facilities would have an annual impact of approximately $8.8 million on interest expense. The principal balance due in the next twelve months is $9.0 million.

Current wording

As of December 31, 2024, our total indebtedness was $870.8 million, with up to $75.2 million of available borrowings under our ABL. Our liquidity requirements are significant, primarily due to debt service requirements. As reported, our cash interest expense for the years ended December 31, 2024, 2023 and 2022 was approximately $49.0 million, $42.1 million and $35.4 million, respectively. Before any impact of hedges, a one percent change in assumed interest rates for our variable interest credit facilities would have an annual impact of approximately $8.7 million on interest expense. The principal balance due in the next twelve months is $8.7 million.