Q1 2024 Ecovyst Inc Earnings Call
Madison: Good morning, my name is Madison, and I'll be your conference operator today. Welcome to Ecovyst's first quarter 2024 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.
Good morning, My name is Madison and I will be your conference operator today.
Madison: Come to <unk> first quarter, 'twenty 'twenty four earnings call and webcast.
Madison: 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 speakers' remarks, there will be a question and answer session I would now like to hand, the conference over to gene Shiels director of Investor Relations.
Madison: After the speaker's remarks, there will be a question-and-answer session. I would now like to hand the conference over to Gene Shields, Director of Investor Relations. Please go ahead.
Gene Shields: Please go ahead.
Gene Shields: Thank you, operator. Good morning and welcome to the Ecovyst first quarter 2024 earnings call. With me on the call this morning are Kurt Bitting, Ecovyst's Chief Executive Officer, and Mike Feehan, Ecovyst's Chief Financial Officer. Following our prepared remarks, we'll take your questions.
Gene Shields: Thank you operator, good morning, and welcome to the Eco best first quarter of 2024 earnings call.
Gene Shields: With me on the call. This morning are Kurt bidding <unk>, Chief Executive Officer and Mark.
Gene Shields: C N <unk> Chief Financial Officer.
Gene Shields: Following our prepared remarks, we'll take your questions.
Gene Shields: 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 2024 financial outlook. This information is subject to risks and uncertainties that could cause the actual results and 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.
Gene Shields: 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 2024 financial outlook.
Gene Shields: This information is subject to risks and uncertainties that could cause the actual results and implementation.
Gene Shields: The company's plans to vary materially.
Gene Shields: Any forward looking information shared today speaks only as of this date. These risks are discussed in the company's filings with the SEC.
Gene Shields: Reconciliations of non-GAAP financial measures mentioned in today's call with their corresponding GAAP measures can be found in our earnings release and in presentation materials posted on the investor section of our website at ecovist.com. I'll now turn the call over to Kurt Bitting.
Gene Shields: Reconciliations of non-GAAP financial measures mentioned in today's call with their corresponding GAAP measures can be found in our earnings release, and then presentation materials posted on the investors section of our website at <unk> Dot com.
Kurt Bitting: I'll now turn the call over to Curt bidding Kurt Thank you gene and good morning.
Kurt Bitting: Thank you, Gene, and good morning. Ecovyst delivered solid results for the first quarter of 2024. Continued strong demand for regeneration services and higher sales of virgin sulfuric acid drove the favorable results in ecoservices. Sales within the Zealist Joint Venture were up due to higher sales of catalysts used in sustainable fuel production and sales growth in customized catalyst applications. However, sales of advanced silicas were lower due to lower sales of polyethylene catalyst supports, which more than offset stronger sales of finished polyethylene catalysts.
Kurt Bitting: <unk> delivered solid results for the first quarter of 2024.
Kurt Bitting: Continued strong demand for regeneration services and higher sales of Virgin sulfuric acid drove the favorable results in eco services sale.
Kurt Bitting: Sales within the Zelus joint venture were up on higher sales of catalyst using sustainable fuel production and sales growth and customized catalyst applications. However.
Kurt Bitting: However, sales in advanced silicone were lower due to lower sales of polyethylene catalyst supports which more than offset stronger sales and finished polyethylene catalysts.
Kurt Bitting: As a result, we delivered first quarter adjusted EBITDA of $45.5 million, up 6% compared to the first quarter of 2023. Cash generation in the first quarter was particularly strong, reflecting the timing of dividends received from the Zealous joint venture that were deferred in the fourth quarter due to the timing of working capital needs within the joint venture.
Kurt Bitting: As a result, we delivered first quarter adjusted EBITDA of 45, and a half million dollars up 6% compared to the first quarter of 2023.
Kurt Bitting: Cash generation in the first quarter was particularly strong reflecting the timing of dividends received from New Zealand joint venture that were deferred in the fourth quarter due to the timing of working capital needs within the joint venture.
Kurt Bitting: This favorable cash generation, along with higher adjusted EBITDA, provided for further reduction in our net debt leverage ratio to 2.9 times at the end of the first quarter, down from three times at the end of last year. Overall, I'm pleased with our achievements in the first quarter. Our first quarter financial performance provides a good start to the year. We successfully completed two turnarounds in our eco-services segment during the quarter while maintaining a very favorable safety performance.
Kurt Bitting: This favorable cash generation, along with higher adjusted EBITDA provided for further reduction in our net debt leverage ratio to two nine times at the end of the first quarter down from three times at the end of last year.
Kurt Bitting: Overall I'm pleased with our achievements in the first quarter, our first quarter financial performance provides a good start to the year. We successfully completed two turnarounds in our eco services segment during the quarter, while maintaining a very favorable safety performance. In addition, we continued to execute on our long term strategic plan.
Kurt Bitting: In addition, we continue to execute on our long-term strategic plan, positioning Ecovyst for continued growth in the future. As we turn to slide six, I'll provide an update on our near-term demand outlook. Starting with eco-services, for our regeneration services business, the outlook remains positive. We believe that the North American refining climate remains favorable with rising vehicle miles traveled, refining utilization rates expected to remain in the 90% range, and increasing margins for alkalis.
Kurt Bitting: Positioning <unk> for continued growth in the future.
Kurt Bitting: As we turn to slide six I'll provide an update on our near term demand outlook.
Kurt Bitting: Starting with eco services for our regeneration services business. The outlook remains positive we believe that the north American refining climate remains favorable with rising vehicle miles traveled refining utilization rates expected to remain in the 90% range and increasing margins for athletes.
Kurt Bitting: And for our Gulf Coast refining customers, the lack of availability of Russian refined products in the global market is creating additional demand for U.S. refined product exports. For virgin sulfuric acid, we see balanced conditions and expect sales volume to be up in 2024. Mining demand remains strong, with continued demand strength expected to be driven by global copper demand and ongoing expansion of projects in North America.
Kurt Bitting: And for our Gulf Coast refining customers, the lack of availability of Russian refined products in the global market is creating additional demand for U S refined product exports.
Kurt Bitting: For Virgin sulfuric acid, we see balanced conditions and expect sales volume to be up in 2024.
Kurt Bitting: Mining demand remains strong with continued demand strength expected to be driven by global copper demand and ongoing expansion of projects in North America.
Kurt Bitting: We continue to expect improvement this year for virgin sulfuric acid sales into the nylon industry. However, industrial demand remains a mixed bag with relative stability in many end uses, including lead acid batteries, chloralkali, and water treatment. While we continue to see some price weakness for spot and short-dated contracts as compared to 2023, we did not see a significant deterioration in overall demand conditions for industrial markets in the first quarter. For our CHEM 32 business, we continue to see high utilization and strong customer interest, with continued growth in sustainable fuel production capacity being a contributing factor. Turning to Advanced Materials and Catalysts
Kurt Bitting: We continue to expect improvement this year for Virgin sulfuric acid sales into the nylon end use industrial demand remains a mixed bag with relative stability in many end uses including lead acid batteries, chlor alkali and water treatment.
Kurt Bitting: While we continue to see some price weakness for spot and short dated contracts as compared to 2023, we did not see significant deterioration in overall demand conditions for industrial markets in the first quarter.
Kurt Bitting: For our Kent thirty-two business, we continue to see high utilization and strong customer interest with continued growth in sustainable fuel production capacity being a contributing factor.
Kurt Bitting: Turning to advanced materials and catalyst for advanced silica as global demand growth for polyethylene is expected to be up 2% to 3%. This year led by North America, where producers continue to benefit from favorable feedstock costs.
Kurt Bitting: For advanced silica, global demand growth for polyethylene is expected to be up 2-3% this year, led by North America, where producers continue to benefit from favorable feedstock costs. However, sales for the advanced silica segment fell short of our expectations in the first quarter, where higher sales of finished polyethylene catalysts were offset by lower sales of polyethylene catalyst supports associated with customer order timing and limited destocking. Overall, we expect improved global demand conditions to benefit our sales of advanced silicas used to produce polyethylene, particularly in the second half of the year.
Kurt Bitting: Sales for the advanced Silicon segment fell short of our expectations in the first quarter were higher sales of finished polyethylene catalysts were offset by lower sales of polyethylene catalyst supports associated with customer order timing and limited destocking.
Kurt Bitting: Overall, we expect improved global demand conditions to benefit our sales of advanced silica is used to produce polyethylene, particularly in the second half of the year.
Kurt Bitting: We remain very optimistic about the long-term outlook for sales of catalysts used in the production of sustainable fuels. In 2024, North American capacity for renewable diesel and sustainable aviation fuel is expected to grow by over 70 percent, supported by attractive production incentives for U.S.-based producers. And with the EU mandating blending targets, EU renewable diesel and SAF capacity is expected to grow by 26% in 2024. Furthermore, customer and prospective customer engagement in sustainable fuels remains high.
Kurt Bitting: We remain very optimistic about the long term outlook for sales of catalyst used in the production of sustainable fuels in 2024, North American capacity for renewable diesel and sustainable aviation fuel is expected to grow by over 70% supported by attractive production incentives for U S based produce.
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Kurt Bitting: And with the EU mandating blending target's EU renewable diesel and Saf capacity is expected to grow by 26% in 2024.
Kurt Bitting: Customer and prospective customer engagement and sustainable fuels remains high we already have trial sales of catalyst for alcohol to jet S. A F protection technologies, and we expect activity to increase with a number of startups slated for next year.
Kurt Bitting: We already have trial sales of catalysts for alcohol-to-jet SAF production technologies, and we expect activity to increase with a number of startups slated for next year. For hydrocracking catalysts, the growth in global diesel demand is a positive factor. Market conditions in the U.S. remain favorable, with diesel inventories below historic averages. The hydrocracking catalyst market remains competitive, but we believe we have a differentiated offering with our mock technology.
Kurt Bitting: For hydrocracking catalyst the growth in global diesel demand is a positive factor.
Kurt Bitting: Market conditions in the U S remain favorable with diesel inventories below historic averages the hydrocracking catalyst market remains competitive, but we believe we have a differentiated offering with our market technology.
Kurt Bitting: Order timing for hydrocarbon catalyst sales remains a function of change-out activity, which makes the timing of sales difficult to predict with absolute certainty. While we expect a positive year for hydrocracking sales in 2024, we will not repeat the peak level of sales in 2023, and based upon our current expectations for sales timing, we anticipate a stronger second half for 2024. For sales of emission control catalysts, we are seeing a softer demand outlook for 2024. Additionally, increased borrowing costs are impacting purchase activity for new vehicles.
Kurt Bitting: Order timing for hydrocracking catalyst sales remains a function of change out activity, which makes the timing of sales difficult to predict with absolute certainty. While we expect a positive year for hydrocracking sales in 2024, we will not repeat the peak level of sales in 2023 and based upon our current expectations for sales timing.
Kurt Bitting: We anticipate a stronger second half for 2024.
Kurt Bitting: Sales of emission control catalysts, we are seeing softer demand outlook for 2024 increased borrowing costs are impacting purchase activity for new vehicles.
Kurt Bitting: While not commercial on a large scale yet, we continue to work with key players in the advanced recycling industry, where our catalyst technologies can provide a meaningful reduction in energy intensity for thermal pyrolysis. We expect growth in recycling activity to increase in the next two years, with 12 advanced recycling plants for plastic waste expected to be commissioned in 2024. I'll now turn the call over to Mike for a more detailed discussion of our financial results for the first quarter. Thank you, Kurt.
Kurt Bitting: And while not commercial on a large scale yet we continue to work with key players in advanced recycling industry, where our catalyst technologies can provide a meaningful reduction in energy intensity for thermal paralysis, we expect growth in recycling activity to increase in the next two years with 12 advance recycling plants.
Mike: Plastic waste is expected to be commissioned in 2024.
Kurt Bitting: I'll now turn the call over to Mike for a more detailed discussion of our financial results for the first quarter.
Mike: Thank you Kurt equaled the sales for the first quarter of 2024, including our proportionate 50% share of sales from New Zealand joint venture were $184 million slightly higher than the first quarter of 2023.
Michael P. Feehan: Ecovyst sales for the first quarter of 2024, including our proportionate 50% share of sales from the Zealous joint venture, were $184 million, slightly higher than the first quarter of 2023. Ecoservices sales were up 3%, reflecting higher sales volume, invergent sulfuric acid, and regeneration services. However, advanced materials and catalyst sales were down, as lower sales of advanced silicas used for the production of polyethylene were only partially offset by higher sales from the Zealous joint venture.
Michael P. Feehan: Eco services sales were up 3%, reflecting higher sales volume and Virgin sulfuric acid and regeneration services.
Michael P. Feehan: However, advanced materials and catalyst sales were down as lower sales of advanced Silicon is used for the production of polyethylene.
Michael P. Feehan: Were only partially offset by higher sales from New Zealand joint venture.
Michael P. Feehan: Adjusted EBITDA for the first quarter was $45.5 million, up 6% driven primarily by the contribution from higher sales volume. The adjusted EBITDA margin for the first quarter was 24.7%, up 130 basis points over the prior year. Turning to the next slide, I will discuss the primary components of the change in adjusted EBITDA compared to the first quarter of last year and look at the major drivers of the change in adjusted EBITDA.
Michael P. Feehan: Adjusted EBITDA for the first quarter was $45 $5 million up 6% driven primarily by the contribution from higher sales volume.
Michael P. Feehan: The adjusted EBITDA margin for the first quarter was 24, 7%.
Michael P. Feehan: Up 130 basis points over the prior year.
Michael P. Feehan: Turning to the next slide.
Michael P. Feehan: I will discuss the primary components of the change in adjusted EBITDA compared to the first quarter of last year.
Michael P. Feehan: And looking at the major drivers of the change in adjusted EBITDA.
Michael P. Feehan: The higher sales volume provided a pull-through benefit of approximately $10 million. However, aggregate pricing, including the $5 million sulfur pass-through effect, was down $16 million period over period. The lower pricing resulted from the pass-through of $17 million in lower variable costs, which included lower sulfur, natural gas, electricity, and other variable costs.
Michael P. Feehan: The higher sales volume provided a pull through benefit of approximately $10 million.
Michael P. Feehan: However, while aggregate pricing, including the $5 million sulfur pass through effect was down $16 million period over period.
Michael P. Feehan: The lower pricing resulted from the pass through of $17 million and lower variable costs, which included lower sulfur natural gas electricity and other variable costs.
Michael P. Feehan: Overall, the net impact resulted in a positive price-to-cost ratio for the quarter. The balance of the change in adjusted EBITDA is comprised of a number of factors, including approximately $3 million of higher planned turnaround costs. Higher fixed manufacturing costs associated with our reliability initiative, costs attributed to winter storm Heather and inflation, and our labor costs. As we transition to our segment results, I'll start with the highlights for EcoServe. Sales for the first quarter of 2024 were $142 million, up 3% on higher sales volume for virgin sulfuric acid and regeneration services, primarily reflecting recovery from the prior year lower sales volume that was adversely impacted by winter storm Elliott and the extended turnaround. The sales increase was partially offset by the pass-through effect of lower sulfur prices of $5 million as well as the pass-through effect of other variable costs such as natural gas and electricity.
Michael P. Feehan: Overall, the net impact resulted in a positive price to cost ratio for the quarter.
Michael P. Feehan: The balance of the change in adjusted EBITDA is comprised of a number of factors, including approximately $3 million of higher planned turnaround costs.
Michael P. Feehan: Higher fixed manufacturing costs associated with our reliability initiatives.
Michael P. Feehan: Costs attributed to winter storm, Heather and inflation in our labor costs.
Michael P. Feehan: As we transition to our segment results I'll start with the highlights for eco services.
Michael P. Feehan: Sales for the first quarter of 2024 were $142 million up 3% on higher sales volume for Virgin sulfuric acid and regeneration services.
Michael P. Feehan: Primarily reflecting recovery from the prior year lower sales volume that was adversely impacted by winter storm Elliott and the extended turnaround.
Michael P. Feehan: The sales increase was partially offset by the pass through effect of lower sulfur prices of $5 million as well as the pass through effect of other variable costs, such as natural gas and electricity.
Michael P. Feehan: Okay.
Michael P. Feehan: First quarter 2024 adjusted EBITDA for eco services of 41.5 million dollars was up 13%, with the benefit of higher sales volume, partially offset by the higher turnaround costs, higher fixed manufacturing costs, and costs associated with the winter storm. Overall, it was a positive quarter for Ecoservices and a solid start to the year, with adjusted EBITDA up 13% and associated margins of 29%, up 260 basis points from the first quarter of 2023.
Michael P. Feehan: First quarter 2020 for adjusted EBITDA for Eco services of $41 $5 million was up 13% with the benefit of higher sales volume, partially offset by the higher turnaround costs higher fixed manufacturing costs and costs associated with the winter storm.
Michael P. Feehan: Overall, it was a positive quarter for eco services and a solid start to the year with adjusted EBITDA up 13% and the associated margins of 29% up 260 basis points from the first quarter of 2023.
Michael P. Feehan: For Advanced Materials and Catalyst, first quarter sales, including our 50% proportionate share of Zealous Joint Venture sales, were $42 million, down $3 million. Sales for the Zealous Joint Venture were up 6% driven by higher sales of catalysts used in sustainable fuel production and sales growth in customized catalyst applications. However, sales for advanced silicas decreased year over year due to lower sales volume of advanced silicas used for the production of polyethylene.
Michael P. Feehan: For advanced materials, and catalyst first quarter sales, including our 50% proportionate share of Zelus joint venture sales were $42 million down $3 million.
Michael P. Feehan: Sales for the Zelus joint venture were up 6% driven by higher sales of catalyst used in sustainable fuel production and sales growth and customized catalyst applications.
Michael P. Feehan: However, sales for advanced silica has decreased year over year due to lower sales volume of advanced silica is used for the production of polyethylene.
Michael P. Feehan: While sales of finished catalysts used to produce polyethylene were up, sales of polyethylene catalyst supports were lower due to customer order timing and limited destocking. For the full year, we continue to expect higher sales of advanced silicas used for the production of polyethylene compared to 2023, with an expected stronger second half of the year compared to the first half. Adjusted EBITDA for Advanced Materials and Catalyst was $11 million compared to $13 million in the year-ago quarter, with higher sales volume and favorable mix in the Zealous Joint Venture offset by lower sales in Advanced Silicas.
Michael P. Feehan: While sales of finished catalysts used to produce polyethylene were up sales of polyethylene catalyst supports were lower due to customer order timing and limited destocking.
Michael P. Feehan: For the full year, we continue to expect higher sales of advanced silica is used for the production of polyethylene compared to 2023 with an expected stronger second half of the year compared to the first half.
Michael P. Feehan: Adjusted EBITDA for advanced materials, and catalyst was $11 million compared to $13 million in the year ago quarter.
Michael P. Feehan: With higher sales volume and favorable mix and the Zelus joint venture offset by the lower sales in advanced Silicon.
Michael P. Feehan: Yeah.
Michael P. Feehan: Turning to cash and leverage on the next slide, cash generation in the first quarter of 2020 forward is particularly strong, benefiting from the dividends received from the Zealous Joint Venture that were deferred from the fourth quarter of 2023 due to the timing of working capital. As such, we ended the first quarter with cash of $103 million, including $70 million of availability under our ABL facility. We ended the first quarter with total liquidity of $173 million.
Michael P. Feehan: Turning to cash and leverage on the next slide.
Michael P. Feehan: Cash generation in the first quarter of 2020 forwards, particularly strong benefiting from the dividends received from the Zelus joint venture that were deferred from the fourth quarter of 2023 due to the timing of working capital.
Michael P. Feehan: As such we ended the first quarter with cash of $103 million <unk>.
Michael P. Feehan: Including the $70 million of availability under our ABL facility.
Michael P. Feehan: We ended the first quarter with total liquidity of $173 million.
Michael P. Feehan: Okay.
Michael P. Feehan: In light of the strong cash generation and higher adjusted EBITDA, we ended the first quarter with a net debt leverage ratio of 2.9 times, down from 3.0 times at the end of the year. At this time, we remain on target to generate free cash flow for this year of $85 million to $105 million. In terms of capital allocation, we expect to continue to maintain a balanced strategy. From an overall balance sheet perspective, we have one tranche of debt maturing in 2028. We have capped our interest exposure on approximately 75% of our outstanding debt out to the third quarter of 2026.
Michael P. Feehan: In light of the strong cash generation and higher adjusted EBITDA. We ended the first quarter with a net debt leverage ratio of two nine times.
Michael P. Feehan: Down from 3.0 times at the end of the year.
Michael P. Feehan: At this time, we remain on target to generate free cash flow for this year of an $85 million to $105 million.
Michael P. Feehan: In terms of capital allocation.
Michael P. Feehan: We expect to continue to maintain a balanced strategy.
Michael P. Feehan: From an overall balance sheet perspective, we have one tranche of debt maturing in 2028.
Michael P. Feehan: We have kept our interest exposure on approximately 75% of our outstanding debt out to the third quarter of 2026 and.
Michael P. Feehan: And our weighted average cost of debt is expected to be approximately 5.5% during 2024. As it relates to our guidance, the full-year outlook that we provided in our fourth quarter earnings call in late February remains unchanged, with gap sales of $715 to $755 million, sales for the Zealous Joint Venture of $145 to $165 million, and Consolidated Adjusted EBITDA of $255 to $275 million.
Michael P. Feehan: And our weighted average cost of debt is expected to be approximately five 5% during 2024.
Michael P. Feehan: As it relates to our guidance the full year outlook that we provided in our fourth quarter earnings call in late February remains unchanged.
Michael P. Feehan: With GAAP sales of $715 million to $755 million.
Michael P. Feehan: Sales for the Zelus joint venture of $145 to $165 million and consolidated adjusted EBITDA of $255 million to $275 million.
Michael P. Feehan: As is our usual practice, the guidance ranges for specific modeling line items are included in today's earnings press release and in the earnings presentation. In terms of directional guidance for the second quarter, on a consolidated basis, we expect second quarter 2024 adjusted EBITDA to be between 50 and 55 million dollars for Eco-Services. We expect adjusted EBITDA for the second quarter to be down compared to the prior year in a range of between $48 million and $52 million.
Michael P. Feehan: As is our usual practice the guidance ranges for specific modeling line items are included in today's earnings press release and in the earnings presentation.
Michael P. Feehan: In terms of directional guidance for the second quarter.
Michael P. Feehan: On a consolidated basis, we expect second quarter 2024 adjusted EBITDA.
Michael P. Feehan: To be between 50 and $55 million.
Michael P. Feehan: For Eco services, we expect adjusted EBITDA for the second quarter to be down compared to the prior year and a range of between $48 million and $52 million.
Michael P. Feehan: While we expect sales volume to be higher in the second quarter compared to the prior year, higher fixed costs, including an increase in the number of turnarounds and the related costs, along with an unfavorable net pricing impact, are expected to drive lower earnings for the quarter. The unfavorable net pricing is expected to reflect the timing and the contractual pass-through of certain costs, including energy and other index costs, for Advanced Materials and Catalysts.
Michael P. Feehan: While we expect sales volume to be higher in the second quarter compared to the prior year.
Michael P. Feehan: Higher fixed costs, including an increase in the number of turnarounds and the related costs, along with an unfavorable net pricing impact.
Michael P. Feehan: Is expected to drive lower earnings for the quarter.
Michael P. Feehan: The unfavorable net pricing is expected to reflect the timing and the contractual pass through of certain costs, including energy and other index costs.
Michael P. Feehan: For advanced materials and catalyst, we expect second quarter 2024, adjusted EBITDA to be sequentially flat to the first quarter of 2024 with a range of between 10 and $12 million.
Michael P. Feehan: We expect second quarter 2024 adjusted EBITDA to be sequentially flat to the first quarter of 2024, with a range of between $10 and $12 million. The results are expected to be lower than the prior year's second quarter, driven by lower sales of advanced silicas used for polyethylene production. Unfavorable Product and Customer, and the unfavorable impact of fixed cost absorption on inventory period over period. And we continue to expect corporate costs to be between $7 and $8 million per quarter.
Michael P. Feehan: The results are expected to be lower than the prior year second quarter, driven by lower sales of advanced silicon used for polyethylene production.
Michael P. Feehan: Unfavorable product and customer mix and the unfavorable impact of fixed cost absorption on inventory period over period.
Michael P. Feehan: And we continue to expect corporate cost to be between seven and $8 million per quarter.
Kurt Bitting: I will now hand the call back to Kurt for some closing remarks. Thank you, Mike. As we move into the second quarter, we will continue to build upon the positive financial results we delivered in the first quarter. With the expectation of improved global polyethylene demand and higher sales of virgin sulfuric acid into the nylon end-use, the demand outlook across our portfolio remains positive for 2024. Ecoservices will have conducted four of its five major turnarounds in the first half of 2024, which will position the business to deliver virgin sulfuric acid and regeneration volumes in the second half of the year.
Michael P. Feehan: I will now hand, the call back to Kurt for some closing remarks.
Kurt Bitting: Thank you Mike.
Kurt Bitting: As we move into the second quarter, we will continue to build upon the positive financial results, we delivered in the first quarter with.
Kurt Bitting: With the expectation of improved global polyethylene demand and higher sales of Virgin sulfuric acid into the nylon end used the demand outlook across our portfolio remains positive for 2024.
Kurt Bitting: Eco services will have conducted four of its five major turnarounds in the first half of 2024, which will position the business to deliver Virgin sulfuric acid and regeneration volumes in the second half of the year.
Kurt Bitting: We expect stronger demand fundamentals in the second half of the year, particularly for sales of polyethylene catalysts and for the timing of hydrocracking catalyst sales. As such, our previous guidance for 2024 remains unchanged. However, we will seek to leverage opportunities for incremental growth as they arrive. Moreover, we believe favorable cash generation in 2024 will continue to support a balanced capital allocation strategy. Before we move to the Q&A session, I do want to comment on a recent development regarding our Houston site.
Kurt Bitting: We expect stronger demand fundamentals in the second half of the year, particularly for sales of polyethylene catalyst and for the timing of hydrocracking catalyst sales as such our previous guidance for 2024 remains unchanged. However, we will seek to leverage opportunities for incremental growth as they arise.
Kurt Bitting: Moreover, we believe favorable cash generation in 2024 will continue to support a balanced capital allocation strategy.
Kurt Bitting: Before we move to the Q&A session I do want to comment on a recent development regarding our Houston site.
Kurt Bitting: The United Steelworkers Union represents a number of maintenance and operation employees at our Houston site. Unfortunately, despite our good faith efforts to reach a labor agreement with the Union, the Union workers went on strike on April 10.
Kurt Bitting: The United Steelworkers Union represents a number of maintenance and operation employees at our Houston site of.
Kurt Bitting: Unfortunately, despite our good faith efforts to reach a labor agreement with the Union. The Union workers went on strike on April 10th.
Kurt Bitting: I am happy to report that we reached a tentative agreement with the union on a new 3-year contract. The Houston Plants Union ratified the new contract earlier this week, and our valued colleagues fully returned to work on May 1. During the course of the strike, operations at the Houston site continued, allowing us to serve our customers. Thank you for your interest in Ecovyst, and at this time, I will ask the operator to open the line for questions. Thank you. At this time, if you would like to ask a question, please press the star and one on your telephone keypad. You may remove yourself from the queue at any time by pressing star two.
Kurt Bitting: I am happy to report that we reached a tentative agreement with the Union on a new three year contract.
Kurt Bitting: The Houston plant Union ratified the new contract earlier this week and our valued colleagues fully returned to work on May one.
Kurt Bitting: During the course of the strike operations at the Houston site continued allowing us to service our customers.
Kurt Bitting: Thank you for your interest in eco vis and at this time I will ask the operator to open the line for questions.
Madison: Once again, that is the star and one to ask a question. We will pause for a moment to allow questions to queue. And we will take our first question from John McNulty with BMO Capital Markets. Please go ahead, your line is open. Sorry about that; that was muted.
Speaker Change: Thank you at this time, if you would like to ask a question. Please press the star and one on your telephone keypad you may remove yourself from the queue at any time by pressing star to once again that is star one to ask a question.
John Patrick McNulty: We will pause for a moment to allow questions to queue.
John Patrick McNulty: And we will take our first question from John Mcnulty with BMO capital markets.
John Patrick McNulty: Please go ahead your line is open.
John Patrick McNulty: Sorry about that was it was muted.
John Patrick McNulty: So when I look at the outlook that you have for the various segments for 2024, it looks like a few things have maybe gotten a little bit more positive, the PVC outlook, mining recovery, utilization rates in refining, yet you've largely maintained the guide. I guess, are there some negative offsets to that that we should be thinking about, or is it just, look, it's early in the year, and you don't wanna get too far ahead of yourselves? I guess what should I be thinking about that?
John Patrick McNulty: So when I look at the outlook that you have for the various segments for 2024.
John Patrick McNulty: It looks like you know a few things that maybe gotten a little bit more positive PVC PVC outlook, combining recovery utilization rates are in refining yet you've largely maintained the guide I guess.
John Patrick McNulty: There are some negative offsets to that that we should be thinking about or is it just look it's early in the year and you don't want to get too far ahead of yourselves I guess, how should I be thinking about that.
Kurt Bitting: Hey, thanks for the question, John. Yeah, it's still early in the year. As we mentioned on the call, we're in the first, really in the first five months of the year. We're going to conduct four of our five maintenance outages, which I think really puts us in a nice position to meet what we see as good demand from the regeneration segment. We're happy with the virgin acid.
Speaker Change: Hey, Thanks, Thanks for the question John Yeah, We're it's still I would say we're still early in the year.
Kurt Bitting: As we mentioned on the call were in the first really in the first five months of the year, we're going to conduct four of our five maintenance outages, which I think really puts us in a nice position to meet what we see as good demand from the regeneration segment, we're happy with the Virgin acid, we do expect to have increased virgin acid volumes year over year.
Kurt Bitting: We do expect to have increased virgin acid volumes year over year with some, you know, recovery in the nylon segment and mining remaining strong. Polyethylene, as expected, we believe that it will be stronger in the second half of the year, which is what we had thought it was on our last call. Essentially, we feel good about where we're at and we're happy with our results so far in the first quarter, but there's still time left in the year, but we feel good about where we are.
Kurt Bitting: With some recovery in the nylon segment mining remaining strong.
Kurt Bitting: Polyethylene as expected, we believe that will be stronger in the second half of the year, which is what we had thought it was on our on our last call. So.
Kurt Bitting: Essentially we feel good about where we're at and where we're happy with our results. So far in the first quarter, but there's still there's still time left in the year and but we feel good about where we're at.
Kurt Bitting: Okay. And then you spoke through the prepared remarks around a push out in terms of timing on the polyethylene catalyst side. I guess, can you help us to quantify that and think about the timing of when you expect that to roll in? It sounds like it may not necessarily all be 2Q. It may be pushed out into the back half of the year. Yeah, sure. So for Q1, just to recap for Q1, our finished polyethylene catalyst sales were up year over year.
Speaker Change: Got it okay.
Speaker Change: And then can you you spoke through the through the prepared remarks around a push out in terms of timing around around the polyethylene catalyst side I guess can you.
Kurt Bitting: Can you help us to quantify that and think about the timing of when you expect that to roll in it sounds like it may not necessarily all be <unk> may be pushed out into the back half of the year.
Speaker Change: Yeah sure. So for for Q1, just to recap on for Q1, our finished polyethylene catalyst sales were up year over year, what what was fell short was the polyethylene catalyst supports which are.
Kurt Bitting: What fell short was the polyethylene catalyst supports, which are really intermediates that either co-producers in the catalyst industries or actually polyethylene producers themselves buy from us, these advanced intermediates, and they impregnate them with their own metals. That's around a quarter to a third of what we call our polyethylene catalyst sales. So there were some timing issues. Some of it was based on shipping and just when the orders actually landed at
Kurt Bitting: Intermediates that are either co producers in the catalysts industries are actually polyethylene producers themselves five from US. These advanced intermediates and then pregnant them with their own metals, that's around a quarter to a third of what we call in our polyethylene catalyst sales so those.
Kurt Bitting: That there was some timing issues. Some of it was based shipping and just win the orders actually landed at least that the customers. There was some limited destocking in that in that space, but overall when we look at polyethylene both for the finished catalysts side and supports we do expect that.
Kurt Bitting: There was some limited destocking in that space. But overall, when we look at polyethylene, both for the finished catalyst side and supports, we do expect that to be picking up in the second half of the year and for both of them to be up year over year.
Kurt Bitting: To be picking up in the second half of the year and for both of them to be up year over year.
Kurt Bitting: Yes.
Speaker Change: Got it thanks very much for the color.
John Patrick McNulty: Thanks very much for the call. Thank you. And we will take our next question from Aleksey Yefremov with KeyBank Capital Market. Thanks. Good morning.
Kurt Bitting: Thank you and we will take our next question from Alexia <unk> with Keybanc capital markets.
Aleksey V. Yefremov: And just to stay with PE Catalyst, could you just step back and tell us where you think you are in this PE Catalyst? Michael Feehan, Nate Connor, George Vann, Paul Whittleston, Ecovyst, Gross next year, but some idea of where you are in that cycle. Sure. Thanks for the question, Aleksey. I think, you know, we generally look at the polyethylene market, and what's expected this year is a 2 to 3 percent growth across the globe.
Aleksey V. Yefremov: Thanks. Good morning, this is <unk>.
Aleksey V. Yefremov: Key catalysts can you just step back and tell US where you think you are in this <unk> catalysts.
Aleksey V. Yefremov: Catalysts.
Aleksey V. Yefremov: Cycle for for yourselves in the back half of this year would you be at a normal run rate or is there still more recovery.
Aleksey V. Yefremov: Into next year, maybe not looking for precise.
Aleksey V. Yefremov: Gross next year, but some idea.
Aleksey V. Yefremov: We are in that cycle.
Speaker Change: Sure. Thanks for the thanks for the question Olesky I think we generally look at the polyethylene market and what's expected. This year is 2% to 3% growth.
Aleksey V. Yefremov: Across the globe now thats segmented by that Theres different regions behaving differently here in North America.
Aleksey V. Yefremov: Now, that's segmented by, you know, different regions behaving differently. Here in North America and the Middle East, where feedstock costs are low, those advantaged producers are, you know, are above that growth rate. Other regions, such as China, continue to have sluggish growth as well as Europe, but we do see overall growth growing 2 to 3 percent this year.
Aleksey V. Yefremov: In the middle East, where feedstock costs are low those advantaged producers R. R.
Aleksey V. Yefremov: Our above that growth rate other regions, such as China continues to have sluggish growth as well as well as Europe, but we do see overall growth growing 2% to 3%. This year as we've talked about before historically we've.
Kurt Bitting: As we've talked about before, historically, we've, you know, through capturing market share and getting a disproportionate amount of the new bills and new business, been roughly able to double that market growth rate. So, we feel good about where polyethylene is going. It clearly is recovering from where it was last year, but we expect, I guess, the momentum of that recovery to pick up more in the second half.
Kurt Bitting: Through capturing market share and getting a disproportionate amount of the new builds and new business, we've been roughly able to been able to double that that market growth rate. So.
Kurt Bitting: We feel good about where polyethylene is going its clearly is recovering from from where it was last year, but we expect I guess the momentum of that recovery to pick up more in the second half of the year.
Aleksey V. Yefremov: Thanks. And shifting to the merchant asset market, when you talk about some net pricing headwinds in the second quarter, what is the net price headwind that you expect for the entire year, either in dollars or percentage of price or any other metric? Yeah, Aleksey, thanks for the question. This is Mike.
Kurt Bitting: Thanks.
Kurt Bitting: Shifting to merchant.
Aleksey V. Yefremov: Mark when you talk about some pricing headwinds in the second quarter.
Mike: What is the net price headwind that you expect for the entire year, either in dollars or percentage of price or any other metric.
Michael P. Feehan: So, you know, for the second quarter, we really don't have any concerns around our overall base pricing. I mean, we did see some headwinds in the virgin sulfuric acid pricing model from some of the spot sales that we talked about before and some of the shorter-dated, you know, contractual pricing. The net pricing impact that we were referring to in the second quarter is really generated by the pass-through nature of some of the contracts and the timing of when those costs are incurred versus when they're passed-through, right? There's a quarterly lag, and when you have significant variances, that can be intensified by the variable cost, the volatility in the variable cost.
Aleksey V. Yefremov: Yeah Alexia. Thanks for the question. This is Mike So I think what for the second quarter, we really don't have any concerns around our overall based pricing I mean, we did see some headwinds in the Virgin sulfuric acid pricing model from some of the spot sales that we talked about before and some of the shorter dated.
Michael P. Feehan: Our actual pricing the net pricing impact that we were referring to in the second quarter is really generated on the pass through nature of some of the contracts and the timing of when those costs are incurred versus when they are pass through right Theres, a quarterly lag and when you have significant variances.
Aleksey V. Yefremov: So, you know, we see that hitting us really hard in the second quarter but then really moderating out for the rest of the year, right? It's not, it's really, you know, partly due to the pass-through contract timing, so we don't expect that to be something that you'll see continuing in Q3 and Q4 for the full year. Okay, thank you. Thank you, and we will take our next question from Patrick Cunningham with Citi. Hi, good morning.
Patrick Cunningham: Be intensified by the variable cost the volatility and the variable costs. So.
Patrick Cunningham: We see that hitting us really in the second quarter, but then really moderating out for the rest of the year right. That's not it's really partly due to the pass through of contract timing. So we don't expect that to be.
Patrick Cunningham: Something that Youll see continuing in Q3 and Q4.
Patrick Cunningham: For the full year.
Patrick Cunningham: Okay. Thank you.
Aleksey V. Yefremov: Thank you and we will take our next question from Patrick Cunningham with Citi.
Patrick Cunningham: Maybe just on the Kansas City expansion that you referenced in the release, I guess, you know, how big is that in terms of a percentage basis of your capacity? And, you know, are the long-term commitments you referenced linked to the latest wave of P.E. capacity additions, and is there any sort of, is there anything baked in for the larger capacity additions we see in 2026 and 2027? Are you spec'd in there?
Patrick Cunningham: Hi, Good morning, maybe just on the Kansas City expansion that you referenced in the release I guess.
Patrick Cunningham: How big is that in terms of the percentage basis off your capacity.
Patrick Cunningham: Other long term commitments you referenced linked to the latest wave of capacity additions and is there any sort of is there anything baked in for the larger capacity addition, do you see in 2026 and 27 are you expecting there or is the timeline a bit closer to first production.
Kurt Bitting: Or is the timeline a bit closer to first production? And thanks for the question, Patrick. So in terms of the sizing of the Kansas City expansion, I think we've said it's a 50% expansion of our polyethylene capacity at the Kansas City level. Kansas City Site.
Speaker Change: Yeah. Thanks for the question Patrick So in.
Speaker Change: In terms of the sizing of the Kansas City expansion I think we've said, it's a 50% expansion of our polyethylene capacity at the Kansas City site, we do.
Kurt Bitting: We do have other production locations that fuse around the globe, but Kansas City is about a 50% production increase. And of course, as we talked about, it is linked to contractual obligations with customers that are part of this wave of new builds across the globe. I'm obviously not at liberty to state the customers that are involved with that, but those volumes are essentially spoken for already from those customers that are expanding their polyethylene catalysts or their polyethylene production, and Nethos Catalysts.
Kurt Bitting: You have other production locations.
Kurt Bitting: Around around the globe at the Kansas City, it's about a 50% production increase and of course as we've talked about it is linked to contractual equip contractual obligations with customers that are part of this wave of new builds across the across the globe, obviously not at Liberty to state the customer.
Kurt Bitting: The customers that are involved with that but those volumes are essentially spoken for already from those customers that are expanding their polyethylene catalysts are their polyethylene production and need and need those catalysts. So in terms of timing of that.
Kurt Bitting: We do expect the expansion to be complete fourth quarter at the end of 2025, and Thats really there to start meeting some of that demand that you see in call 'twenty 'twenty late 'twenty six 'twenty $7 28 at that time period.
Kurt Bitting: The expansion to be complete, you know, fourth quarter or the end of 2025, and that's really there to start meeting some of that demand that you see in call late 26, 27, 28, that time period. Got it.
Kurt Bitting: Yes.
Speaker Change: Got it and can you help size the growth that you've seen in renewable fuels catalysts first quarter and into 2024, how big is that business today, and what sort of growth rates are you forecasting into 2025 and beyond.
Patrick Cunningham: And can you help size the growth that you've seen in renewable fuels catalysts, you know, in the first quarter and into 2024? How big is that business today? And what sort of growth rates are you forecasting for 2025 and beyond? Yeah, so thanks for the question. The growth rates that we see there are linked to the market, right? There's definitely a strong market push when we talk about significant growth rates. That business represents a little more than probably 10 plus percent of our overall sales from our A, M, and C group.
Speaker Change: Yeah. So thanks for the question.
Patrick Cunningham: The growth rates that we see there are are linked to the market. There is definitely a strong market push that are talking about significant growth rates.
Patrick Cunningham: That business represents a little more than probably 10 plus percent of our overall sales from our AMC group, we've talked about this during our Investor day, where the growth of that will be.
Patrick Cunningham: We've talked about this during our investor day where the growth of that will be, call it 20 plus percent over time. Obviously, that shifts quarter on quarter, year on year, but we definitely see some extremely good strength in that business as we continue to ramp it up and win new business. Yeah, and I think the dynamic with that, Patrick, is played out a lot in what we call sustainable fuels, which are mainly limited to renewable diesel at this point. When you talk about 2025 and 2026.
Patrick Cunningham: All at 20 plus percent over time, obviously that shifts.
Patrick Cunningham: On quarter year on year, but we definitely see some some extremely good strength in that business as we continue to ramp it up and when new businesses.
Patrick Cunningham: I think the dynamic with that Patrick is.
Patrick Cunningham: Played a lot in we call it sustainable fuels, that's mainly been limited to renewable diesel at this point.
Patrick Cunningham: When you talk about 2025 and 2026.
Kurt Bitting: SAF Technology will start to take hold in terms of airlines consuming the fuel and getting approved. So that is going to provide further wind at the back for sustainable fuels. Great, thank you. Thank you. And we will take our next question from Lawrence Alexander with Jeffrey. Good morning.
Patrick Cunningham: SaaS technology will start to.
Kurt Bitting: To take to take hold in terms of airlines consuming the fuel of getting approved so that will that will that is going to provide further wins at the back for the sustainable fuels business.
Laurence Alexander: Great. Thank you.
Kurt Bitting: Okay.
Laurence Alexander: Thank you and we will take our next question from Laurence Alexander with Jefferies.
Laurence Alexander: Just to follow up on that. Can you do you have any rough metrics for the kind of dollars per ton revenue opportunity for you if there's expansions in copper mining capacity? If refineries move from gasoline-diesel production to chemical production, which I understand would probably increase the catalyst demand and then also kind of your sensitivity to sort of SAF, is there any way to help us understand just how the kind of real, what the tans of the market might be on a dollar-per-tonne basis? Are we talking $5 or hundreds of dollars or thousands?
Laurence Alexander: Good morning, just to follow up on that can you do you have any.
Laurence Alexander: Rough metrics for kind of dollars per ton.
Laurence Alexander: Revenue opportunity for you.
Laurence Alexander: If there are some expansions in copper mining capacity.
Laurence Alexander: If refineries move from gasoline and diesel production to chemical production, which I understand it probably increases the catalyst demand.
Laurence Alexander: And then also kind of your sensitivity to.
Laurence Alexander: Sort of Saf.
Laurence Alexander: Yes.
Laurence Alexander: Is there any way to help us understand just how old are you kind of what the teams of the market might be on a dollar per ton basis.
Laurence Alexander: Are we talking $5 or hundreds of dollars a thousand.
Kurt Bitting: Yeah, I could probably, I can help you a little bit on some of the questions about the usage of sulfuric acid. So, you know, when you look at copper. Solvent Extraction Electrowinning, which is essentially copper leaching, consumes anywhere from three to five tons of sulfuric acid per ton of copper produced, so that's a good kind of flag for what the potential growth is in terms of sulfuric acid and copper mining. And there are various, when you look at lithium, that uses more, anywhere up to 20 tons of sulfuric acid. Some other metals use different ratios.
Speaker Change: Yeah, I could probably I can help you a little bit on the.
Kurt Bitting: On some of the questions to put the usage I guess, a sulphuric acid. So when you look at copper.
Kurt Bitting: Solvent extraction, Electra, winning right, which is essentially copper leaching.
Kurt Bitting: That consumes anywhere from three to five times, a sulphuric acid per tonne of copper produced so that's a good.
Kurt Bitting: That's a good kind of flagged for what the potential growth is in terms of sulfuric acid and copper mining and theres. Various when you look at lithium that uses more anywhere up to 2000 tons of sulphuric acid. Some other metals use used different different ratios in terms of regeneration.
Kurt Bitting: In terms of regeneration of business, our customer base, which is roughly two-thirds located in the Gulf Coast, has tremendous scale, and we believe they'll be in refined products, and their business models will drive them towards exporting refined products as time goes along. And then for our West Coast refineries, obviously, the outlet that they're producing is highly valuable in the California market in order to meet those California gasoline specifications. That's probably the best marker I can give you in terms of acid usage and some of those dynamics that you mentioned.
Kurt Bitting: <unk>.
Kurt Bitting: <unk> are our customer base, which is roughly two thirds located in the Gulf coast.
Kurt Bitting: We have tremendous scale and we believe they will be in the refined products.
Kurt Bitting: And their business models will drive them towards exporting refined products.
Kurt Bitting: As time goes along and then for our West Coast refineries, obviously, the outlet that theyre producing is highly valuable in the California market in order to meet those.
Kurt Bitting: California gasoline specifications so.
Kurt Bitting: That's probably the best.
Kurt Bitting: Markers I can give you in terms of asset usage and some of those dynamics that you mentioned.
Kurt Bitting: And then there was just the opportunity for Catalyst. Yeah, so for catalysts, we do see polyethylene catalyst or polyethylene demand, as we talked about continuing to grow, you know, in that 3% range. We sell a lot of catalysts both into the Middle East and North American markets, where we see continued expansions, and there are planned expansions that have been announced, obviously, to take advantage of the low feedstock costs, low natural gas, and so forth.
Kurt Bitting: And then just the opportunity for catalysts.
Kurt Bitting: Yes, so for catalyst, we do see.
Kurt Bitting: The polyethylene.
Kurt Bitting: Catalysts.
Kurt Bitting: Polyethylene demand as we talked about continuing to grow in that 3% range.
Kurt Bitting: We sell a lot of catalysts bolt into the middle East and North American markets, where we see.
Kurt Bitting: Continued expansions and Theres planned expansions that has had been announced obviously to take advantage of the low <unk>.
Kurt Bitting: So we've always, you know, one of the reasons we made the expansion decision for Kansas City was to, you know, and those customer commitments that we have for that backing that investment are to meet some of that growing demand long term that's benefiting from lower feedstock costs here in the U.S. and Middle East. Thank you. Thank you. Once again, if you would like to ask a question, please press star and one on your telephone keypad now. And we will take our next question from Hamed Khorsand with BWS Financial. Hey, good morning.
Kurt Bitting: Feedstock cost low natural gas and so forth. So we've always one of the reasons. We made the expansion decision for Kansas City was too and those customer commitments that we have for that backing that investment up or to meet some of that growing demand long term, that's benefiting from lower feedstock costs here in the U S in mid.
Kurt Bitting: East.
Hamed Khorsand: Thank you.
Hamed Khorsand: Thank you once again, if you would like to ask a question. Please press star and one on your telephone keypad now.
Hamed Khorsand: And we will take our next question from Amit <unk> with BWXT financial.
Hamed Khorsand: So I just wanted to understand the level of conversation you're having with customers, looking out for the rest of the year that gives you confidence that the rest of the year is not at risk given where Q1 and potentially Q2 ends up falling. Thanks for the question, Hamed. So, if we look at, you know, if we just go across the spectrum of the major end-use customers, you know, obviously, the products that we supply to those customers are very important.
Hamed Khorsand: Hi, good morning, So I just wanted to understand.
Hamed Khorsand: The level of conversation Youre, having with <unk>.
Hamed Khorsand: Customers looking out for the rest of the year that gives you confidence.
Hamed Khorsand: The rest of the year is not at risk, given where Q1 and potentially Q2 ends up falling.
Hamed Khorsand: We're generally sole-sourced with a lot of our customers, so we do get a very good window into their forecast because some of the products obviously take longer to make if it's in terms of catalysts. And then the sulfuric acid and the sulfuric acid regeneration has very high utilization across the country. So customers are generally very transparent with us in terms of their forecast. So when you look at regeneration, the things we mentioned on the call, there are very good margins for octane and outlet right now, so we see that demand continuing through the year. Exports are up due to the global dynamics going on right now and U.S. refining capacity having a nice advantage there.
Speaker Change: Sure. Thanks for the question Amit So if we look at our.
Hamed Khorsand: Just go across the spectrum of the major end use customers.
Hamed Khorsand: Obviously, the products that we supply to those customers.
Hamed Khorsand: Very important we're generally sole sourced with a lot of our customers. So we do get a very good window into their forecast because some of the products, obviously take longer to make if its terms of catalyst and then.
Hamed Khorsand: Sulphuric acid and Sulphuric acid regeneration is has very high utilization across the across the country. So.
Hamed Khorsand: Customers are generally.
Hamed Khorsand: Transparent with us in terms of their forecast. So when you look at regeneration the things we mentioned on the call.
Hamed Khorsand: Sure.
Hamed Khorsand: Good margins for octane and outlet right now so we see that demand carrying through the year exports are up due to the global dynamics going on right now in U S refining capacity, having having a nice advantage there Virgin sulfuric acid, which we were we were uncertain with on the on the last call.
Kurt Bitting: Virgin sulfuric acid, which we were uncertain about on the last call. What I would say is pricing there has stabilized from the last call, as well as we expect the nylon end-use sales to rise year over year. Mining remains very firm.
Kurt Bitting: What I would say is pricing there has has stabilized from the last from the last call as well as we expect 90, the nylon end use sales to rise year over year mining remains very firm as you can see the metals prices have firmed here in the last three years three to six months.
Hamed Khorsand: As you can see, metals prices have firmed here in the last three to six months. And there are still some pockets in virgin acid, certain industrial applications that I would say are less certain, but in general, things have stabilized nicely there. And then moving over to polyethylene catalysts, as we just talked about, there is growth year over year, and we do expect that to pick up even more momentum in the second half of the year.
Hamed Khorsand: And there are still some pockets in virgin acid certain industrial applications.
Hamed Khorsand: I would say are less certain but in general things have stabilized nicely there and then moving over to polyethylene catalyst as we just talked about theres growth year over year, we do expect that to pick up even more momentum in the second half of the year, and then hydrocracking, which.
Hamed Khorsand: And then hydrocracking, which, you know, another large chunk of orders we do have good visibility to now, or better visibility to now, you know, later in the year. And again, those are longer lead time catalyst items that have to be produced, so we generally have good visibility on that.
Hamed Khorsand: Another large chunk.
Hamed Khorsand: Those orders, we do have good visibility to now or better visibility to now later on in the year and again those are longer lead time catalyst items that have to be produced.
Hamed Khorsand: We generally have a good visibility on those.
Kurt Bitting: Okay, and then could you just quantify what kind of impact you're expecting in Q2 as far as the downtime is concerned? Well, we have two planned turnarounds for the quarter, which is one more than we had in Q2 of last year, but the downtime itself will be very similar to Q1, right? So we executed two maintenance turnarounds in this Q1 of 2024 this year, so it'll be similar to... Q1 slightly more than it was in Q2 of last year, but we're happy with where we're set up really because those turnarounds will all be complete by the end of May, which leaves us with 80% of our turnaround activity completed for the year and with a decent volume outlook for the remainder of the year.
Speaker Change: Okay, and then could you just quantify what kind of impact you're expecting in Q2 as far as the downtime is concerned.
Kurt Bitting: The downside well we have two planned turnarounds in in the.
Kurt Bitting: For the quarter, which was one more than one more than we had Q2 of last year, but the downtime itself will be very similar to Q1 right. So we had to we executed two maintenance turnarounds in Q1 of 'twenty 2024. This year. So it will be similar to Q1 <unk>.
Kurt Bitting: Lately more than it was Q2 of last year, but.
Kurt Bitting: We're happy with where we're set up really because those turnarounds will all be complete really by the end of May which leaves us with 80% of our turnaround activity completed for the year and with.
Kurt Bitting: A decent volume outlook for the remainder of the year.
Speaker Change: Okay. Thank you.
Kurt Bitting: Okay, thank you. Thank you. It appears that we have no further questions at this time. I will now turn the program back over to our presenters for any additional or closing remarks. Thank you, Madison. Thank you to all of our participants this morning for your interest in Ecovyst and your thoughtful questions. With that, we'll conclude our call. This does conclude today's program. Thank you for your participation. You may disconnect at any time, and many more
Speaker Change: Thank you. It appears that we have no further questions. At this time I will now turn the program back over to our presenters for any additional or closing remarks.
Kurt Bitting: Thank you Madison. Thank you to all of our participants this morning for your interest in <unk> and your thoughtful questions with that we'll conclude our call.
Kurt Bitting: Sure.
Kurt Bitting: This does conclude today's program. Thank you for your participation you may disconnect at anytime.
Kurt Bitting: Hum.
Kurt Bitting: [music].
Kurt Bitting: Okay.
Speaker Change: Got it.
Kurt Bitting: Hum.
Kurt Bitting: Hello.
Kurt Bitting: [music].
Kurt Bitting: Okay.
Kurt Bitting: Uh huh.
Kurt Bitting: Yeah.
Kurt Bitting: [music].
Kurt Bitting: Hmm.
Kurt Bitting: [music].
Kurt Bitting: Hum.
Kurt Bitting: Hum.
Kurt Bitting: Hum.
Kurt Bitting: Yes.
Kurt Bitting: Yeah.
Kurt Bitting: Hum.
Madison: [inaudible] and many more. I'll see you next time. Bye. [inaudible] and many more. I hope you enjoyed this video. If you did, please hit the Like button and subscribe to my channel. I'll see you in the next video. (inaudible)
Kurt Bitting: Yeah.
Madison: Yes.
Madison: Yeah.
Madison: Yes.
Madison: Yeah.
Madison: Hum.
Madison: Okay.
Madison: Uh-huh.
Madison: [music].