Q3 2025 Ecovyst Inc Earnings Call
Speaker #4: Welcome to the Ecovyst Inc. third Quarter 2020 Earnings Call and webcast . Please note today's call is being recorded and should run approximately one hour .
Speaker #4: Currently , all participants have been placed in a listen only mode to prevent any background noise . After the speaker's remarks , there will be a question and answer period .
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Speaker #4: I would now like to turn the conference over to Mr. Gene shields , Director of Investor Relations . Please go ahead , sir .
Speaker #5: Thank you . Operator . Good morning and welcome to Ecovyst Inc. third Quarter 2025 Earnings Call . With me on the call this morning are Kurt Bitting Chief Executive Officer and Mike Finn , chief Financial Officer .
Speaker #5: Following our prepared remarks this morning , we'll take your questions . Please note that some of the information shared today is forward looking information , including information about the company's financial and operating performance strategies .
Speaker #5: Our anticipated end use demand trends and our 2025 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 .
Speaker #5: Any forward looking information shared today speaks only as of this date . These risks are discussed in the company's filings with the SEC .
Speaker #5: 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 the presentation materials posted in the investor section of our website .
Speaker #5: I'll now turn the call over to Kurt Bitting . Kurt . Thank you , Jean .
Speaker #6: And good morning . The third quarter of 2025 was a pivotal quarter for Ecovyst Inc. . Following an extensive strategic review of our advanced materials and Catalyst segment , we announced an agreement to sell the business to Technip Energies for a purchase price of $556 million .
Speaker #6: The anticipated close of this transaction in the first quarter of 2026 is expected to result in net proceeds of approximately $530 million , and we currently plan to apply 450 to $500 million of the net proceeds to reduce our long term debt , resulting in an expected net debt leverage ratio of less than 1.5 times .
Speaker #6: Moving forward , our strategy will focus on acceleration of growth through organic growth initiatives and by pursuing attractive inorganic opportunities . In addition , we plan to return capital to our stockholders through an active stock repurchase program to facilitate this active return of capital to stockholders , the board has amended our existing $450 million stock repurchase plan to remove the April 2026 expiration date .
Speaker #6: The repurchase program has approximately $200 million of remaining capacity . During the third quarter , we repurchased $5.5 million of our common stock , and we intend to repurchase up to $20 million of our stock in the fourth quarter of 2025 , with further repurchases anticipated in 2026 .
Speaker #6: From a business standpoint , the company delivered positive results in the third quarter . Adjusted EBITDA increased 18% , driven by favorable contractual pricing for regeneration services and higher sales volume for Virgin sulfuric acid .
Speaker #6: However , our financial results for the third quarter do not reflect the full potential of our regeneration services business as regeneration volume was adversely impacted by unplanned and extended downtime at several of our customers refineries during the quarter .
Speaker #6: We believe these outages are transitory and we do not expect a significant impact from customer outages as we move into 2026 . Turning to demand trends on slide five .
Speaker #6: We believe the near and longer term outlook for the company remains favorable for our regeneration services business . We expect favorable alkaloid economics will continue to drive demand for our regeneration services , with growth in the business driven by both volumetric and pricing dynamics .
Speaker #6: In 2025 , we expected a higher than average number of planned refinery customer maintenance outages . In addition to these planned outages , one refinery customer experienced extended downtime throughout most of the year due to a fire incident .
Speaker #6: Regeneration volumes in the third quarter were moderately impacted by unplanned customer production restrictions , including one customer who extended their planned turnaround by 30 days in the fourth quarter .
Speaker #6: We now expect two of our major refinery customers to execute unplanned outages to address mechanical issues . Looking out to 2026 , we do not anticipate the same high level of planned or unplanned maintenance at our refining customers .
Speaker #6: For Virgin sulfuric acid , we continue to see very strong demand in the mining sector . Mining . Currently , accounts for 20 to 25% of our virgin sulfuric acid sales , and as previously discussed , we have had two expansion projects with existing customers come online in the second half of this year .
Speaker #6: Global demand for copper is steadily rising due to its essential role in supporting infrastructure for data centers . Renewable energy applications such as wind and solar power , and the production of electric vehicles .
Speaker #6: In addition , tariffs and trends towards Onshoring are increasing the focus on domestic supply . Longer term , we believe the strategic shift towards the mining and processing of critical and rare earth minerals in the US will also contribute to an increase in sulfuric acid demand .
Speaker #6: We are already engaged with customers to address their needs for these future opportunities . We also supply oleum grades of sulfuric acid to producers and suppliers of the precursors of nylon , including nylon six and nylon six .
Speaker #6: Six . This end use also represents 20 to 25% of our sulfuric acid sales , with global overcapacity . We expect stability with modest volume growth in 2025 .
Speaker #6: However , we believe the longer term outlook for this end use remains positive . The balance of our sulfuric acid sales support varied industrial processes , including approximately 10% of sulfuric acid that is under contract with our refining customers as make up acid used in our regeneration process .
Speaker #6: This basket of industrial applications to typically exhibits demand growth in line with GDP . However , the prospect of further onshoring in the US may drive incremental demand for sulfuric acid in a number of industrial applications .
Speaker #6: The addition of the sulfuric acid plant has already had a positive effect on our manufacturing and supply chain network , with the positive network effect from the sulfuric acid plant and capital projects underway to support organic growth .
Speaker #6: We believe we are well positioned to address attractive growth in sulfuric acid demand over the next few years . These expansion projects include the expansion of tank capacity at our Houston site , already underway , as well as planned investments in our Wagaman site to enhance efficiency and increase capacity for Virgin sulfuric acid and regeneration services .
Speaker #6: At the same time , we are evaluating options for future debottlenecking and capacity additions to address longer term growth in demand . We see for Virgin sulfuric acid .
Speaker #6: Lastly , we continue to see robust demand for our chem 32 catalyst activation services . And this is driven by activation of third party catalysts used in both conventional and sustainable fuel production .
Speaker #6: We have already completed the first phase of our debottlenecking at our orange , Texas site to support the growth in demand . As we look forward , we see favorable demand trends for the company and we believe we have a solid strategic plan in place to position Ecovyst Inc. for growth through both organic and inorganic projects .
Speaker #6: I'll now turn the call over to Mike , who will review our financial results . Thank you Curt .
Speaker #7: Good morning . In light of the announced agreement to divest our advanced materials and Catalyst segment , which is now reported in discontinued operations , my comments this morning will be focused on the reported results from our continuing operations in our materials .
Speaker #7: We continue to report eco services as a separate single segment , along with unallocated corporate costs from comparability perspective . No changes were made to the reporting of the eco services segment .
Speaker #7: Sales or adjusted EBITDA results . We are pleased with our results for the quarter . Growing our sales and adjusted EBITDA by double digits , generating over $40 million of adjusted free cash flow and continuing to execute on our stock repurchase program .
Speaker #7: Our strong cash position and liquidity continued to provide us with the flexibility needed to execute on our capital allocation strategy . At the top line .
Speaker #7: Third quarter sales from continuing operations were $205 million , up $51 million , or 33% , excluding the $25 million impact of higher sulfur costs passed through and price sales were up nearly 17% .
Speaker #7: Total adjusted EBITDA , including both segment services , adjusted EBITDA and unallocated corporate costs , was $58 million , up 18% , reflecting the benefits of positive pricing and volume .
Speaker #7: I will refer you to the adjusted EBITDA bridge on slide nine as this highlights the major components of the period over period change in adjusted EBITDA .
Speaker #7: Pricing . Excluding the pass through of higher sulfur costs , was up $9 million compared to the third quarter of 2020 . Four , primarily driven by favorable contractual pricing .
Speaker #7: And our regeneration services business . The pass through effect of higher sulfur costs was approximately $25 million in the quarter , with the pass through resulting in no material impact to adjusted EBITDA .
Speaker #7: Overall volume was favorable in the third quarter , led by higher sales volume for Virgin sulfuric acid and the contribution from our Wagaman site .
Speaker #7: This was partially offset by lower regeneration services associated with the unplanned and extended customer downtime . Other costs increased $7 million , principally reflecting the incremental fixed costs associated with the acquisition of our Wagaman site , along with higher manufacturing costs associated with general inflation and transportation costs .
Speaker #7: Turning to the results of the eco services segment . Our top line sales growth was driven by both price and volume . As previously mentioned , the price variance was driven primarily by favorable contractual pricing for regeneration services .
Speaker #7: Pricing for Virgin sulfuric acid and other end uses were marginally higher and remained stable during the quarter . At the volume level , we experienced strong growth in virgin sulfuric acid , led by mining activity and general industrial end use .
Speaker #7: We also saw volume contribution from our new Wagaman assets , driving the increase in sales . The higher Virgin volume was partially offset by lower regeneration services associated with the unplanned and extended customer downtime .
Speaker #7: As many of our refinery customers were down for extended periods of time during the quarter . Segment adjusted EBITDA for eco services was $64 million , up 15% , and within the guidance range provided during our second quarter call .
Speaker #7: The increase compared to the prior year reflects the sales impacts previously described , partially offset by higher manufacturing costs associated with general inflation and slightly higher transportation costs .
Speaker #7: In addition , while our third quarter financial results include wagaman , the sales contribution was largely offset by integration and other costs . I also want to highlight that the decrease in the adjusted EBITDA margin percent was largely a function of the pass through effect of higher sulfur costs , which increased sales with no associated impact on adjusted EBITDA .
Speaker #7: Turning to the cash and debt on slide 11 . I will comment on our current and expected cash generation for 2025 , as well as our anticipated debt position upon a successful closing of the divestiture of the AMC business .
Speaker #7: Through the first nine months of the year , we generated adjusted free cash flow of $42 million . We continue to expect strong cash generation in the fourth quarter and have increased our full year 2025 expectations for adjusted free cash flow to a range of 75 to $85 million at quarter end , we had available liquidity of $185 million , made up of $99 million of total cash , of which 82 million is from continuing operations and 17 million is from discontinued operations .
Speaker #7: Along with availability under our ABL facility of approximately $86 million . Regarding our debt position with an anticipated first quarter close for the disposition of our Amac segment , we currently anticipate applying between 450 to $500 million of the net proceeds to reduce our term loan , resulting in an expected cash balance of between 150 and $200 million .
Speaker #7: This would lead to an expected net debt leverage ratio of less than 1.5 times. Moving forward, we believe our significantly strengthened balance sheet and the strong cash generation profile of our business will provide us with ample flexibility as we look to accelerate organic and inorganic growth opportunities and return capital to shareholders through an active stock repurchase program.
Speaker #7: Turning to Slide 12. In light of the announced agreement to divest the AMC segment, we have revised our 2025 guidance to reflect our expectations for our financial results from continuing operations.
Speaker #7: In addition , while we are not able to provide detailed guidance for 2026 , given that we remain positive about the outlook for our business , we wanted to provide some high level commentary on the expectations for 2026 .
Speaker #7: Overall , we see positive demand fundamentals for the balance of 2025 and into 2026 . However , we expect the unplanned refinery customer outages that we have experienced during the year to spill into the fourth quarter , impacting regeneration services volume .
Speaker #7: We expect full year sales to be between 700 and $740 million , including an expectation of higher sulfur cost pass through of approximately 70 million .
Speaker #7: Looking into 2026 , we expect increased regeneration volume on less customer turnarounds and contributions from positive contractual pricing . In addition , we anticipate higher volume for Virgin sulfuric acid , benefiting from robust demand in mining applications and the incremental contributions from our wagaman assets .
Speaker #7: For 2025 , we expect corporate costs of approximately $30 million , slightly favorable to our previous guidance range . As we have previously noted .
Speaker #7: Following the disposition of the Advanced materials and Catalyst segment , we expect a slight reduction in corporate costs in 2026 of a few million dollars compared to this revised guidance for 2025 .
Speaker #7: Our expectations for adjusted EBITDA from continuing operations for 2025 , including corporate costs , will be approximately $170 million . This implies adjusted EBITDA for our eco services segment to be approximately $200 million , slightly below our previous guidance range .
Speaker #7: This reflects a one time drag on EBITDA from the cumulative impact of unplanned and extended customer downtime . We have experienced this year , which has been partially offset by higher than anticipated virgin acid sales .
Speaker #7: Excluding the impact of the unplanned and extended customer downtime , we would have expected adjusted EBITDA for our eco services segment to have landed in the middle of a recent guidance range of 205 to $215 million .
Speaker #7: As mentioned earlier, we increased our adjusted free cash flow range to between $75 million and $85 million for 2026, with the exclusion of the AM and C business.
Speaker #7: We expect free cash flow to be modestly lower . CapEx for 2025 is expected to be between 60 and $70 million . We anticipate higher CapEx in 2026 , driven by the inclusion of our Wagaman site .
Speaker #7: And as we look to accelerate organic growth initiatives , interest expense attributable to continuing operations is expected to be in the range of 32 to $34 million .
Speaker #7: Note that while our debt balance remains the same on the balance sheet, the interest expense in the income statement is adjusted as a portion has been allocated to discontinued operations on the basis of our mandatory debt repayment of our term loan.
Speaker #7: As we expect , the paydown of the term loan to be in the range of 450 to $500 million , cash interest in 2026 is expected to be lower from a range of 46 to $50 million in 2025 to a range of 21 to $25 million in 2026 .
Speaker #7: The effective tax rate for 2025 remains in the mid 20% range , and looking into 2026 , with the disposition of the AMC segment and with some benefits arising from the 2025 tax bill , we believe our cash tax position will benefit .
Speaker #7: But the effective tax rate will remain in the mid 20% range . Lastly , we have continued our practice of providing data on the schedule of planned turnarounds , which is located in the appendix of the presentation .
Speaker #7: I will now turn the call back to Kurt for some closing remarks .
Speaker #6: Thank you . Mike . This year has proven to be another challenging year for the chemical industry . However , this has continued to demonstrate resilience .
Speaker #6: We believe this is attributable to our leading supply share positions , our long standing contractual customer relationships , and the fact that we continue to serve key industries with critical products and services .
Speaker #6: Moreover , as we look forward , we see compelling opportunities for growth for our regeneration services business and for Virgin sulfuric acid . The announced divestiture of our advanced Materials and Catalysts segment will transform Ecovyst Inc. following the close of the transaction , and as we turn our focus to the implementation of our strategies for growth and value creation for our stockholders , we expect to do so with a more stable business profile , a significantly strengthened balance sheet , and a liquidity position and cash generation capability that will allow us to execute on our growth initiatives in parallel , we intend to return capital to our stockholders through an active stock repurchase program .
Speaker #6: As we have indicated , we intend to repurchase up to $20 million of stock in the fourth quarter . Post-closing . And after the reduction of our term loan .
Speaker #6: We expect to have a cash position of 150 to $200 million , which will provide ample funding for growth projects and position us for the additional return of capital to stockholders .
Speaker #6: Specifically, with regard to capital allocation, we will prioritize funding organic growth projects that support our growth expectations that I mentioned earlier.
Speaker #6: At the same time , we will continue our disciplined approach towards evaluating inorganic growth opportunities consistent with our recent acquisitions of chem and the Wagaman assets .
Speaker #6: We plan to focus our inorganic growth strategy on targets that are closely aligned with our operations and enhance our current capabilities beyond the funding of our growth initiatives.
Speaker #6: We believe the best opportunity for value creation that benefits our stockholders remains an active stock repurchase program . Virgin sulfuric acid will be essential for processing copper and other critical minerals , while sulfuric acid regeneration will continue to support clean fuel production .
Speaker #6: We are enthusiastic about the opportunities that lie ahead for Ecovyst Inc. Mike summarized . Our high level expectations for 2026 , and based upon these expectations , we anticipate positive growth and favorable financial results in 2026 .
Speaker #6: We look forward to sharing updates with you as we close the sale of our advanced Materials and Catalyst segment , and as we move forward with the implementation of our strategy to accelerate growth for Ecovyst Inc. .
Speaker #6: At this time , I will ask the operator to open the line for questions .
Speaker #4: Thank you . Mr. Bidding ladies and gentlemen , at this time , if you do have any questions or comments , simply press star one on your telephone .
Speaker #4: If you would like to remove yourself from the queue , you can do so by pressing star two . We go first today to John McNulty of BMO Capital Markets .
Speaker #8: Yeah , thanks very much for taking my question . So maybe a first one with regard to cash deployment . It sounds like you're looking to accelerate both organic and inorganic growth , as well as some of the buybacks .
Speaker #8: So I guess maybe question on that . Are there any specific projects internally that you've kind of had on hold that now you kind of have the opportunity to to really kind of go full throttle into and I guess how do you think about balancing that capital deployment into growth opportunities versus returning it to the shareholders through buybacks ?
Speaker #8: When when your stocks are kind of this valuation ?
Speaker #6: Yeah . Thanks , John . So I'd say first to hit on the growth opportunities . We obviously have a lot of excitement around some of the end segments in our business , particularly as it comes to mining .
Speaker #6: So we have some storage and logistics expansion work that we're conducting in Houston that's already underway , that we referenced in our comments , as well as additional investments at the Wagaman facility , which will give us , I'd say , further logistics and capacity at that site as well , to support to support our network .
Speaker #6: So we're able to advance those quicker to meet some of the near-term demand trends that that we see . You know , I think Ecovyst Inc. in a good position , really , to , you know , to to go after our growth opportunities , both organic and inorganic .
Speaker #6: But at the same time , the share repurchases remain a pillar of our capital allocation strategy . And quite frankly , we're going to prioritize things as they give the best value creation to our shareholders , right .
Speaker #6: So as we see organic opportunities , will make those investments as we see our shares being undervalued , as we believe they are now , we'll make we'll do the share repurchases .
Speaker #8: Got it. Fair enough. And then maybe can you give us some color as to how you're thinking about pricing and its impact for next year?
Speaker #8: I mean , you've had some pretty decent success so far . It seems like it's still you're still seeing further upward pricing momentum .
Speaker #8: I guess . Can you help us to think about how that may carry into 2026 a little bit more ?
Speaker #6: Yeah , I think we're it's it's a similar pace as as we've said before . So we'll have our typical contracts on the regeneration side that will that will reprice as you've seen , flow through , you know , as in the history of , of eco services in terms of virgin sulfuric acid , I'd point to two things .
Speaker #6: I think there's obviously sulfur prices are way up , which might pointed to in his comments , which those will look prices in general look higher year over year over year .
Speaker #6: We see really good demand heading into next year , especially in terms of the the mining sector , which will which will support General Virgin sulfuric acid pricing .
Speaker #6: And then I would point to our Wagaman facility right where a lot of those contracts that were inherited with the acquisition of that are , are rolling off this year , that will be repriced going into next year as well .
Speaker #8: Great . Thanks very much for the color .
Speaker #4: Thank you. We'll go next to Patrick Cunningham of Citi.
Speaker #9: Hi . Good morning . Sort of a related question to that last one . Which is or your last comment on the wagon integration , just how should we think about how that's progressing and what should we expect in terms of potential EBITDA lift in synergies into next year is more of the uplift coming from the positive network effects , or is more of the effect coming from contract repricing ?
Speaker #6: Yeah , I think it's really it's really both . So the contract repricing is obviously an important element . That'll be somewhat as we've talked about the uplift , there will be somewhat offset by you know we are going to have a pretty significant turnaround there that we're planning for .
Speaker #6: I think the end of the end of Q1 at that site , but it also is already having a positive network effect . And we expect that to carry on into next year .
Speaker #6: And grow over time . As you know , mining and some of the other opportunities become more and more , you know , demand more and more sulfuric acid .
Speaker #6: Wagaman will play a bigger part . So that's our some of that is already already happening within within the system .
Speaker #9: Got it . And and I guess just on the long term financial framework , obviously the business is more stable . Business profile , predictable earnings and cash flow upside from critical minerals .
Speaker #9: Do you have any early thinking on how we should think about the growth algorithm? Is it a, you know, EPs growth range?
Speaker #9: That's bolstered by pretty radical repurchases ? Is it just a simple sort of free cash flow conversion percentage , or is that maybe too much stability and predictability that I'm forecasting into what the go forward business might look like ?
Speaker #7: Yeah . Patrick , thanks for the question . I think we you know , we see some very positive trends as we articulated going into 2026 .
Speaker #7: And certainly with the New balance sheet and the amount of cash generation we see , we see that being a very positive aspect that would go not only into 2026 , but beyond .
Speaker #7: Right . So , you know , we do continue to expect to have a high cash yield . You know , on our business .
Speaker #7: Certainly we will continue to to drive organic investments that , you know , we think are necessary , certainly impacting the cash line as we take that first dollar from from operations and put it back into the business for , you know , quality organic growth projects .
Speaker #7: But we do see a strong free cash flow generation going forward . We do see that this business is one that can can grow both volumetrically and through pricing .
Speaker #7: Given our structure . So we see that to be something that will continue to go out beyond 2026 . You know , whether that's in the , mid-single digits or mid single digit .
Speaker #7: Plus , you know , we certainly expect to to provide some more granularity around 2026 as we come into next year when we provide our our full 2026 guidance .
Speaker #7: And we can give some additional clarity on kind of where we see , you know , the rest of the business going out .
Speaker #7: You know , more on a long term basis .
Speaker #9: Great . Thank you .
Speaker #4: Thank you . We turn now to Aleksey Yefremov , KeyBanc Capital Markets .
Speaker #9: Hey , guys . Good morning . This is this is Ryan on for Aleksey . Mike , I just wanted to kind of circle back to thinking about debt reduction .
Speaker #9: And your leverage . If I , if I think back to Investor Day about two years ago , I think your long term target was , was leveraging the 2 to 2 and a half times range .
Speaker #9: And now you guys are talking about being below one and a half times after use the proceeds . So has your changing has your thought changed in terms of kind of like what your target wants to be longer term ?
Speaker #9: Or is this maybe , you know , short term kind of action and longer term we can kind of lever back up ?
Speaker #7: Yeah . Thanks , Ryan , for the question . You know , so with the with the net proceeds that we're expecting , regardless of the debt Paydown , we're going to start out with a net debt leverage ratio of below one and a half times .
Speaker #7: Right ? So our gross , you know , leverage ratio as we articulated in the materials , will probably be closer to two , two times .
Speaker #7: So you know , this is something that we think is going to ebb and flow over time based on how much cash we want to use for some of our capital allocation priorities .
Speaker #7: Right . So , you know , we believe that , you know , probably below one and a half times is , is is probably too low .
Speaker #7: You know , we want to use our cash appropriately to , you know , grow the business . But , you know , believe that we can also flex up , you know , to a higher level , which we've talked about before , just given our strength , our stability , our free cash flow generation to execute on our capital allocation strategies .
Speaker #7: So , you know , our target of 2 to 2 and a half times , you know , is still a relevant target .
Speaker #7: We just think that it's going to ebb and flow depending on both the timing of when we divest the a m and C business and the net leverage that will result .
Speaker #7: And what kind of capital allocation strategies we deploy over the coming years .
Speaker #9: Okay . That makes sense . And then just the second question on slide five , I mean , nylon is kind of really the only cautionary short term demand outlook .
Speaker #9: So wondering kind of how you're thinking about this trending into into 26 ? I know like the long term outlook is pretty strong .
Speaker #9: But I think customers we were talking about maybe gaining some share there in the near term . So maybe into early 26 , how you're thinking about nylon .
Speaker #9: Thank you .
Speaker #6: Yeah I mean I think , you know , for this year , the way we look at it , it's been up moderately this year versus versus last year .
Speaker #6: So recovery has been has been good for next year . I think we're you know we expect it to kind of be status quo with where we're at .
Speaker #6: We don't expect a big movement up or down either way . But long term as we said , you know , we're confident in the in the fundamentals on on nylon .
Speaker #4: Thank you. We'll go next to Ahmed Kasonde of BW Financial.
Speaker #10: Hey good morning . Could you just talk about the clarity you have from your customers as they're talking to you about these downtimes that are unexpected ?
Speaker #10: And how are you managing inventory through that process ?
Speaker #6: Yeah , thanks for the thanks for the question , Hamid . I think yeah , this year , in 2025 , coming into the year , we expected it to be not only a heavy refining turnaround year across the industry , but as well in our customer , in our customer base .
Speaker #6: And, you know, that was reflected in our original guidance. I think what's happened as the year has gone on is we had one customer that suffered a fire at the beginning of the year.
Speaker #6: As we mentioned in our comments . And then there's been a multitude of various things which have one created an additional downtime for a customer of 30 days , and then others taking unplanned outages , which , you know , alkaloid economics are favorable .
Speaker #6: So these customers are , you know , really try to avoid doing these things as much as possible . We do generally will get , you know , for a turn , a planned turnaround almost , you know , 1 to 2 years notice in advance of something because these are major equipment overhauls where hundreds of contractors are coming on site to these refineries .
Speaker #6: They're not in impromptu outages when they have disruptions like they are now and things are going , you know , sideways on them mechanically .
Speaker #6: They have to plan those very quickly . And those those can be a matter of weeks in terms of the , you know , when they plan those types of of downtime .
Speaker #6: So we don't we don't necessarily when there's unplanned outages , get a whole bunch of of notice in advance of that . What we have been able to do through this , I guess this period of these unplanned outages is we obviously have ramped up our virgin sulfuric acid volume , and we've been happy with where that's at this year .
Speaker #6: And we try to manage inventories accordingly . Where we can .
Speaker #10: Okay . And just to follow up on it is going forward is is the best way to measure the business on a rolling two year process .
Speaker #10: Because of these maintenance issues .
Speaker #6: No , it Hamid , the that's a good question . You know , refinery outages can range anywhere from 2 to 4 years .
Speaker #6: In terms of the the alkylation equipment . So I wouldn't say two years is a is a good marker . Plus there's , you know , volume increases that go on with refineries over time .
Speaker #6: And , and different things . So it's probably a longer a longer cycle than that .
Speaker #10: Okay . Thank you .
Speaker #4: Thank you . We'll go next . Now to Lawrence Alexander at Jefferies .
Speaker #11: Can you give us some updated perspective on kind of the emerging kind of mining CapEx cycle in the US and what that could mean for you ?
Speaker #11: First , in terms of , you know , potential capacity , spend over , say , the next five , seven years to keep up with demand for Virgin sulphuric acid and also the degree to which you can get any operating margin lift or earnings lift to , you know , sort of a structurally higher sulfuric acid price .
Speaker #11: If one were to occur .
Speaker #6: Sure . Great question , Lawrence . Thanks for that . I think when you look at near term and when I say near term , you know , maybe 1 to 5 years , there's a lot of mining projects , particularly in the copper space that are coming online in the southwest .
Speaker #6: Now that are either extensions of existing projects or new projects that have been under permit and review for some period of time , or even , you know , higher tech leaching technologies , those will require , you know , significant amounts of sulfuric acid , which we're obviously in discussions with customers now to service that demand through some of the things I talked to you about with expansions at Houston and Wagaman , which will allow us to put a lot more tons downrange there into to meet that demand .
Speaker #6: Beyond that, there are even more significant projects, right? Because there's such a deficit for the minerals going forward, and those are going to require larger capacity expansions.
Speaker #6: And , you know , we are in conversations with customers on how we meet that further demand . And we want to make the investments there .
Speaker #6: And be the supplier of choice for those for those projects .
Speaker #11: Thank you .
Speaker #12: And I think your .
Speaker #6: Question , you know , just to get back to the the pricing , I mean , and the uplift in margin , we do see , you know , two things going on long term demand for sulfuric acid rising because of the mining activity and the processing of the minerals in the US .
Speaker #6: And onshoring driving that at the same time , you know , the sulfur molecule is becoming scarce around the globe , right ? As people are using it for obviously , mining applications like they are in the US or fertilizer and so forth .
Speaker #6: And you will see that we believe you'll see the value of sulfuric acid rise over time . Accordingly .
Speaker #11: Got it . Thank you .
Speaker #4: Thank you . And gentlemen , it appears we have no further questions in queue at this time . So this will bring us to the conclusion of the Ecovyst Inc. third quarter 2020 earnings call and webcast .