Ecovyst Inc. Q4 FY2025 earnings call

Overall Performance: Very pleased with fourth quarter results and strategic execution. Full-year adjusted EBITDA exceeded guidance despite customer downtime. ### Portfolio Transformation: Completed divestiture of advanced materials and catalyst segment early, using proceeds to pay down debt, resulting in net debt leverage ratio of 1.2 times. ### 2025 Capital Allocation: Acquired Wagamon Sulfuric Acid assets for ~$40 million and repurchased ~$50 million of stock. ### 2026 Outlook: Positive demand outlook for sulfuric acid, with higher virgin and regeneration sales expected. Anticipate favorable contractual pricing for regeneration and stable virgin pricing. Mining demand for sulfuric acid, especially copper, is expected to grow, supported by the Wagamon assets. Investing ~$20 million in Gulf Coast projects to increase storage and improve rail logistics for mining. The Chem32 Ex-Situ Catalyst activation business has positive long-term outlook with recent expansion.

In the fourth quarter, strong sales volume for virgin sulfuric acid and favorable contractual pricing for regeneration services contributed to a solid quarter. The divestiture of the advanced materials and catalyst segment was completed for $556 million, with net proceeds used to pay down debt. In 2025, the acquisition of Wagamon Sulfuric Acid assets for ~$40 million and stock repurchases of ~$50 million were made. For 2026, virgin sulfuric acid sales are expected to grow due to mining demand and the Wagamon assets, while regeneration services volume is anticipated to increase with less customer downtime. Virgin sulfuric acid sales to nylon end use are ~20 - 25% of total, and some industrial applications remain cautious. Revenue contribution: Virgin sulfuric acid and regeneration services are key segments, with mining accounting for 20 - 25% of sulfuric acid sales.

2026 Financial Outlook: Full-year sales expected to be in $860 - $940 million range. Adjusted EBITDA expected to be $175 - $195 million. Capital expenditures expected to be $80 - $90 million, with adjusted free cash flow $35 - $55 million. First quarter 2026 expected adjusted EBITDA up $8 - $13 million compared to first quarter 2025. Second and third quarters expected to be peak adjusted EBITDA quarters. ### Capital Allocation: Continue growth initiatives, including organic and inorganic growth, and share repurchases. Plan to repurchase $25 - $40 million of stock in first quarter 2026.

Risks: Near-term macroeconomic weakness could lead to softer demand in some industrial applications. Unplanned customer downtime could impact regeneration services volume. Fluctuations in sulfur costs and their pass-through could affect financial results. Potential for macro events to cause degradation in pricing or volumes for virgin sulfuric acid.

Q: Could you elaborate on the Wagamon assets and their impact on growth?

A: The Wagamon Sulfuric Acid assets added ~10% volume to the network, came with its own customer book, provided a deepwater vessel dock, and created a positive network effect allowing better supply chain reach and enabling more opportunities.

Q: How is the regen contract pricing lift expected in 2026?

A: Similar to 2025, contractual agreements roll off annually, with a 15 - 20% lift depending on customer size and contract structure.

Q: What are the concerns in industrial applications?

A: Cautious about some industrial applications like nylon and others, but nylon sales are expected to be roughly on par with 2025.

Q: How do CapEx plans compare for greenfield vs debottlenecking vs acquisitions?

A: Prefer de-bottlenecking and logistics/storage investments to meet mining demand growth, with Wagamon acquisition adding capacity, and considering accretive acquisitions in the future.

Q: What's the current state of the merchant asset market?

A: Balanced, with some industrial segments mixed, but mining demand driving growth.

Q: What drives the full-year guidance range?

A: High end driven by virgin acid pricing lift and healthy regeneration volume; low end by unplanned customer outages or macroeconomic events.

Q: Plans for Wagamon investments?

A: Still integrating Wagamon, with a maintenance outage this quarter and further investments planned to increase operating rate.

Q: Flexibility in sulfuric acid supply if industrial markets are weak?

A: Some flexibility to move product between end-use segments, as customers provide forecasts and there are close relationships.

Q: M&A opportunity sets?

A: Interested in all assets producing sulfuric acid and related sulfur chemistries and services, as Ecovist services a broad market.