Good morning. My name is Todd, and I will be your conference operator today. Welcome to the Ecovyst First Quarter 2023 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. I would now like to hand the conference over to Gene Shiels, Director of Investor Relations. Please go ahead.

Thank you, Operator. Good morning, and welcome to the Ecovyst First Quarter 2023 Earnings Call. With me on the call this morning are Kurt Bitting, Ecovyst's Chief Executive Officer; and Mike Feehan, Ecovyst Chief Financial Officer. Following our prepared remarks this morning, 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 2023 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 the earnings release and in the presentation materials posted in the Investors section of our website at ecovyst.com. I'll now turn the call over to Kurt Bitting. Kurt?

Thank you, Gene, and good morning. During the first quarter, we continued to execute on our long-term strategies, leveraging Ecovyst's leadership positions and technical strengths to benefit from the world's expanding need for more sustainable technologies. In this regard, it was a successful quarter. During the quarter, we continued to see positive demand in the fundamentals across the range of end uses we serve, giving us continued confidence in long-term growth opportunities for Ecovyst. In terms of financial results for the quarter, as discussed in our fourth quarter earnings call in late February, we expected our first quarter results to be impacted by a number of factors. For our Eco Services business, we indicated that our first quarter results would be adversely impacted by Winter Storm Elliott as well as by an extended turnaround at one of our sites. And in our Catalyst Technologies business, we expected lower sales of hydrocracking catalysts due to customer order timing. The first quarter impact of these factors was in line with our expectations. The significant planned maintenance turnaround at one of the Eco Services sites was extended, which limited sales of virgin sulfuric acid in the quarter and resulted in some one-time higher maintenance costs. As a result, first quarter adjusted EBITDA for Eco Services was lower than we anticipated in February, however, our Catalyst Technology business results contributed favorably to our first quarter results, benefiting from positive pricing momentum and lower raw material and energy costs. Total sales for the first quarter, including our proportionate share of sales for the ZI joint venture, were $183 million compared to $209 million for the first quarter of 2022. The variance was due to lower sales of virgin sulfuric acid in our Eco Services business associated with Winter Storm Elliott and the extended maintenance activities, lower sales of polyethylene catalyst and the effect of order timing for hydrocracking and specialty catalyst sales in our Catalyst Technologies business. Adjusted EBITDA for the first quarter was $43 million compared to $59 million for the first quarter of 2022, with the decrease primarily driven by higher maintenance and repair costs associated with the storm and the extended turnaround activity, the resulting lower virgin sulfuric acid sales and lower relative sales volume due to the order timing in Catalyst Technologies. These factors were partially offset by higher pricing in Regeneration Services and Silica Catalysts, and we anticipate that positive pricing momentum in Eco Services and Catalyst Technologies over the balance of the year will benefit our full-year results. During the first quarter, we participated in another successful secondary offering that marked the final disposition of stock by CCMP, a former private equity owner. In conjunction with this transaction, we repurchased 3 million shares at an average price of $9.95. Going forward, we expect to maintain a balanced approach to capital allocation, and we believe our strong cash generation capability will provide for significant flexibility. Funding for growth initiatives remains a higher priority. As this continued reduction in net leverage, we will also have the ability to deliver further shareholder value with $280 million remaining under our share repurchase authorization. We believe 2023 will be another year of growth for Ecovyst. And as the factors that adversely impacted our first quarter results were largely anticipated and factored into our full-year outlook we provided in late February, we are maintaining our full-year 2023 guidance range for adjusted EBITDA and for adjusted free cash flow. Turning to slide 6 for an update on our demand outlook. Overall, our expectations for drivers of demand for the balance of this year have not changed materially from what we shared in our fourth quarter earnings call in late February. For our Ecoservices business, we continue to expect high utilization rates for our refining customers, driven by growth in both domestic and export demand for gasoline as projected by the EIA and inventories that are below normal ranges. Alkylate remains a critical component in gas formulation for our refining customers, particularly with seasonally higher demand as we head into the summer driving season which requires lower vapor pressure gasoline. We believe strong alkylate demand will continue to support positive regeneration activity for Ecoservices over the balance of 2023. Although sales of virgin sulfuric acid were down in the first quarter, largely due to outages associated with the storm and the extended turnaround activity, we continue to see healthy demand across a range of end-use applications. Demand in a wide variety of industrial uses for virgin sulfuric including chloralkali, performance materials, engineered plastics and lead-acid batteries remained stable. Given current plans for broader electrification and for further expansion of low-carbon technologies and in light of the global supply shortage for metals and minerals to support these objectives, we believe the ongoing expansion of mining projects in North America for both copper and borates will continue to drive demand growth for virgin acid. Our growing treatment services business continues to benefit from healthy demand and we expect to benefit from a positive demand backlog into the second half of this year. Through processing liquid waste streams for our refining and petrochemical customers in the Gulf Coast, we provide a preferred alternative to other disposal options such as long-haul trucking to deep-well injection sites and we benefit from the inherent energy value in the waste streams, which is an offset to our natural gas inputs needed to fuel our furnaces. Lastly, for Chem32, our Catalyst Activation Service business, we are seeing robust demand for off-site pre-activation services with demand being driven by high refinery utilization turnaround activity and continued growth in renewable fuel production that is driving higher activation volume for hydroprocessing catalysts. Turning to Catalyst Technologies. While anticipated order timing was a factor in lower first quarter sales for Catalyst Technologies, we expect solid growth on a full-year basis. Although we have seen some near-term destocking in polyethylene, which can be impacted by economic cycles, global polyethylene demand is still projected to increase this year. Domestic demand remains positive and with new capacity startups, February was a record production month in the US, where we are well represented with our tailored catalyst offerings. Polyethylene demand recovery in China was slower than expected in the first quarter. Demand is expected to strengthen in later quarters in response to stimulus continued COVID recovery and restocking activity. In Europe, operating rates are down reflecting soft demand given the economic challenges coupled with the higher energy costs. As we have highlighted before, our polyethylene catalyst sales are more directed to the North American and Middle Eastern markets and we have lower exposure to the European and Asian markets. While first quarter hydrocracking catalyst sales were lower as anticipated due to order timing, we continue to expect higher sales in 2023. The deferral of turnarounds and catalyst change-outs in 2022 as refineries sought to maintain operations to maximize profitability had the effect of shifting turnaround activity in sales into 2023. In addition, the EIA projects that global liquid fuel consumption will increase by 1.5 million barrels a day in 2023. As a result, refinery utilization is expected to remain at high levels for the balance of the year. With this positive underlying demand for refined products, we continue to expect strong growth in hydrocracking catalyst sales in 2023. We expect our sales of zeolite-based emission control catalysts will also increase in 2023 supported by a backlog of production of heavy-duty diesel vehicles. Looking forward we expect regulatory mandates such as the proposed Euro seven emission standards will continue to drive demand for advanced emission control systems. Turning to renewable fuels. The market for renewable diesel continues to expand with growth in both demand and capacity over the past two years in excess of 20%. We believe we are in the early stages of the conversion and construction cycle with the growth in production capacity driving demand for our zeolite catalyst used in the dewaxing processes. As the renewable market continues to grow, we expect our sales of renewable fuels catalysts will benefit from both incremental capacity additions and the periodic catalyst change-outs for existing capacity. We expect strong growth in renewable fuel demand and production to continue, particularly with growth in sustainable aviation fuel that is projected in 2025 to 2026. We continue to believe, Ecovyst is uniquely positioned to serve the growing need for more sustainable products and technologies. In terms of product and technology, today over 80% of our innovation projects are linked to sustainability. And as we have discussed before, our commitment to sustainability extends beyond research and development of new technologies. We continue to push for more sustainable practices throughout our organization. We were recently awarded a Gold Status rating by EcoVadis in recognition of our efforts to promote more sustainable practices. This year, we will continue to promote sustainability throughout our organization, underscoring its importance to our corporate culture. We have implemented our Sustainability Leadership Award program to foster incremental improvements in operations and internal processes and product development and through our social impact efforts. As a part of this program, our Baton Rouge, Louisiana site, one of Ecovyst's largest sites, was recently recognized for its Furnace Optimization Project, which is providing for a significant reduction in energy consumption and reduction in related greenhouse gas emissions. Our product development teams were recently recognized for the development of Silica Catalysts for the production of bio-butadiene for use in synthetic rubber as a replacement for petroleum-based butadiene. In addition, our Baytown, Texas site was recognized for its commitment and dedication to community partnerships through support of local schools, mutual aid groups, the local food bank and community cleanup efforts. I want to again congratulate those Ecovyst sites for their great accomplishments in sustainability. In addition, we have expanded our internal resources dedicated to sustainability to the recent addition of our Director of Sustainability. We look forward to providing you with further updates on our sustainability programs and our progress towards our long-term goals in our 2022 sustainability report, which we expect to publish in the third quarter. At this time, I'll turn the call over to Mike for a more detailed discussion of our first quarter results.

Thanks, Kurt. As Kurt noted, our financial performance in the first quarter reflects several factors, including the effect of Winter Storm Elliott, the impact of extended maintenance turnaround activity at one of our sites in Eco Services and our order timing for hydrocracking and specialty catalyst sales in our Catalyst Technologies business. With the exception of some of the extended maintenance activity, the anticipated impact of these discrete events on first quarter results was discussed during our fourth quarter earnings call in late February. The operational disruption of Winter Storm Elliott along with the extended maintenance activity resulted in constrained availability to produce inventory and meet customer demand for virgin sulfuric acid in the first quarter. In addition, and as discussed in our fourth quarter call, while we still expect percentage growth to be in the high teens for hydrocracking catalyst sales on a full-year basis, the timing of customer orders for hydrocracking catalysts was a factor in the first quarter with the majority of these sales expected to occur over the balance of the year. Total sales for the first quarter, including our proportionate 50% share of sales from the Zeolyst joint venture were $183 million, compared to $209 million in the first quarter of 2022. The change in sales reflects the lower virgin sulfuric acid volume in Eco Services, as well as order timing for hydrocracking and specialty catalyst sales, and lower sales of polyethylene catalysts in our Catalyst Technologies business. Our continued strong pricing in both businesses, helped mitigate the volume shortfall during the quarter. In addition, approximately $5 million of the change in sales is associated with the pass-through of lower sulfur costs. In the fourth quarter earnings call, we shared our expectation that first quarter adjusted EBITDA for Eco Services would be down approximately 20% compared to the first quarter of 2022 and that adjusted EBITDA for Catalyst Technologies would be down approximately 50% compared to the first quarter of 2022. Directionally, this occurred as expected, however, adjusted EBITDA for Eco Services was lower than expected principally due to the extended maintenance turnaround activity that contributed to the reduced sales volume. While adjusted EBITDA for Catalyst Technologies was better than expected, principally due to lower raw material and energy costs and favorable mix. First quarter adjusted EBITDA was $43 million, compared to $59 million in the first quarter of 2022. The change in adjusted EBITDA and the associated margin compared to the year ago quarter was due to the lower sales volume including the adverse impact of the storm and the extended maintenance turnaround activity, as well as the higher unplanned repair and maintenance costs, partially offset by higher pricing in regeneration services and in Catalyst Technologies. Moving to the next slide, I'll highlight the components of the change in adjusted EBITDA compared to the first quarter of 2022. As previously mentioned, the change in adjusted EBITDA was primarily driven by lower sales volume. Compared to the first quarter of 2022, the aggregate impact of lower sales volume for virgin sulfuric acid, lower sales of polyethylene catalysts, and order timing associated with hydrocracking and specialty catalysts was $19 million. Variable costs increased on higher natural gas, primarily in the West Coast, as well as the impact from higher freight rates. However, our continued strong pricing in regeneration services and in Catalyst Technologies more than covered the rising variable costs during the quarter, resulting in another quarter of positive price-to-cost ratio. Turning to Slide 11. Eco Services sales for the first quarter of 2023 were $138 million compared to $154 million in the first quarter of 2022. Of this change, approximately $5 million is associated with the pass-through of lower sulfur costs. The balance of the change was due to a lower volume associated with Winter Storm Elliott and the extended maintenance turnaround activity which constrained production and limited our ability to meet customer demand for virgin sulfuric acid. The impact of lower sales volume was partially offset by higher pricing in regeneration services driven by contractual price increases and index cost pass-through pricing. First quarter adjusted EBITDA for Ecoservices was $36.8 million, compared to $49.3 million in the first quarter of 2022. The lower sales volume, higher unplanned repair and maintenance costs and planned turnaround costs were the primary factors in the change in adjusted EBITDA and resulted in adjusted EBITDA margin of 26.7%. Excluding the impact of the storm and the extended maintenance turnaround activity with reduced volume and increased repair and maintenance costs, we will continue to expect an adjusted EBITDA margin for Ecoservices to be in the low-to-mid-30% range. Turning to the results for Catalyst Technologies, on the next slide, for the first quarter, total sales for Catalyst Technologies including the Zeolyst Joint Venture were $45 million compared to $55 million in the first quarter of 2022. For Silica Catalyst, lower sales of polyethylene catalyst, driven in part by the economic sanctions associated with the developments in Russia and Ukraine, drove the change compared to the prior year first quarter. The change in sales for the Zeolyst Joint Venture reflects lower sales of hydrocracking and specialty catalyst sales, primarily a function of customer order timing. As we have previously noted, we expect hydrocracking sales to be up on a high-teens percentage basis in 2023 with the majority of the sales expected to occur over the balance of the year. Adjusted EBITDA for Catalyst Technologies was $13 million in the first quarter, compared to $17 million in the first quarter of 2022. The change was primarily driven by lower sales volume, partially offset by continued higher pricing and favorable sales mix. Turning to Slide 13, I'll provide an update on cash leverage and liquidity. As previously noted, we had strong cash generation in 2022 with free cash flow of $146 million. And while we expect 2023 to be another year of solid cash generation, during the first quarter of 2023, we were a net user of cash largely due to the impact of lower sales volume, changes in working capital as well as timing of capital expenditures. Our cash conversion remains strong. And we ended the quarter with a net debt leverage ratio of 3.2 times. The increase in our net debt leverage ratio was primarily driven by the change in first quarter adjusted EBITDA, relative to the year ago quarter as well as a $30 million use of cash during the first quarter associated with share repurchases in conjunction with the secondary offering by a former private equity owner. At quarter end, we had total liquidity of $119 million, comprised of cash and cash equivalents of $62 million and availability under our ABL facility of $57 million. Turning to slide 14, given our expectation for strong cash generation over the balance of the year we will maintain a balanced approach to capital allocation. We will prioritize investment in operational improvements and organic growth. And while we continue to pursue accretive bolt-on acquisitions in the current environment, we will also maintain a focus on leverage reduction with expected adjusted EBITDA growth and strong cash generation, excluding any potential M&A transactions that would allow for a clear path for leverage reduction, our net leverage target remains in the mid-to-low times range. Our balance sheet remains strong with only one tranche of debt being our Term Loan B facility, maturing in 2028. We have capped 75% of our interest exposure out over the next several years and we will continue to evaluate opportunities to continue to extend our interest protection program. Turning to the full-year 2023 guidance, on Slide 15, we currently expect overall demand trends to remain positive in 2023, but continue to keep an eye on macroeconomic activity that could impact our businesses. During the first quarter we experienced significant challenges from the Winter Storm and the extended maintenance turnaround activity, resulting in lower virgin sulfuric acid sales in Ecoservices. However, we are maintaining our current guidance range for adjusted EBITDA and adjusted free cash flow. For sales, we are adjusting our guidance range of $760 million to $790 million, to a range of $730 million to $760 million to reflect lower projected pass-through of energy costs and lower expected virgin sulfuric acid volume resulting from the Storm and the extended maintenance turnaround activity that occurred in the first quarter. I will now provide some more specific guidance for the second quarter. We expect strong quarterly sequential growth in both businesses, resulting in mid-single-digit adjusted EBITDA growth for Ecovyst compared to the second quarter of 2022. In Ecoservices, we expect to see a strong volume recovery, lower repair and maintenance cost and continued favorable pricing covering our variable costs in the second quarter. This is expected to result in adjusted EBITDA growth in the mid-single digits compared to the second quarter of 2022. We remain confident in our full-year guidance and expect lower turnarounds and increased demand in our Treatment Services and Catalyst Activation Business lines in the later part of the year. For Catalyst Technologies, we expect significant improvement in sales for hydrocracking catalysts as well as increased sales of catalyst used in the renewable fuels in our Zeolyst joint venture during the second quarter. Our full year expectation for hydrocracking catalysts remains strong with the percentage growth in the high teens driven by strong orders for the balance of the year. As Kurt noted, we have seen some softness in the polyethylene market and along with lower expected niche custom catalyst sales due to order timing, we expect Silica Catalyst sales will be down in the second quarter compared to the prior year second quarter. As a result, we expect adjusted EBITDA for the Catalyst Technologies business to be down in the mid-single digits compared to the second quarter of 2022. We expect our second quarter results to demonstrate strong quarterly sequential growth as we continue to anticipate solid overall growth for the full year in 2023.

Thank you, Mike. Overall, we expect the demand environment to remain positive in 2023. In our favor, we have diversified end-use exposure with strong representation in markets that we believe have favorable growth trends associated with the growing demand for low-carbon and more sustainable technologies. We believe we are uniquely positioned with an Eco Services business that should continue to benefit from the demand for cleaner burning higher octane fuels and the expanding need for virgin sulfuric acid to support a wide range of industrial processes, including demand growth associated with increased mining activity for metals and minerals that are essential for electric vehicle production, expansion of charging networks, and the tie-in of wind and solar generating capacity. At the same time, we are benefiting from mega trends that include growing production of renewable fuels, increasing regulation associated with more stringent emission requirements, and the continued demand growth for specialty engineered materials. Mike and I outlined the factors that played into our first quarter 2023 results. And as we move through the second quarter, the storm impact and costs associated with the extended turnaround activity are largely behind us. In addition, and based upon order activity in the first quarter, we continue to expect stronger results in our Catalyst Technologies business over the remainder of the year. We also expect to maintain the positive pricing momentum for Eco Services and Catalyst Technologies that we saw in the first quarter. Therefore, we are maintaining our guidance range for 2023 adjusted EBITDA and for adjusted free cash flow generation. We expect that strong cash generation over the balance of the year will continue to support a balanced capital allocation strategy. We will continue to evaluate opportunities to enhance shareholder value with priorities given to growth initiatives and leverage reduction. With that, we will ask the operator to open the line for questions.

Thank you. At this time, we will open the floor for questions. Our first question comes from Aleksey Yefremov with KeyBanc Capital Markets.

Hey guys. Good morning. This is Ryan on for Aleksey. I guess first question for you just kind of going based off what you guys guided for 2Q and then looking at what it implies to the back half it looks like a pretty sizable step up. Can you maybe just talk about at least to get to the midpoint can you maybe just talk about confidence there and like kind of what leads you to believe in that step-up? Thanks.

Sure Ryan. Thanks for the question. Well, we really see strong demand across all of our market segments moving into the latter part of the year. So, regeneration business is obviously going to benefit what's projected to be growing domestic gasoline demand and growing exports of gasoline that equate to strong refinery utilization. Our virgin sulfuric acid demand is very strong for things like low carbon technologies and sustainable technology. So, we view that business as really as much as we can produce. We'll be able to sell Chem32 and treatment services' demand remains robust. And then moving over to the Catalyst Technologies segment. Obviously, as we've said before, our hydrocracking catalysts we expect to be up on a year-over-year basis on sales in the high teens. We expect growth in line with market for our polyethylene catalyst and then strong demand coming from both renewables and emission controls. So, we have good confidence going into the later quarters of this year which is why we're maintaining our EBITDA guidance.

Great. Thanks for the color there. And then I guess just like can you talk about in Catalyst Technologies how you guys are tracking on price cost? I believe last quarter you guys talked a little bit about how you can be at the upper end of the guide if not potentially a little bit above it. If you continue to see some relief on energy costs and stuff like that. So, I don't know if maybe you guys have anything to provide there?

Certainly. We observed positive pricing momentum, particularly in Silica Catalyst, where we implemented pricing actions in the latter part of 2022, alongside formula-based pricing adjustments in 2023. This has led to stronger pricing. Additionally, we are experiencing lower raw material and energy costs, which has allowed us to expand our margins. In relation to our ZI joint venture, we offer a unique and highly regarded hydrocracking catalyst that enables refiners to maintain flexibility and achieve desired margins. We also see good pricing momentum in that area, which supports our expectation of growth in the high teens for that segment.

Hi. This is David Huang. Maybe first, just going back to the guidance. Can you talk about at this point what's driving the low end and high end of your guidance range? And I guess, just given the demand issue you mentioned in Catalyst, do you think we're tracking towards the lower end of the guidance rather than the higher end?

Thank you for the questions, David. When we consider the guidance range provided during last quarter's call, we've approached it with caution, especially since we are still early in the year as we sit in May. This range is closely monitored in light of the overall macro market conditions. However, I want to emphasize that we remain confident in the Catalyst Technologies segment for this year. We are observing strong order trends, particularly in hydrocracking for the second half of the year, and we anticipate that this business will see year-over-year sales growth in the high teens percentage. Additionally, we continue to achieve solid sales at market rates for our polyethylene catalyst. Sure. Well for sulfuric acid, the demand remains really strong. And again, it's driven by the production of and the propagation of low-carbon technology, sustainable technologies which require minerals and materials for all of the electrical vehicle charging. So, there's a tremendous pull for sulfuric acid and then for just general industrial uses as well. From a sulfur basis, sulfur pricing is largely driven by the agricultural market. They purchase about two-thirds of the world's sulfur, so we're expecting currently this year sulfur prices in 2023 to be below what they were in 2022. And that's being driven by one, the high refinery utilization. So as refineries run harder, they're producing more sulfur, which consequently benefits our regeneration business. However, on the other side of the equation, on the demand side agricultural demand for sulfur this year is a little bit lower. We don't participate in that market. It's driven by agricultural economics, but we see the overall supply-demand balance for sulfur being slightly tilting towards lower pricing in 2023, which obviously impacts our virgin acid pricing as sulfur's pass-through on a dollar-for-dollar basis. Hi, Hamed. Thanks for the question. So for virgin sulfuric acid, I think what we're seeing in demand from there is largely mining and construction. Right? So, you look at things like wiring and copper and other minerals and materials being used for not only in commercial construction, but then for infrastructure construction right? The support charging and green energy products and so forth. So we see that market continuing to be strong because quite frankly there's global initiatives to push towards low-carbon technologies and green energy and it's just going to require lots of those materials and minerals. So as we refer to construction, it's somewhat into that space. Yes. So we have the extended turnaround that we had in the first quarter is completed and that unit is running at capacity now. We do have other turnarounds that take place in the latter part of the year and that's quite normal for us. So they're planned. Generally when we plan turnarounds we have a scope of work that we know that will be executed and we can generally time when they're going to be up or down and we plan around those with building inventory and such. We have a pretty robust preventive and replacement cycle with our plants and it's obviously very important to us that we conduct our maintenance at our plants as thoroughly as possible because we view the market as very strong. We'll be able to sell everything we produce. So we want to make sure those plants are running correctly. Yes. Thanks for the question. I think you're referring to hydrocracking catalysts so our hydrocracking catalyst change-outs generally happen on a three to four-year cycle basis. So a lot of the customers in that portfolio are incumbents right? So you've got some customers that will upgrade their catalysts as we develop new catalysts that have higher yields and allow them higher flexibility. And then at the same token, our new products that offer that higher yield and higher flexibility we're trying to win new customers with those catalysts which we've seen would be very successful with our technology which really is kind of surrounded by the purity of our zeolites that we produce.

At this time, we have no further questions in queue. This does conclude the Ecovyst first quarter 2023 earnings call and webcast. Thank you for your participation, and you may disconnect.