Ecovyst Inc.

Good morning. My name is Brittany and I'll be your conference operator today. Welcome to the ECOVIST fourth quarter and full year 2021 earnings call and webcast. Please note today's call is being recorded and should run approximately one hour. Currently, all participants have been placed in a listen-only mode to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question at that time, please press the star and 1 on your telephone keypad. If you want to remove yourself from the queue, please press the pound key. When poising your question, we ask that you please pick up your handset to allow optimal sound quality. Lastly, if you should need operator assistance, please press star 0. I would now like to turn the call over to Chris Evans, Director of Investor Relations and Financial Communications. Please go ahead.

Thank you. Welcome, everyone. And thank you for joining us for our fourth quarter 2021 earnings call. We will start today with formal remarks from Balgasim Chiriag, Chairman, President, and Chief Executive Officer, and Mike Thehan, Vice President and Chief Financial Officer. Then we will follow with a Q&A session. Please note that some of the information shared today is forward-looking, including information about the company's financial and operating performance, strategies, our anticipated end-use demand trends, our 2022 financial outlook, and our 2025 goals. This 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 on today's call with their corresponding GAAP measures can be found in our earnings release and presentation materials posted on the Investors section of our website at www.ecovist.com. And with that, I'm pleased to turn the call over to Belgassim.

Thank you, Chris, and thank you to everyone joining us today. I'm very proud of what we accomplished in 2021. It was a highly successful and transformational year as the Ecovist team achieved remarkable financial performance and delivered on our strategic vision to create a simpler and stronger portfolio. Most importantly, we successfully completed our transformational journey with the launch of Ecovist, a pure play catalyst and services company. We are now aligned around two strong, complementary, and growing businesses, each with high margins, high growth rates, and robust gas generation. We are uniquely positioned to support the green energy transition. Today, our products help our customers to achieve their sustainability goals. Our innovation pipeline is increasingly focused on sustainable solutions in areas such as biomass, renewable fuels, and plastic circularity. We are very confident in our strategy and the industry trends. and we remain on pace to achieve the 2025 financial goals we laid out at our investor day last April. Meanwhile, we are committed to and acting on our own key ESG goals. Our sustainability ambitions are center to our mission and complimentary to our financial growth. In 2021, we implemented a comprehensive set of sustainability goals for 2025 and 2030. which define our path towards decarbonization and waste reduction. 2021 was a challenging operational year from the pandemic and supply chain complications. Throughout it all, we maintained a high level of customer support and operational performance. Our successful execution was critical to delivering a solid year and fourth quarter performance. We will go through these financials in more detail later. But I'll comment on a few points worth noting. 2021 earnings exceeded our upgraded financial guidance as we delivered a solid fourth quarter. Volumes rebounded across the entire portfolio, driving sales and boosting profitability. We are succeeding in offsetting inflationary factors. This has been achieved in part from contractual pass-throughs of sulfur, energy, and labor in our eco-services business, but also from cost management and targeted pricing efforts. You can see the net benefit of our actions in our fourth quarter and full-year adjusted EBITDA margins, which are up considerably after adjusting out of the impact of pass-throughs. And we have delivered strong free cash flow. In total, 2021 was a great year for EcoVest, but our work is not done. We see growth momentum continuing into 2022, and we expect another solid year of growth and cash generation. Moving to slide four. I would like to highlight several key metrics that make me proud of this team and excited about our long-term potential. I view these as undeniable proof points of the quality of our business and the success of our strategic execution. We are number one or number two industry leader by supply share for those products categories that make up more than 90% of our sales. This speaks to the value we deliver for our customers and our differentiation from competitors. We expect to maintain our product leadership position through our innovation, advantage regional exposure, and deep customer connectivity. We create tailored solutions for our customers, which provide unmatched value and makes for enduring relationships. These factors enable us to grow at above industry rates. This is demonstrated in our 2021 results, with 19% sales growth and 18% adjusted EBITDA growth. We're now exceeding pre-pandemic sales and profitability in the majority of our business lines, despite a restrained recovery in select areas like emission control and hydrocracking catalysts. In these areas, we expect to see tailwinds in 2022 and 2023 as ordering patterns and supply chains normalize. EcoVest is a highly profitable business. We reported 31% adjusted EBITDA margins in 2021. This was an improvement of more than 200 basis points year over year when excluding the sulfur cost pass-through impact. This was a notable achievement given the degree of cost inflation in the economy and is indicative of the stability and strength of our earnings profile. But none of these matter without an unwavering commitment to safety. Our safety metrics are some of the most important KPIs that the management team monitors very closely. We have made great strides over the past several years and reached a top-tier performance level.