Ecovyst Inc. Q1 2023 Earnings Call
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My name is Todd and I will be your conference operator today.
Welcome to the <unk> first quarter 2023 earnings call and webcast.
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I would now like to hand, the conference over to gene Shiels Director of Investor Relations. Please go ahead. Thank.
Thank you operator, good morning, and welcome to the <unk> first quarter 2023 earnings call with me on the call. This morning are Kurt bidding <unk>, Chief Executive Officer, and Mike <unk>, Chief Financial Officer.
Following our prepared remarks. This morning, we will 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 are 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 <unk> Dot com.
Now I'll turn the call over to Curt bidding Kurt.
Jeanne and good morning during.
During the first quarter, we continued to execute our long term strategies, leveraging eco vis 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 fundamentals across the range of end uses we serve giving us continued confidence in long term growth opportunities for ecosystem.
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 Elliot as well as by an extended turnaround at one of our sites.
And then our catalyst technologies business, we expected lower sales of hydrocracking catalyst 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 businesses 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 <unk> joint venture or $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 turnaround activity.
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 and catalyst technologies.
These factors were partially offset by higher pricing and regeneration services in silica catalysts, and we anticipate that positive pricing momentum and eco services in 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 mark the final disposition of stock by <unk>, 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 the 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 each of this 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 six 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 eco services 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.
Alcohol remains a critical component in gasoline 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 absolute demand will continue to support positive regeneration activity for eco services 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 Chlor alkali performance materials engineered plastics and lead acid batteries remains stable give.
Given current plans for broader electrification and for further expansion of low carbon technologies and in light of the global supply shortage for metals <unk> minerals to support these objectives. We believe the ongoing expansion of mining projects in North America for both copper and <unk> will continue to drive demand 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 site 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 <unk>, our catalyst activation services 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 hydro processing catalyst.
Yes.
Turning to catalysts technologies.
While our 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.
Stick demand remains positive and with new capacity startups February with a record production month in the U S, where we are well represented with our tailored catalysts offerings.
The ethylene demand recovery in China was slower than expected in the first quarter.
<unk> is expected to strengthen in later quarters in response to stimulus continued COVID-19 recovery and restocking activity.
In Europe operating rates are down reflecting soft demand given the economic challenges coupled with the higher energy costs as.
As we have highlighted before our polyethylene catalyst sales are more directed to the North American and middle Eastern markets, and we had 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.
Deferrals turnarounds and catalyst change outs in 2022 as refineries sought to maintain operations to maximize profitability had the effect of shifting turnaround activity and sales into 2023 and.
In addition, the EIA projects that global liquid fuel consumption will increase by one 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 conversion and construction cycle with the growth in production capacity driving demand for our zeolite catalyst used in the <unk> 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 2020.
$5 in 2026.
We continue to believe eco this is uniquely positioned to serve the growing need for more sustainable products and technologies in.
In terms of products 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 are recently awarded a gold status rating by eco biased 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 at the <unk>.
This program, our Baton Rouge, Louisiana site, one of <unk> 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 <unk> for use in synthetic rubber as a replacement for petroleum based butadiene and.
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 ecosystem for their great accomplishments and sustainability.
In addition, we have expanded our internal resources dedicated to sustainability to the recent addition of a director of sustainability.
We look forward to providing you with further updates on our sustainability programs and our progress towards our long term goals and 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 Curt noted our financial performance in the first quarter reflects several factors, including the effect of winter storm Elliot the impact of extended maintenance turnaround activity at one of our sites of 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 Elliot 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 catalyst was a factor in the first quarter with the majority of these sales are expected to occur over the balance of the year.
Total sales for the first quarter, including our proportionate, 50% share of sales from the <unk> joint venture were $183 million compared to $209 million in the first quarter of 2020 to.
The change in sales reflects the lower Virgin sulfuric acid volume and ecosystems as well as over 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 then adjusted EBIT for catalyst technologies will be down approximately 50% compared to the first quarter of 2022.
Directionally that's occurred as expected however.
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 EBIT for catalyst technologies was better than expected, principally due to lower raw material and energy costs and favorable mix.
First quarter, adjusted EBIT was $43 million compared to $59 million in the first quarter of 2022.
The change in adjusted EBIT, 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.
Partially offset by higher pricing and regeneration services and in catalyst technologies.
Moving to the next slide.
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 catalyst and order timing associated with hydrocracking and specialty catalyst was $19 million.
Variable cost increased on higher natural gas primarily in the west coast.
As well as the impact from higher freight rates.
Our continued strong pricing and regeneration services and in catalyst technologies more than cover the rising variable costs during the quarter, resulting in another quarter of positive price to cost ratio.
Turning to slide 11.
<unk> sales for the first quarter of 2023 or $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 lower volume associated 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 and regeneration services.
Driven by contractual price increases and index cost pass through pricing.
First quarter adjusted EBITDA for Eco services 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, which reduced volume and increased repair and maintenance costs.
We will continue to expect an adjusted EBITDA margin for eco services 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 Zelus joint venture for $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 <unk> joint venture reflect 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 EBIT 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.
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.
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 remained strong.
And we ended the quarter with a net debt leverage ratio of three two 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 a secondary offering by our 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 and 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 led.
<unk> reduction.
With expected adjusted EBIT 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 two times range.
Our balance sheet remains strong with only one tranche of debt being our term loan b facility maturing in 2028, we had 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 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 and eco services. 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.
Through a range of $730 million to $760 million to respect reflect lower projected pass through of energy cost and.
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 expect strong quarterly sequential growth in both businesses.
Resulting in mid single digit adjusted EBITDA growth for <unk> compared to the second quarter of 2022.
And eco services, 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 EBIT growth in the mid single digits compared to the second quarter of 2022.
We remain confident in our full year guidance.
<unk> 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 catalyst as well as increased sales of catalyst used in the renewable fuels and our <unk> joint venture during the second quarter.
Our full year expectation for hydrocracking catalyst remains strong with a 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 demonstrated strong quarterly sequential growth as we continue to anticipate solid overall growth for the full year in 2023.
I will now hand, the call back to Kurt for some closing remarks.
Thank you Mike overall, we expect the demand environment to remain positive in 2023.
In our favor we had 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.
Our 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 of 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 and.
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 in 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 priority given to growth initiatives and leverage reduction.
With that we will ask the operator to open the line for questions.
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Our first question comes from Aleksey.
I'm, sorry, Alexia <unk> with Keybanc capital markets.
Hey, guys. Good morning. This is Ryan on for Alexia.
I guess first question for you just kind of based off what you guys got it.
For <unk> and then looking at what it implies back half looks.
It looks like a pretty sizable step up could you maybe just talk about I used to go to the mill.
Good point.
Just talk about confidence there and that kind of what leads you to believe.
That's helpful. Thanks.
Sure Ryan Thanks for the question.
Well, we really see strong demand across the across all of our market segments moving into the latter part of the year. So regeneration regeneration business is obviously going to benefit was projected to be growing domestic gasoline demand growing exports of gasoline and that equating to strong refinery.
<unk> utilization or Virgin sulfuric acid demand is very strong for things like low carbon technologies and sustainable technology. So we view that business is really as much as we can produce we'll be able to sell <unk> 32 in 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.
Good confidence going into the later quarters of this year, which is why we remain.
Maintaining our EBITDA guidance.
Great. Thanks for the color there.
And then I guess just like can you just talk about in catalyst technologies. How you guys are tracking on price cost I believe last quarter, you guys talked a little bit about.
I used to be at the upper end of the guide if not potentially a little bit above it.
And similarly.
Similarly on energy costs and stuff like that so I don't know maybe you guys have anything to provider.
Sure. So we did see this in our comments we saw some.
Some good pricing momentum in.
Particularly in silica catalysts, where.
We instituted some pricing actions in the latter part of 2022 as well as just the formula based pricing that some of that is attached to some of that business, making adjustments in 2023. So that's provided stronger pricing as well as we are experiencing lower cost for raw materials and energy.
And so forth so thats been able that's given us the.
<unk> ability to expand our margins and then really our products as we look over to the <unk> joint venture. We again, we offer a very unique and coveted hydrocracking catalysts.
Laos refiners, a good ability to remain flexible and generate the kind of margins on the products that they want to so we had good pricing momentum there, which is why we believe we can have growth in knee.
High teens in that segment as well.
Great. Thanks, a lot.
Thank you. Our next question comes from David Begleiter with Deutsche Bank.
Okay.
David.
Maybe first just going back to the guidance can you talk about at this point, what's driving the low end the high end of your guidance range and I guess, just given the demand issue you mentioned in <unk>.
Do you think we are tracking towards the lower end of the guidance rather than the higher end.
Yes. Thanks for the question David So when we look at.
When we look at the guidance range and as we gave that on last quarter's call. We obviously, we're looking at we were cautious looking at we've got long part of the year left here as we sit here in may.
So that range is really there as we watch the general overall macro market conditions. However, I will say, we remain confident in the catalyst technology segment for this year, we see strong.
<unk> patterns, especially for hydrocracking for the second half of the year and again expect that business to be up in the high teens percentage year over year on a sales basis and we continue to maintain good sales that kind of the market rate for our polyethylene catalyst as well.
Okay and second question can you talk about your expectations for Safari asset pricing and then suffer cost for the rest of the year.
Sure well for software of gas at the demand remains really strong and again, it's driven by.
The production of <unk>.
And the propagation of low carbon and low carbon technology sustainable technologies, which are obviously, requiring minerals and materials for all of the.
We're charging in electric vehicles, and so forth. So there is a tremendous pull for sulfuric acid and then for just general industrial uses as well from a sulfur from our sulfur basis sulfur is largely driven by pricing is largely driven by the agricultural market. They purchased about two thirds of the.
<unk> 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 are producing more sulfur, which consequently benefits our regeneration business obviously benefits.
From a high utilization rate, but then 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 is 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 FERC asset pricing is sulfur is pass through on a dollar for dollar basis.
Okay. Thank you.
Thank you. Our next question comes from Laurence Alexander with Jefferies.
Hi, guys. Thank you for taking my question. This is Kevin on for Laurence.
As mentioned you expect demand to be pretty stable broadly in 2023, and you guys seem pretty confident about that I guess I'm, just curious and even in a recession, let's say towards.
Maybe back half of the year into 'twenty four.
I guess, how do you expect your business with fair to that and maybe what sort of levers could you pull.
To improve operating performance in the event the volumes declined more than expected.
Yeah, Kevin Thanks for the question so.
As you stated we're confident in our market segment. So as you look at.
Mike and I have been with this business going back to 2006 and have seen numerous down cycles right. When you look back at 2008, 2009, and what happened in 2020.
What I would say is our refining segment, we project to be continued to be strong because it's based on demand for products in those in those areas. When you look at the regeneration, obviously outpaced the alcohol as demand continues to be strong to produce gasoline demand which is growing.
And to produce premium gasoline, which continues to grow too.
To help meet Cafe standards, then you look at our hydrocracking business, which is related to the refining which that's based on a change out cycle and those orders are we're seeing the order book to be strong for the back end of the year and we expect again those sales to be up on a <unk>.
Mid teens basis year over year moving into the other segments, we still feel confident our silica catalysts or polyethylene catalyst generally is less cyclical than than than other things and that's related to what goes into film in packaging and things like blow molding for food packaging as well as.
The.
Things like <unk>.
Sumer goods, and such which are generally household staples and less cyclical. So we feel good about the end market segment. There obviously, we've gone through downturns before and we have levers to pull to reduce our capex spending and take a look at it at that and spread it out a little further.
Or other short term cost reductions, but in general we feel good about our market segments.
Feel confident going into the back half of the year.
Alright, Thank you very much.
Thank you. Our next question comes from Amit <unk> with BW is financial.
Yes, hi, so first off here and sulfuric acid.
On the presentations, you're talking now about construction coming back is that incremental demand to what you've previously talked about as far as the consumers are still fair Kathryn.
Yes.
Virgins, Hi, Amit Thanks for the question.
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.
Copper and other minerals and materials being used for not only just in.
Commercial construction, but then for infrastructure construction and right to support charging Green Green energy products and so forth. So we see that market continuing to be strong because quite frankly.
The global 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.
Somewhat into into that space.
Okay.
Are you completely done with the turnarounds.
Turnarounds that you've been talking about.
Yes, so we have the extended turnaround.
We had in the first quarter is completed and that unit is running at capacity now.
The we do have other turnarounds that take place.
In the latter part of the year and Thats quite normal for us so their plans.
Generally when we planned turnarounds, we have a scope of work that we know that will be executed and we can do.
Generally time, when theyre going to be up or down and we plan around those with building inventory and such we have a pretty robust preventive and replace replacement cycle with our plants and obviously very important to us that we conduct our maintenance at our plants as thoroughly as possible because we view the market is very strong we will be able to sell everything we produce.
So we want to make sure those plants are running correctly.
And my last question is.
What's the time line for Upselling the refineries.
Higher quality catalyst given that they are still running at 90% plus.
Yes. So thanks for the question I think you are referring to hydrocracking catalyst. So our hydrocracking catalysts as those change outs generally happen on a on a three to four year cycle basis. So a lot of the customers in that in that portfolio are incumbents right.
You've got some customers that will.
Great. They are catalysts as we develop new catalysts that have higher yields and allow them higher flexibility and then at the same token or 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 deal is that we produce.
Okay. Thank you.
Thank you at this time, we have no further questions in queue.
This does conclude the <unk> first quarter 2023 earnings call and webcast. Thank you for your participation and you may disconnect at anytime.
Okay.
Sure.
Manuel.
Uh huh.
Hello.
Mhm.
Yeah.