Ecovyst Inc. Q2 FY2026 earnings call

Overall Q2 2026 Financial Performance

• Total Q2 2026 sales reached $250 million, a $74 million increase year-over-year, driven by $55 million in sulfur cost pass-through, favorable net pricing, and strong volume growth for both sulfuric acid segments
• Adjusted EBITDA for Q2 2026 hit $53 million, a 27% increase year-over-year, coming in solidly within the company's prior guidance range
• Adjusted free cash flow for H1 2026 was $13 million. Ended Q2 2026 with $176 million in available liquidity and a net debt leverage ratio of 2x, at the low end of the company's 2-2.5x target range

Strategic Execution Milestones

• Closed the acquisition of Calabrian's sulfur dioxide and related derivatives business on June 30, 2026, marking the third bolt-on acquisition following Chem 32 (2021) and Wagamon (May 2025)
• All three acquisitions follow the company's playbook: acquiring capital-efficient, adjacent sulfur chemistry businesses that align with existing customer and end-use overlap, then integrating them into Ecovist's existing network to expand product offerings
• The 2025 disposition of the advanced materials and catalyst segment simplified the company's portfolio, strengthened its balance sheet, and improved focus on core sulfur solutions
• The Gulf Coast storage and logistics network expansion is currently underway, which will support growing virgin sulfuric acid demand

Capital Allocation Discipline

• Over the past 15 months, the company has executed $83 million in stock repurchases, $172 million in debt reduction, and two bolt-on acquisitions totaling $224 million, while ending Q2 within the target leverage range
• Going forward, the company will maintain a balanced approach to capital allocation, weighing organic growth, additional bolt-on acquisitions, debt reduction, and stock repurchases to maximize shareholder value

Current Demand Trends

• Regenerated sulfuric acid: High refinery utilization is expected to continue through H2 2026, with higher volume and lower unplanned customer downtime than 2025
• Virgin sulfuric acid: Mining demand continues to grow driven by copper expansion projects tied to long-term structural electrification; nylon end-use demand is expected to remain flat in 2026
• Sulfur prices have continued to rise through Q2 2026, with no material demand destruction observed to date, though management expects elevated prices to eventually moderate

After the disposition of the advanced materials and catalyst segment in December 2025, Ecovist operates two core product segments focused on sulfur-based chemistry solutions: 1) Regenerated Sulfuric Acid: benefited from high refinery utilization and favorable alkaline economics during the Q2 2026 summer driving season, with sales volume growing year-over-year. Favorable contractual pricing for regenerated sulfuric acid contributed $9 million to adjusted EBITDA, excluding sulfur cost pass-through impacts. 2) Virgin Sulfuric Acid: delivered double-digit year-over-year volume growth in Q2 2026, driven by strong end-market demand and incremental capacity from the Wagamon acquisition completed in May 2025. 3) Calabrian Sulfur Dioxide and Derivatives: acquired on June 30, 2026, it is expected to contribute $10-$12 million in adjusted EBITDA in H2 2026. It has a slightly higher EBITDA margin than Ecovist's legacy business and represents approximately 10% of the company's overall business post-acquisition.

• Full year 2026 total sales guidance is revised to $1.02-$1.06 billion, up from the prior guidance of $890-$970 million that excluded the Calabrian acquisition; the full-year sulfur cost pass-through impact is now expected to be ~$220 million higher year-over-year, up from the prior expectation of $155 million
• Adjusted full year 2026 EBITDA guidance is set to $195-$207 million: the low end of legacy business EBITDA guidance was raised to $185 million, with the high end maintained at $195 million, plus an expected $10-$12 million contribution from Calabrian in H2 2026
• Adjusted full year 2026 free cash flow guidance is revised to $45-$55 million, up from the prior range of $40-$55 million, with Calabrian's contribution partially offset by working capital impacts from higher sulfur costs
• Full year 2026 capital expenditure guidance is increased to $85-$95 million, up from the prior $80-$90 million, to account for the Gulf Coast expansion and Calabrian integration
• Full year 2026 interest expense guidance remains unchanged at $18-$22 million, as incremental interest from the $100 million Calabrian acquisition debt is offset by broader interest savings across the company's portfolio
• For Q3 2026: Regenerated sulfuric acid sales volume is expected to increase year-over-year; virgin sulfuric acid volume is expected to be slightly lower than Q3 2025 due to fewer spot sales
• For Q4 2026: Adjusted EBITDA including Calabrian is expected to be $48-$55 million; regenerated sulfuric acid volume is expected to be higher than Q4 2025, while virgin sulfuric acid volume is expected to be lower; one planned Q4 2026 turnaround has been shifted to early 2027, though Q4 turnaround costs will still be higher than Q4 2025, which had no turnarounds
• Sulfur prices are expected to plateau at current levels and may see moderate decreases later in 2026, with no large downward drop expected

• Elevated sulfur prices could eventually lead to demand destruction in some industrial end markets
• If customers anticipate falling sulfur prices, temporary demand declines could occur from customer inventory destocking
• Sulfur and sulfuric acid market volatility creates uncertainty around contract pricing resets for contracts rolling off at the end of 2026
• Changes in end-market demand, particularly for industrial applications like nylon, could lead to volume that differs from management expectations
• Integration of the Calabrian acquisition could incur higher-than-expected upfront costs or fail to deliver projected synergies

Q: Given current sulfur market volatility, with ~90% of business under 1-3 year contracts, how will pricing reset for contracts rolling off at the end of 2026? / A: Management confirmed that the vast majority of revenue comes from longer-term contracts, with a portion rolling off annually. If current market conditions hold when contracts expire, management expects new negotiated pricing will be more favorable than expiring contract pricing, in line with current elevated market levels. /

Q: Now that Calabrian is closed, what is the target for synergies, and when will they be realized? / A: Management expects total combined cost and revenue synergies of $3-$4 million. After synergies are implemented, the acquisition's purchase multiple will drop from ~8x to ~7x EBITDA. Integration has progressed smoothly with no customer disruptions, and Calabrian's existing leadership has been retained. /

Q: What are management's assumptions for sulfur price balancing after recent increases? / A: Management noted U.S. sulfur prices have plateaued at current elevated levels, following sharp increases driven by high international prices. While fertilizer producers (a major sulfur consumer) have announced curtailments due to unfavorable economics, demand from the mining sector remains very strong. The combination of these two dynamics will lead to moderate price moderation, with little room for further price increases and only moderate decreases expected, not a large price drop. /

Q: Will the Calabrian acquisition be free cash flow positive in its first year of ownership, and are there material upfront integration costs? / A: Management confirmed Calabrian will be free cash flow positive in the first year, with $10-$12 million in expected H2 2026 EBITDA. While there are some minor upfront integration costs, they are far outpaced by expected synergies. Calabrian is less capital-intensive than Ecovist's legacy business, has a higher EBITDA margin, and will be net positive for overall free cash flow.