Ecovyst Inc.

Good morning. My name is Katie, and I will be your conference operator today. Welcome to the EcoVEST third quarter 2022 earnings call and webcast. Please note today's call is being recorded and should run approximately one hour. Currently, all participants have been placed in a listen-only mode to prevent any background noise. After the speaker's remarks, there will be a question and answer period. If you would like to ask a question at that time, please press star 1 on your telephone keypad. If you want to remove yourself from the queue, please press star two. When posing your question, we ask that you please pick up your handset to allow for optimal sound quality. And lastly, if you should need operator assistance, please press star zero. I would now like to hand the call over to Gene Shields, Director of Investor Relations. Please go ahead.

Gene Shields Thank you, Katie. Good morning and welcome to the ECOVIS third quarter 2022 earnings call. With me on the call this morning are Kurt Bidding, ECOWIS Chief Executive Officer, and Mike Feehan, ECOWIS Chief Financial Officer. Following our prepared remarks, we'll take your questions. Please note that some of the information shared today is forward-looking information, including information about the company's financial and operating performance, strategies, our anticipated end-use demand trends, and our 2022 financial outlook. 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 in presentation materials posted in the investor section of our website at ecovist.com. Now I'd like to turn the call over to Kurt.

Kurt? Thank you, Gene, and good morning. Ecovist delivered strong financial results for the third quarter of 2022, reflecting continued growth in sales and building upon the favorable results we delivered in the first half of this year. As a key supplier of products and services to industries that provide energy and materials to essential segments of the economy, Ecovist has continued to benefit this year from favorable demand trends across the breadth of our portfolio. In addition, we believe Ecovist remains well-positioned to leverage key sustainability trends and to benefit from projected growth and demand for low-carbon technologies in the years to come. For our eco-services business, high utilization rates in the U.S. refining industry, more stringent fuel standards, and increasing demand for premium gasoline continue to drive volume growth for our regeneration services. Those regeneration services are vital to our refining customers' production of alkali, the critical component in the formulation of higher octane and cleaner fuels. Ecovist has a leading share position for regeneration services in the U.S. with long-standing relationships with blue-chip customers who rely upon Ecovist as their sole provider of regeneration services. Our assets are well-situated to service both the Gulf Coast market, where two-thirds of U.S. refining capacity is located, and West Coast markets, where alkali plays an important role in the production of Carbob, the regulated blend for California gasoline. With four facilities in the Gulf Coast and two in California, our customers value our production redundancy as it ensures operational integrity for their highly profitable ablation units. Strong regeneration volume growth was a significant contributor to the robust year-over-year results for our eco-services business in the third quarter. We also continue to see strong demand for virgin sulfuric acid across a variety of applications including mining, production of engineered plastics, lead acid batteries, and semiconductors. In the third quarter, our catalyst technologies business benefited from higher sales of polyethylene catalysts, driven by positive global polyethylene demand. We also saw increased sales of niche custom catalysts for petrochemical applications. With continued favorability and demand trends, Ecovist's third quarter sales, including our 50% share in the ZI joint venture, were up 30%, and adjusted EBITDA was up 9% compared to the third quarter of 2021. I'll note here that on a year-to-date basis, Ecovist sales are up nearly 45%, and adjusted EBITDA is up 26% compared to the first nine months of 2021, with the increase primarily representing organic growth. While inflation is a reality in today's environment, we have continued to benefit from structural margin support in our eco-services business by contractual pass-through mechanisms for variable costs. For sulfur, the pass-through is dollar for dollar, while costs for other variable inputs such as natural gas, transportation, labor, and certain plant costs are passed through on an index basis. While we do not have these contractual pass-throughs in our catalyst technologies business, we have undertaken targeted price actions as a means to offset increases to variable costs. As a result, we were able to significantly mitigate the adverse impact of inflation in the quarter. In fact, during the third quarter, we continued to see unit margin expansion in our eco-services business. The third quarter of 2022 was also another quarter of strong cash generation for EcoVest. With open market share repurchases and in conjunction with the secondary offering in early August, we repurchased an aggregate of $65 million worth of stock during the quarter. Yet, we were able to maintain our net debt leverage ratio of 2.8 turns, underscoring our conviction that Ecovish cash generation capability continues to provide for significant capital allocation flexibility. In our second quarter earnings call in late July, we shared with you our belief that we remained on track to deliver solid year-over-year growth in financial results. Given our conviction in the strength and stability of our business, at that time we increased our full-year guidance range for adjusted EBITDA to $265 to $275 million. As we move into the fourth quarter, I am pleased to say that the positive momentum in our business has continued. Based upon our current outlook for the balance of the year, we expect that our full year 2022 adjusted EBITDA will land at the high end of our $265 to $275 million guidance range. Now let's turn to slide five for more detail on our expectations for near-term demand trends. Within our eco-services business, we believe the outlook for our regeneration services and for virgin sulfuric acid demand remains favorable. While electric vehicle penetration will no doubt increase over the next few years, we believe conventional fuel demand will remain strong, supported by the sheer number of conventional cars and trucks in use today. High refinery utilization, growth in premium gasoline, which requires a higher proportion of alkali, as well as increasing fuel economy standards are expected to continue to drive alkali demand. Additionally, export demand for refined products remains strong, and with access to crude supplies and the lowest cost of energy, U.S. refineries remain in favored positions to serve the growing export demand. We also believe future expectations for greener infrastructure and electrification, as well as continued growth in other industrial applications, will drive further demand for virgin sulfuric acid. Growth in low carbon technologies, including electric vehicles, batteries, and solar panels, will require increased production of metals and minerals, with sulfuric acid utilized in the leaching process to extract materials such as copper and borates from the mined rock. And if expectations for expansion of these low-carbon technologies are to be met, demand for sulfuric acid will undoubtedly increase. Turning to the balance of our eco-services business, while collectively less than 10% of consolidated revenue, we believe our catalyst activation segment, the Chem32 business that we acquired last year, and our waste treatment businesses are positioned for attractive growth. Chem 32 provides ex situ activation for catalysts, including catalysts used in renewable fuels applications. Ex situ activation provides for faster startup from turnarounds, averting lengthy onsite activation processes. The business is extremely scalable and we expect to benefit from continued expansion in renewable fuel production. We also expect further growth in our waste treatment business. With our favorable Gulf Coast locations, our incineration of specific chemical waste streams provides our customers with the preferred alternative to long-distance trucking of liquid waste and disposable via deep well injection. With a more environmentally friendly process than other alternatives, the waste streams are incinerated in our furnaces and Ecovist benefits from the inherent energy in the waste streams, reducing external natural gas requirements. For our catalyst technologies business, sales of our silica catalysts have continued to grow along with global polyethylene production. While polyethylene demand is expected to slow modestly, as we have noted, our sales in the polyethylene production have been higher than the industry growth rate, as the sales of our customized catalyst solutions have benefited from a differential win rate on new capacity expansions. Likewise, the near-term demand outlook for sales of zeolite catalysts through our ZI joint venture also remains positive. We expect high refinery utilization and global fuel demand will continue to support sales of hydrocracking catalysts. While there is still a significant backlog of heavy-duty diesel vehicle orders due to production constraints and the global chip shortage, sales of zeolite catalysts for emission control applications are expected to benefit. Lastly, we expect growth in renewable fuel capacity, including the future adoption of sustainable aviation fuel, will continue to drive growth for our zeolite catalysts. With that, I will turn the call over to Mike Feehan for a review of third quarter financial results.