Ecovyst Inc Stock

Good morning, everyone. My name is Beau, and I will be your conference operator today. Welcome to Ecovyst's Second Quarter 2026 Earnings Call and Webcast. Please note, today's call is being recorded and should run approximately 1 hour. [Operator Instructions]

I would now like to hand the conference over to Mr. Gene Shiels, Senior Director of Investor Relations. Please go ahead, sir.

Thank you, operator. Good morning, and welcome to Ecovyst's second quarter 2026 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 this morning, we'll take your questions.

Please note 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 2026 financial outlook. This information is subject to risks and uncertainties that could cause the actual results and the implementation of the company's plans to vary materially. Any forward-looking information shared today speaks only as of this date. These risks are discussed in the company's filings with the SEC.

Reconciliations of non-GAAP financial measures mentioned in this morning's call with their corresponding GAAP measures can be found in our earnings release and in the presentation materials posted in the Investors section of our website.

I'll now turn the call over to Kurt.

Thank you, Gene, and good morning. We are very pleased with our second quarter results, which reflect continued progress against our financial objectives and clear execution of our long-term growth strategy. As anticipated, high refinery utilization and favorable alkylate economics contributed to growth in sales volume for regenerated sulfuric acid.

In addition, virgin sulfuric acid volume increased on a double-digit percentage basis compared to the year ago quarter on positive demand and the contribution from Waggaman acquired in May of last year. This volume growth, along with favorable net pricing, resulted in adjusted EBITDA of $53 million, solidly within our guidance range and up 27% compared to the second quarter of 2025.

The quarter was also a milestone in strategic execution. On June 30, we closed the acquisition of the Calabrian sulfur dioxide and related derivatives business, the third bolt-on in a playbook we have now run 3 times, which is to identify essential sulfur chemistries adjacent to what we already do best, acquire them at capital-efficient valuations and integrate them into a network that is uniquely built to provide superior products and services to our customers. Calabrian broadens our portfolio, deepens our position in end uses we already serve and is accretive from day 1.

Slide 5 lays out that playbook. The disposition of our Advanced Materials & Catalysts segment in December simplified the portfolio and strengthened the balance sheet, giving us both the focus and the financial flexibility to build a platform of leading sulfur solutions. Ecoservices has long been a leading provider of virgin and regenerated sulfuric acid, and it is that scale in sulfur chemistry that makes each step out possible. The first was Chem32 in 2021, a leading provider of ex-situ catalyst activation using sulfur-based sulfiding technology.

The second was Waggaman in May of 2025, which added capital-efficient incremental capacity sited in our Gulf Coast network. Waggaman contributed to our double-digit virgin sulfuric acid volume growth this quarter, and we have delivered the network optimization we underwrote.

Calabrian is the third step, and it follows the same logic. It brings significant end-use and customer overlap with our legacy business, while adding sulfur dioxide and derivative chemistries we did not previously offer. That is what makes this more than added capacity. It widens what we can sell to customers we already serve in applications where reliability of supply, not price alone, decides who wins the contract.

Across our portfolio, we hold leadership positions in critical chemistries that are essential to our customers' operations, positions that are uniquely built to provide superior products and services to our customers and that we intend to keep extending.

On Slide 6, our demand expectations have not changed materially from our first quarter call. For sales of regenerated sulfuric acid, we are in the midst of the summer driving season, and alkylate economics remain favorable. We expect refinery utilization to remain high and for the second half, higher regenerated sulfuric acid volume with lower unplanned customer downtime than we experienced in 2025.

For sales of virgin sulfuric acid overall, we expect relative stability for the balance of the year. We see continued demand growth in the mining sector driven by copper expansion projects tied to structural electrification. Calabrian gives us a second way to participate in that same growth. With Canadian gold mines running at full capacity, we expect its sulfur dioxide sales into mining to remain favorable.

For sales into industrial applications, we continue to expect virgin sulfuric acid sales into the nylon end-use to be relatively flat in 2026. Sulfur prices continue to increase. And while we did not see any material demand destruction in the second quarter associated with high sulfur prices, we remain cautious about the potential for weaker demand in some industrial applications.

Based on experience, we expect today's elevated sulfur prices to eventually moderate. If customers begin to anticipate lower sulfur prices, we could see a temporary demand impact from destocking.

Overall, long-term secular trends, mining expansion and the onshoring of U.S. industrial activity are positives for Ecovyst. And as a leading provider of products essential to our customers, we remain excited about the longer-term outlook across our businesses.

I'll now turn the call over to Mike, who will review our financial results.

Thank you, Kurt, and good morning. Starting with our key highlights. Our second quarter sales of $250 million were up $74 million, reflecting the pass-through impact of higher sulfur costs, favorable net pricing and strong demand for both regenerated sulfuric acid and virgin sulfuric acid. Adjusted EBITDA of $53 million was up 27% and solidly within our guidance range.

Cash generation was positive in the quarter. And for the first half of 2026, adjusted free cash flow was $13 million. Considering the closing of the Calabrian acquisition at the end of the second quarter, funded through debt and cash on hand, we ended the quarter with a net debt leverage ratio of 2x.

On the following slide, excluding the $55 million sulfur pass-through, sales were up nearly 11%, reflecting higher regenerated and virgin sulfuric acid volume in part from the acquired Waggaman plant and favorable contractual pricing. Adjusted EBITDA was up $11 million, driven by higher sales volume and favorable net pricing, partially offset by higher manufacturing costs, general inflation and higher transportation costs.

The adjusted EBITDA bridge on the following slide shows a continued positive price-to-cost ratio at the contribution margin level. As previously mentioned, the pass-through effect of higher sulfur costs on sales was approximately $55 million, with the pass-through generally having no material impact on adjusted EBITDA. Excluding that pass-through, the price and variable cost combination contributed $9 million, largely from favorable contractual pricing for regenerated sulfuric acid, including the net price impact of higher index costs. Higher sales volume, including Waggaman, accounted for nearly $7 million, partially offset by higher fixed manufacturing costs, including Waggaman's incremental costs.

Turning to the cash and leverage on the next slide. As noted, cash generation was positive in the second quarter, resulting in adjusted free cash flow for the first 6 months of 2026 of $13 million. As we have previously discussed, free cash flow generation this year will reflect higher capital expenditures associated with the expansion of our Gulf Coast storage and logistics network and the working capital impact of higher sulfur costs.

We ended the quarter with available liquidity of $176 million, $88 million of cash and $88 million of availability under our ABL. Because the funding of the Calabrian acquisition added $100 million of debt with no associated trailing 12-month EBITDA contribution, our net debt leverage ratio at quarter end was 2x, up from 1.2x at March 31. It is worth noting that the 2x leverage ratio carries the full acquisition debt against none of Calabrian's trailing 12-month EBITDA. We are currently at the low end of our 2 to 2.5x target range.

Turning to the next slide. Our capital allocation over the past 15 months reflects the same discipline Kurt described, $83 million of stock repurchases, $472 million of debt reduction and 2 bolt-on acquisitions, aggregating $224 million. In addition, this year, we have the flexibility to implement plans to organically invest approximately $20 million in the expansion of our Gulf Coast storage and logistics network.

We executed buybacks, delevered and made 2 acquisitions and still ended the quarter at the bottom of our target leverage range. Going forward, we expect to maintain that balance, weighing organic growth projects, additional bolt-on acquisitions, debt reduction and stock repurchases, creating the most value for our stockholders.

I'll now turn to the 2026 outlook and revised guidance. Our revised 2026 guidance reflects both our expectations for our legacy business and the expected contribution of the Calabrian business in the third and fourth quarters. Sulfur prices rose further in the second quarter, and our second half outlook assumes they hold near current levels.

On that basis, we now expect the full year pass-through effect of sulfur cost on sales to be approximately $220 million higher compared to the prior year, up from $155 million previously expected. Incorporating Calabrian, we now expect full year 2026 sales of $1.02 billion to $1.06 billion, up from our prior guidance, which excluded Calabrian of $890 million to $970 million.

Given our favorable first half results and our confidence in continued demand stability, we are raising the low end of our full year adjusted EBITDA guidance range for the legacy business to $185 million, while maintaining the high end at $195 million. For Calabrian, we expect adjusted EBITDA in the second half of the year to be in the range of $10 million to $12 million. Accordingly, we now expect Ecovyst full year 2026 adjusted EBITDA to fall in the range of $195 million to $207 million.

We expect adjusted free cash flow to be in the range of $45 million to $55 million, up from $40 million to $55 million, with the increase reflecting the contribution from Calabrian, partially offset by the impact of increased sulfur costs on working capital.

While we funded a portion of the Calabrian acquisition through a $100 million add-on to our term loan, we have realized some additional interest savings. And as such, our expectations for the full year interest expense remains unchanged at $18 million to $22 million.

Capital expenditures are now expected to be $85 million to $95 million, up from $80 million to $90 million, reflecting the Gulf Coast expansion and the addition of Calabrian. Depreciation and amortization is now estimated at $80 million to $84 million. And we expect our full year effective tax rate to remain in the mid-20% range.

And finally, we expect adjusted net income to be in the range of $65 million to $85 million with adjusted diluted net income per share of $0.58 to $0.72 per share.

As we move to the next slide, I'll provide directional guidance for the third and fourth quarters. For the third quarter, we expect sales of regenerated sulfuric acid to be up compared to the third quarter of 2025. And although we expect third quarter volume to be up sequentially, we anticipate virgin sulfuric acid will be slightly lower than the year ago quarter, reflecting fewer expected spot sales compared to the third quarter of 2025. With higher turnaround costs than the prior year, we expect third quarter 2026 adjusted EBITDA, including Calabrian, to be in the range of $54 million to $59 million.

Fourth quarter expectations are similar, higher regenerated sulfuric acid volume and lower virgin sulfuric acid volume than in the fourth quarter of 2025. Second half virgin volumes are expected to be lower than the last year because 2025 had a high amount of spot opportunities, and we did not have the turnarounds limiting our production.

We believe sulfur prices may have reached a plateau and could begin to decrease later this year. We still expect sulfuric acid pricing, excluding the pass-through effect, to be lower in the fourth quarter on projected customer mix and on the timing difference between when we purchase sulfur and when we pass those costs through to customers.

Regarding turnaround costs, you will note a change in the turnaround schedule compared to our view in the first quarter's earnings call, as 1 of the 2 turnarounds planned for the fourth quarter has now shifted into early 2027. Despite this timing shift, we still expect turnaround costs in the fourth quarter to be up compared to the year ago quarter, as Q4 2025 did not have any turnarounds. For the fourth quarter of 2026, we expect adjusted EBITDA, including Calabrian to be between $48 million and $55 million.

I will hand the call back to Kurt for some closing remarks.

Thank you, Mike. We are encouraged by our progress through the first half of the year with results that position us well for the second half. Building on the strong performance of our legacy business and the expected contribution from Calabrian in the third and fourth quarters, we have increased our full year 2026 adjusted EBITDA guidance to a range of $195 million to $207 million.

We are pleased to welcome the Calabrian team to Ecovyst. One month in, integration is on plan, and we are focused on executing the synergy actions we underwrote at signing and identifying the growth projects that Calabrian's asset base supports.

For the remainder of the year, our focus will remain on execution. In addition to the integration of Calabrian, the Gulf Coast storage and logistics expansion is underway, which we expect will enhance our ability to serve growing virgin sulfuric acid demand.

After funding the Calabrian acquisition, we ended the second quarter with a net debt leverage ratio of 2x, within our long-term guidance range of 2 to 2.5x. As we continue to evaluate organic and inorganic growth opportunities, we believe our balance sheet and cash generation capability will continue to provide significant flexibility, and we will prioritize the options we believe create the best value for our stockholders.

I will close on this. Our advantage is not any single asset or transaction. It is a network of essential sulfur chemistries embedded in our customers' operations, a position we have now extended 3x without stretching the balance sheet. We intend to keep compounding it.

At this time, I will ask the operator to open the line for questions.

[Operator Instructions] We'll go first this morning to John McNulty with BMO Capital Markets.

This is Margarita Margulis on for John. Given the volatility in the sulfur and sulfuric acid markets, could you please speak to not only spot pricing, but since roughly 90% of your business is tied to longer-term contracts, how should we think about where contracts coming due later this year may reset?

Thanks for the question. So yes, spot sulfur and sulfuric prices are obviously up appreciably year-over-year. And as you pointed out, the lion's share of our business is really -- is under contract, right, anywhere from 1-year to 3-year contracts for virgin sulfuric acid. And a portion of those roll off at the end of every year. So it would be our belief and expectation is as those roll off, they should be negotiated as usual at more favorable pricing and terms if everything in terms of the market overall is in the same condition as it is today.

Great. And then I had another question on nylon markets. We have seen concerns about some weakness there. Could you speak to what you're seeing currently?

Yes. For our area in nylon, which is, again, really geographically focused on the Gulf Coast production, we went into this year believing it would be flattish for us. And that's -- as we sit here midway through the year, that's largely how it's playing out. So we maintain that outlook for the remainder of the year.

We'll go next now to Patrick Cunningham with Citi.

Now that the Calabrian transaction is closed, integration is underway, can you quantify or provide an update on targeted cost synergies, how we should be thinking about those in 2027? And sort of how soon you expect to leverage your existing sales force and customer base to accelerate some of the cross-selling you talked about in the past?

Yes, sure. Well, thanks, Patrick. I mean we're -- again, we're excited about Calabrian -- day 1 was -- is completed. We've safely integrated the business with no customer disruptions. The leadership has been retained. We're happy with the demand. It's tracking to our modeling, and we're really excited about, obviously, the future of growth in terms of the gold sector, particularly in Canada.

And as we stated before, we expect to deliver both cost and revenue synergies, likely in the $3 million to $4 million range. So to put that in perspective, we stated that we purchased the business for around 8x. And after the synergies are implemented, that will step down to around 7x.

Understood. Very helpful. And then maybe just a question on the guidance. Correct me if I'm wrong, I think the underlying guidance rate, excluding Calabrian is maybe a couple of million higher in the second half. Is that exclusively coming from one less turnaround in 4Q? Or is there anything else that you'd call out in terms of incremental puts and takes?

No. So yes, thanks for pointing that. I mean, we -- this is -- we're pleased with our results and outlook so far. And this is -- we did tighten the guidance range now for the second consecutive quarter, which obviously implies an upward move on the midpoint. I would say that's a combination of system cost items as well as additional favorability that we're seeing in some of the spaces, particularly as it pertains to like regeneration, which has obviously been favorable this year with the nice backdrop in refining.

So we're happy with where we're at. And right now, at the midpoint, we're looking at our legacy business really moving up about 11% year-on-year based on our midpoint that we've offered.

[Operator Instructions] We'll go next now to David Silver with Freedom Capital Markets.

I was just wondering, I think in your prepared remarks, you talked about sulfur and sulfuric acid costs moderating, I think, towards the end of the year or a little bit beyond. Apologies if I missed it, but could you just kind of maybe discuss what your assumptions are for how that market might balance out?

Sure. Thanks, David. Welcome back. I think for sulfur, what we made the comment -- I made the comment that we believe that sulfur is largely plateauing right now at its current levels here, at least where we purchased domestically in the U.S. International sulfur prices remain very elevated. U.S. prices have followed that upward. However, you start to see some fertilizer, which is obviously a huge user of the sulfur molecule, have announced some curtailments just based on fertilizer economics, sulfur economics and so forth.

However, despite those curtailments, mining demand for sulfur remains strong. So we just think the blend of those 2 dynamics going on with the curtailments in the fertilizer industry with plus still demand strong from other sectors of the global economy, particularly in mining, is going to lead to a moderation of sulfur prices. We don't believe that the price really has much room to go up from here, but we could see some moderate decreases in the future, but not -- we're not expecting a large handle down or anything like that.

Okay. And I mean, there is -- as you pointed out, there is this spread, I guess, between the domestic contract price and maybe the international spot price. And with your enlarged and enhanced kind of sulfuric acid network, I mean, I am kind of scratching my head and I'm wondering if there's maybe some flexibility within your system to maybe take advantage of that spread via maybe exports out of one or more of your Louisiana-based facilities. But is there some flexibility in the system to consider that option on an opportunistic basis here?

Sure. And we have participated in exports in the past out of -- with sulfuric acid. And again, the Waggaman facility brought that capability to our portfolio last year when we acquired that business. So as you point out, domestic sulfur prices are lower than international prices, which creates a bit of an advantage for people producing sulfuric acid here in the U.S., but also for the people consuming sulfuric acid in the U.S. So it gives our customers a leg up versus their international competition because their raw materials, particularly on sulfur and energy and so forth, tend to be cheaper.

And additionally, I would point out probably the largest advantage our network has is the availability of sulfur and the fact that we have the high concentration in the Gulf Coast, which is where the lion's share of sulfur is produced in North America.

Okay. Great. And then maybe last question for me. But in your remarks, you talked about the Calabrian acquisition being accretive from day 1. And I just wanted to check that frequently, when there's a new acquisition, there are some upfront costs. But should we think that Calabrian is going to be free cash flow positive in the first year of ownership as well? Or might there be some upfront costs to complete the integration the way you want?

Yes. David, it's Mike. Thanks for the question. Yes, we do believe the Calabrian acquisition is going to be cash flow positive for us. Certainly, we guided an EBITDA number of somewhere between $10 million and $12 million for the second half of the year. Of course, from a cash flow standpoint, there will be some additional taxes paid.

We did take on $100 million of additional debt, which would increase our interest, but we also saw some cash interest savings across the portfolio. So we left our overall guidance unchanged. There is some capital that we will spend there, but the Calabrian business is less capital intensive than the legacy acid business. So that's going to be a very net positive for us.

I will say that the Calabrian business overall has a slightly higher EBITDA margin percent than the legacy business. So again, it generates a higher level of free cash flow. It does represent roughly 10% of our overall business, but it's a very positive accretive acquisition. There will be some upfront costs, but they're not overly significant, and they'll be well outpaced by the synergies that we're expecting to get over the next year or 2.

I appreciate you putting together all the moving parts there. That's what I was trying to figure out.

Thank you. And gentlemen, it appears we have no further questions this morning. So ladies and gentlemen, that will bring us to the conclusion of today's call. We'd like to thank you all so much for joining the Ecovyst second quarter earnings conference call and wish you all a great remainder of your day. Goodbye.

Good morning. My name is Stephanie, and I'll be your conference operator today. Welcome to the Ecovyst First Quarter 2026 Earnings Call and Webcast. Please note, today's call is being recorded and should run approximately 1 hour. [Operator Instructions]

I'd like to now hand the call over to Jan Shields, Director of Investor Relations. Please go ahead.

Thank you, operator. Good morning, and welcome to Ecovyst's first quarter 2026 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.

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 2026 financial outlook. This information is subject to risks and uncertainties that could cause the actual results and the implementation of the company's plans to vary materially. Any forward-looking information shared today speaks only as of this date. These risks are discussed in the company's filings with the SEC.

Reconciliations of non-GAAP financial measures mentioned in today's call with their corresponding GAAP measures can be found in our earnings release and in the presentation materials posted in the Investors section of our website.

I'll now hand the call over to Kurt.

Thank you, Gene, and good morning. Consistent with the positive outlook for 2026 that we shared in our fourth quarter earnings call in late February, our first quarter results provide an excellent start to the year with strong growth in both our regeneration services business and for virgin sulfuric acid. Sales for regeneration services were up on a double-digit percentage basis compared to the first quarter of 2025, reflecting high refinery utilization, favorable alkyate economics and lower planned customer downtime compared to the year ago quarter.

First quarter sales for virgin sulfuric acid were also up significantly, benefiting from increased mining demand and the contribution from the Waggaman sulfuric acid assets that we acquired last May. As a result of the strong volume growth and positive pricing in the quarter, we reported adjusted EBITDA of $40 million, which is up 87% compared to the first quarter of 2025.

During the quarter, we also maintained our focus on the implementation of our long-term strategic plan to accelerate growth and enhance value for our stockholders. During the first quarter, we repurchased approximately $36 million worth of our outstanding shares. And with regard to the pursuit of inorganic growth opportunities, our efforts over the course of the first quarter led us to last Friday's announcement that we had reached an agreement to acquire the Calabrian sulfur dioxide and sulfur derivatives business from INEOS Enterprises in a transaction that will broaden our portfolio and further position Ecovyst for attractive growth in end uses we currently serve, such as mining and water treatment and new end uses, including pharma and food processing.

As we move to the next 2 slides, I want to provide a brief overview of the Calabrian business and highlight the details and strategic merits of this transaction. What makes the Calabrian acquisition so compelling is how closely the business aligns with Ecovyst strategically, operationally and commercially. The combination directly leverages our core competencies in sulfur chemistry and extends our platform into highly complementary adjacent chemistries.

Just as Ecovyst is a leading provider of virgin sulfuric acid and sulfuric acid regeneration services, Calabrian is a leading provider of sulfur dioxide and sulfur-based derivatives. It is the sole on-purpose producer of sulfur dioxide in North America with a significant supply share, a leading producer of sodium bisulfide alongside Ecovyst, a leading producer of sodium thiosulfate and the sole North American producer of sodium metabisulfite. These products are critical inputs into a range of attractive end uses that overlap meaningfully with the markets we serve today, reinforcing the natural fit between the 2 businesses.

Looking at a rough breakdown of metabisulfite  Calabrian's 2025 sales, nearly 1/3 of sales were to the mining sector, where we have well-established and long-standing relationships. Roughly 1/4 of Calabrian's 2025 sales were in water treatment, a market that we currently participate in with our virgin sulfuric acid, sodium bisulfide and aluminum sulfate sales. Approximately 15% of sales were into specialty chemical applications and the balance of 2025 sales included sales into food preservatives and other applications.

Similar to Ecovyst, Calabrian has long-standing customer relationships with blue-chip customers, significant long-term contracts and sales visibility. In terms of the strategic fit with Ecovyst, I'll first say that Calabrian has a seasoned and engaged management team, and we look forward to leveraging their expertise and enthusiasm as we move forward on a combined basis. Equally as important, Calabrian provides us with a very attractive opportunity to expand our reach and product offering in sulfur-related chemistries while leveraging our existing supply chain and manufacturing infrastructure.

In doing so, it provides an opportunity to diversify our sales mix and increase our penetration into high-growth industries such as mining, water treatment, pharma and food processing. Calabrian has 2 manufacturing locations: Port Natchez in Texas, situated in the middle of our existing Gulf Coast infrastructure and the Timmins site in Ontario, Canada, which we expect to broaden our exposure to Canada's growing mining sector. Given our existing footprint in the Gulf Coast region, the acquisition provides opportunities to leverage our existing supply chain and manufacturing infrastructure.

Finally, the financial profile is equally compelling. Calabrian brings attractive growth prospects, strong margins and a track record of high cash conversion. On a trailing 12-month adjusted EBITDA of approximately $24 million, the $190 million purchase price represents a multiple of approximately 8x, stepping down to roughly 7x as we capture synergies over the next 3 years. The transaction is expected to close by the end of the second quarter.

We plan to fund the acquisition through cash on hand and a new debt offering with specific allocation to be determined as we move towards closing. At this time, we expect that our pro forma net debt leverage ratio at close of the transaction will be approximately 2x.

Before I hand the call over to Mike to review the details of our first quarter, I want to comment on our expectations for near-term demand trends and our confidence in the longer-term outlook for Ecovyst. While the geopolitical and global macroeconomic environment remains dynamic, our outlook remains very positive. As a leading provider of products and services that are essential to our North American-based customers, we expect demand trends to remain favorable, underpinning our growth expectations for 2026.

We see U.S. refinery utilization remaining high in 2026 with far less planned and unplanned customer downtime than we experienced in 2025. As such, we continue to expect higher volume for our regeneration services in 2026 with favorable contract pricing. We also expect volumetric growth for virgin sulfuric acid in 2026 with increased sales into mining and a full year of contribution from the wagon and sulfuric acid assets we acquired last year. Sales into the nylon end use are expected to be generally in line with 2025, and we anticipate relative stability across the broader range of industrial applications.

Looking beyond 2026, we believe the long-term outlook remains extremely favorable. We expect that high refinery utilization will continue to support demand for our regeneration services business. And for virgin sulfuric acid, we believe we are positioned for growth with sales into mining applications benefiting from multiyear expansion projects, growth in industrial applications associated with onshoring and the prospect for continued sales recovery in the nylon end use.

I'll now turn the call over to Mike, who will review our financial results.

Thank you, Kurt, and good morning. We are very pleased with our results for the first quarter and believe that we are off to a great start to the year as stable demand and favorable pricing helped deliver solid results in the first quarter. Our sales were up 50% compared to the first quarter of last year. Higher sales volume for both virgin sulfuric acid and regeneration services as well as positive pricing translated into adjusted EBITDA of $40 million, up $19 million compared to the prior year first quarter and ahead of our previously provided guidance range.

Our favorable earnings compared to our guidance range were driven by higher-than-expected volume and pricing. We realized stronger-than-expected volume in regeneration services and to a lesser extent, treatment services compared to our original expectations. With a significant spike in cost of sulfur, we also realized a temporary benefit associated with the timing between when we incur the cost of our sulfur purchases and when we pass through those costs to our customers. Adjusted free cash flow for the first quarter was $4 million. Our net debt leverage ratio at quarter end was 1.2x, unchanged from year-end, and our available liquidity remains strong at $237 million as of March 31.

As we look at the first quarter financial results on the next slide, sales were $215 million, up $72 million. Excluding the $33 million impact of higher sulfur costs pass-through and price, sales were up nearly 27%. Regeneration services volume was driven by less customer downtime compared to the first quarter of 2025. Sales volume for virgin sulfuric acid was also higher year-over-year, reflecting the contribution of the Waggaman sulfuric acid assets acquired in May of 2025 and higher overall demand, including into nylon and mining applications. Average selling prices were higher, driven by virgin sulfuric acid pricing and favorable contract pricing for regenerated sulfuric acid.

Adjusted EBITDA of $40 million was up $19 million or 87%, driven by higher sales volume and favorable pricing, partially offset by higher manufacturing costs driven by higher turnaround costs, the impact of general inflation and increased transportation costs. Favorable price-to-cost ratio at the contribution margin level remains evident in our first quarter as illustrated in the adjusted EBITDA bridge shown on the following slide.

As previously mentioned, the pass-through effect of higher sulfur costs on sales was approximately $33 million, with the pass-through having no material impact on adjusted EBITDA. Excluding the sulfur pass-through, the price to cost uplift in the first quarter was approximately $11 million, largely driven by the net price impact, including favorable variable costs. Higher sales volume, including the contribution from the Waggaman assets accounted for nearly $15 million of the period-over-period increase in adjusted EBITDA, and this was partially offset by higher manufacturing costs, including the incremental cost of the acquired Waggaman assets as well as higher SG&A and other costs.

Turning to cash and debt on the next slide. Adjusted free cash flow for the first quarter was $4 million, up compared to a use of cash of $13 million in the first quarter of 2025. The lower-than-average free cash flow for the first quarter reflects the normal cadence of cash generation with the first quarter typically low primarily due to timing of working capital. During the quarter, we repurchased $36 million of our common stock at an average price of approximately $11 per share, and we have $146 million remaining under our existing authorization.

We ended the first quarter with a strong liquidity position of $237 million, comprised of cash of $163 million and availability under our ABL facility of $74 million. With net debt of $234 million at quarter end, our net debt leverage ratio was 1.2x, unchanged from December 31.

Turning to our 2026 outlook. Note that the guidance included in our materials and discussed on this call do not include any contributions from the recently announced Calabrian acquisition. Our previous guidance provided in late February anticipated higher sulfur costs in 2026. However, disruption associated with the Iran conflict has resulted in further increases in sulfur costs. We now expect the impact of higher sulfur cost pass-through in price to be $30 million higher than previously guided, resulting in full year 2026 sales to be in the range of $890 million to $970 million, up from our previously guided range of $860 million to $940 million.

With a strong start to the year and having 1 quarter under our belt, we are revising our adjusted EBITDA guidance by tightening the range, now expecting full year 2026 adjusted EBITDA to fall in the range of $180 million to $195 million. Similarly, we are tightening the range for adjusted free cash flow to be $40 million to $55 million. While we are not changing our guidance due to the announced Calabrian acquisition, we do intend to finance a portion of the acquisition through a debt offering, along with cash on hand. As a result, we would expect cash interest to increase an additional $4 million to $5 million on a full year annual basis.

As we move to the next slide, I'll provide directional guidance by quarter for the balance of the year. For the second quarter, we continue to expect higher year-over-year sales of regeneration services with favorable contractual pricing. We also continue to expect higher volume of virgin sulfuric acid, driven by mining demand and the contribution of the acquired Waggaman assets, along with stable pricing for virgin sulfuric acid. Turnaround costs are expected to be lower than in the year ago quarter. As a result, we project second quarter 2026 adjusted EBITDA to be in the range of $50 million to $55 million.

For the third quarter, we continue to expect higher sales of regeneration services compared to the third quarter of 2025, and we currently project that virgin sulfuric acid volume will be slightly lower than the year ago quarter, driven by the timing of our sales into nylon applications. With higher projected turnaround costs than in the third quarter of 2025, we expect third quarter 2026 adjusted EBITDA to be in the range of $50 million to $5

Finally, for the fourth quarter, we continue to expect higher sales of regeneration services compared to the fourth quarter of 2025 with favorable contractual pricing. We are currently expecting lower virgin sulfuric acid volume than in the fourth quarter of 2025. We also are anticipating that sulfur costs will ease from the current historic highs. As a result, we expect that sulfuric acid pricing, excluding the pass-through effect, will be lower due to the overall customer mix and timing between when we incur the cost of our sulfur purchases and when we pass through these costs to our customers.

Lastly, we expect higher turnaround costs compared to the fourth quarter of 2025. As such, we currently anticipate that the fourth quarter adjusted EBITDA will fall in the range of $40 million to $45 million.

I will now turn the call back to Kurt for some closing remarks.

Thank you, Mike. We have had a great start to the year, and we are energized by the positive momentum we see as we move into the second quarter. While the global macroeconomic landscape continues to evolve, we believe Ecovyst remains well positioned to deliver on our objectives. Moreover, we are extremely pleased with our progress on strategic implementation as we maintain our focus on growth and on value creation for our stockholders.

The disposition of our Advanced Materials and Catalysts segment at year-end was a transformational event that resulted in a strengthened balance sheet and a robust liquidity position that provides us with the resources and flexibility to execute on multiple capital allocation alternatives, including the funding of organic growth projects, the pursuit of attractive inorganic growth opportunities and the return of capital to our stockholders.

During the first quarter, we returned $36 million in capital to our stockholders through share repurchases. And as previously indicated, to support organic growth this year, we are investing in the expansion of our Gulf Coast storage and logistics capabilities that will further enhance our ability to serve our customers' growing needs. And building upon last year's successes, we also expect further contributions and network optimization benefits from the acquisition of our Waggaman site as we continue to leverage the site's capacity to meet the growing needs of our customers.

With regard to our stated objective to pursue attractive inorganic growth opportunities, we are excited about the agreement that we have reached to acquire Colabrian, which will broaden our portfolio of sulfur products that we can offer to growing end uses. We look forward to the completion of the Calabrian acquisition and to providing you with updates on our ongoing progress as we move throughout the year.

At this time, I will ask the operator to open the line for questions.

[Operator Instructions] And we'll take our first question from John McNulty with BMO Capital Markets.

Congrats on a really solid start to the year. So I wanted to dig into -- a lot's changed since you gave your last guide, both in the virgin acid markets and kind of scarcity around sulfuric acid, at least on a global basis, maybe a little less so in the U.S. And then also the strength of U.S. refining, which I know you were looking for things to be better.

It seems like now that may be even greater in terms of how that industry is reacting to kind of what's going on in the Middle East. So I guess, can you help us to think about how your expectations have changed and how that's woven into the guide? Because I guess I'm a little surprised with a couple of things being reasonably better that you weren't quite ready to necessarily raise at least the upper end of the guide. So can you help us to think about that a little bit?

Yes, John, thanks for the question. I think the first way we would look at that is there were some things that did change positively for us during the quarter. Certainly, compared to the guidance that we had provided, we saw some strength in regen, some positivity on the virgin pricing, but that is a little bit more based on timing as we talked about that we expect to get some of that timing back in the fourth quarter. That regen strength is clearly a tailwind for us, but we also are tempered with some of the other potential macroeconomic items that are going on.

So we still want to continue to keep our guide relatively to where we were. We did raise the bottom end of it. So our midpoint is up to $187.5 million, but we believe that there is strength in the numbers of what we've seen, but want to be tempered with what we're expecting for the rest of the year.

Okay. Fair enough. And I understand it's a little bit of a fluid situation. Maybe just talk -- speaking to Calabrian, I guess, can you give us some color as to how that business has grown over the past few years and kind of what the longer-term growth outlook is for that business?

Yes, sure. Thanks for the question, John. I mean it's going back, Calabrian has been in its current form really since the 1980s and has had the site in Port Nat. They built a site in 2017 up in Timmins, Ontario, which is primarily used to service the mining sector up in Canada. So a lot of the growth in the Clavrian segment has been one from the mining and that backstops gold, which obviously gold mining is at current gold prices has been very healthy. So their business has grown from that. There's also been some growth in terms of their -- some of their pharma, food and, I'd say, other industrial applications.

So when we look at that business, it's probably a GDP to GDP plus type growth rate with some of the things moving faster than others, like we think in mining and industrials. Again, they're the only on-purpose North American producer of sulfur dioxide. They're the only producer of metabisulfite in North America. So they have a really nice position. They have a great technology that's proprietary that's completely different than how it's produced by the competitors. So we're real happy with the acquisition, and we confident in its future potential.

We'll take the next question from Patrick Cunningham with Citigroup.

This is Rachael Lee on for Patrick. So adjusted EBITDA margins were meaningfully stronger than we expected this quarter, driven by higher volumes and incremental pricing above the SOFR pass-through despite some other headwinds from transportation and manufacturing costs. So as we look to the balance of the year, how should we think about the net price cost dynamics?

Yes. Thank you for the question. Yes, the margins were favorable. Obviously, as we've talked in the past, the pass-through of the sulfur cost is relatively neutral to EBITDA. So it does lower the margins. But we did see some positivity around overall pricing and volume that drops straight through the bottom line. So that did provide us with that higher margin. The price-to-cost ratio, the positive number that we discussed during the quarter, we expect that to continue throughout the year.

We do see positive cost price and cost ratio. That's been a consistent view for us over the last several quarters where we are making more money from an EBITDA on a per ton basis comparatively. So while the margin percent will look lower because of the sulfur price through, the earnings is actually positive. So we expect that to continue throughout the rest of the year.

Great. And on the Calabrian acquisition, maybe could you provide more detail on the contract structure and the level of visibility you have into forward sales and earnings?

Yes. So the business is similar, I'd say, to the general construct of the Ecoservices acid business where there are long-term agreements or certainly long-term customers with blue chip users, whether it's in mining, industrials, pharma, food and so forth. The contracts are also have a high pass-through component, similar because it is a sulfur-based chemistry. So passing sulfur is obviously -- passing through sulfur is very important, and they have a similar dynamic to the Ecoservices business.

And in terms of visibility, again, the customers tend to be very steady offtake. It's the products that they purchase from Calabrian are very important to their process. There's generally a very good visibility in terms of the forecasting and the ratability of the volume and so forth.

We'll take our next question from Laurence Alexander with Jefferies.

This is Dan Rizzo on for Lawrence. So just looking at prices and kind of the structural change, Oil analysts now expect a 5% or so structural risk premium for oil due to what's going on in the Middle East. Do you expect a similar structural reset in sulfur prices over the long term that would flow through to your business? Or should we view the sulfur spike as a net negative because it hurts industrial volumes?

Yes. For our business, I mean, sulfur is at really all-time highs right now. And it was -- the run-up in sulfur had actually started well before the conflict in Iran. And a lot of that is due to simply the need for the sulfur molecule for sulfuric acid for things to produce copper and other metals and so forth. So there -- we do feel that there's a definite demand for sulfur out there, which will lead to higher prices. I do think right now, we're in an extremely high situation just given the geopolitical conflict that's going on right now. But long term, we continue to have the ability to pass through sulfur to our customers. Our customers as opposed to like the fertilizer industry, which is very heavily dependent on the commoditized market and sulfur impacts demand there a lot. Ours not so much. Our customers tend to -- sulfuric acid tends to be only a very small component of their overall costs and their process. So while it's not great that sulfur prices go up on them. However, it ends up being a very small component. So we're able to pass it through.

That's actually very helpful. And then just thinking about the most recent acquisition. And as we think about synergies, I mean, are we -- I guess, it's mostly logistical -- logistical like supply synergies as opposed to production and revenue. Is that how we should think about it? I don't think you said you're going to quantify it later, too, I think you said it, right?

Yes. So I mean when we look at the synergies, there's certainly some cost base synergies when you look at -- we're obviously -- we're both involved in sulfur chemistry. So there's going to be procurement. There's obviously -- we have a large supply and manufacturing infrastructure that there should be some synergies with, especially with the Port Neches site, which sits kind of right in the middle of our Gulf Coast footprint. But we also see revenue synergy upside as well, just given the ability to leverage our sales forces across, again, those sulfur products, right? One of which we already sell, sodium bisulfide.

So we really see a nice mixture of both cost and revenue synergies there, and it's really stemming out of the fact that we're both in sulfur chemistry and the products are very closely related.

We'll take our next question from Hamed Khorsand with BSW.

So first off, on the acquisition, you were talking about potentially selling sulfuric acid into Canadian mining. Would these be relationships that Calabrian brings to the table?

Yes. So they would be selling sulfur dioxide to Canadian mines. And so yes, these would be new mining relationships where Ecovyst's mining relationships are primarily focused in, I would say, the Southwestern part of the U.S.

Okay. And then on the refinery side, is the increase in activity utilization, is that more about the current environment? Or does that have to do with more of a normalization given where Q4 was?

The answer is yes. So there's -- it's both. Coming into this year, and we had guided on our -- on the previous call that we had expected a healthy refinery utilization this year. A lot of that due to the fact that there's way less planned and hopefully unplanned maintenance outages in the U.S. refining complex. So utilization was expected to be high. I would say the current conflict that's going on has certainly added a tailwind to that, right?

So obviously, margins are high right now for not only just oil, but for refined products, and there's certainly U.S. refineries can take advantage of that. So I do think there is some tailwind with that there. In terms of how that applies to us, the alkylation units that we service with the regeneration is -- those were always expected to run at very high rates coming into this year and really all years as long as there's not maintenance going on. So they don't really have the ability to flex up a tremendous amount given the margin climate. But I would say the current environment certainly provides a tailwind for everything to run as hard as it can.

[Operator Instructions] At this time, I'd like to thank everybody for joining today's event. You may now disconnect.

Good morning, everyone. My name is Beau, and I will be your conference operator today. Welcome to the Ecovyst Fourth Quarter 2025 Earnings Call and Webcast. Please note today's call is being recorded and should run approximately one hour. [Operator Instructions]

I would now like to hand the conference over to Mr. Gene Shiels, Director of Investor Relations.

Thank you, operator. Good morning, and welcome to Ecovyst's fourth quarter 2025 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 this morning, we'll take your questions.

Please note that some of the information shared today is forward-looking information, including information about the company's financial and operating performance, strategies, our anticipated in-use demand trends and our 2026 financial outlook. This information is subject to risks and uncertainties that could cause the actual results and the implementation of the company's plans to vary materially. Any forward-looking information shared today speaks only as of this date. These risks are discussed in the company's filings with the SEC.

Reconciliations of non-GAAP financial measures mentioned 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.

I'll now hand the call over to Kurt.

Thank you, Gene, and good morning. Overall, we are very pleased with our fourth quarter results and the execution of our strategic objectives. In terms of financial results, strong sales volume for virgin sulfuric acid and favorable contractual pricing for regeneration services contributed to a solid quarter. And as a result, we delivered full year 2025 adjusted EBITDA above our guidance, despite the impact of unplanned and extended customer downtime on regeneration volume during the quarter.

The fourth quarter was also a significant quarter in the context of our ongoing portfolio transformation. We completed the divestiture of the Advanced Materials and Catalysts segment earlier than expected for a sales price of $556 million, utilizing $465 million of the net proceeds to pay down our term loan, leading to a net debt leverage ratio of 1.2x at year end. This transaction has transformed the company, initiating a new focus to drive progress by delivering reliable sulfur solutions for clean fuels and critical materials.

In 2025, we began executing on our capital allocation strategy with the acquisition of the Waggaman sulfuric acid assets for approximately $40 million and repurchased just under $50 million of common stock. We enter 2026 with a strong balance sheet and significant liquidity that we believe positions us well to continue our capital allocation priorities directed at growth, both organic and inorganic, and the continued return of capital to our stockholders.

Turning to the demand trends on Slide 5. Our demand outlook for 2026 remains positive, underpinning the volumetric growth we anticipate for both virgin and regenerated sulfuric acid, and we expect favorable contractual pricing for regenerated sulfuric acid and stable pricing for virgin sulfuric acid.

In 2025, U.S. refineries underwent extensive maintenance, including our customers. This year, we expect our refining customers to run at high utilization, benefiting from favorable outlet economics. With less planned customer downtime than in 2025, we anticipate higher sales for our regeneration services in 2026.

We are also anticipating higher sales of virgin sulfuric acid in 2026, with demand growing in mining, which accounts for 20% to 25% of our sulfuric acid sales, and with the incremental contribution of the Waggaman sulfuric acid assets we acquired last year.

However, we remain cautious about the near-term outlook for the nylon applications and some of the industrial applications we serve. Our sales into the nylon end use account for approximately 20% to 25% of our virgin sulfuric acid sales. For 2026, we currently expect sales into the nylon end use to be relatively flat compared to 2025. And while the balance of our industrial exposures are diversified, further weakening of macro factors could translate into softer demand in some areas.

The integration of the Waggaman sulfuric acid production assets acquired in May of last year has enhanced our supply network, allowing us to meet anticipated growth in demand for this year. Looking ahead, we anticipate that mining demand for sulfuric acid, especially for copper, will continue to increase to support energy infrastructure and data center development.

Furthermore, as many traditional high-grade ores are depleted, solvent extraction electrowinning processing of copper, which utilizes sulfuric acid for mineral extraction, is expected to become more prevalent. Ecovyst is well positioned to support expanding mining applications.

Accordingly, we are investing approximately $20 million in growth capital in the Gulf Coast region for projects aimed at increasing storage capacity and improving rail logistics, thereby strengthening our ability to serve the evolving needs of the mining industry.

Lastly, the long-term outlook for our Chem32 ex-situ Catalyst Activation remains positive, with future growth supported by the recently completed extension at our Orange, Texas tax site.

I'll now turn the call over to Mike, who will review our financial results.

Thank you, Kurt, and good morning. We closed out the year with a solid financial performance in the fourth quarter, delivering full year adjusted EBITDA of $172 million ahead of our previously provided guidance. As a reminder, with the divestiture of the Advanced Materials and Catalysts segment at the end of the year, the results for the business are reported in discontinued operations for all periods. My comments this morning pertain to the reported results from continuing operations.

Our strong fourth quarter results were driven by continued sales growth in both volume and pricing, resulting in adjusted EBITDA of $51 million, 8% ahead of the prior year. We generated $78 million of free cash flow, of which we used $20 million in the fourth quarter for share repurchases. And with the proceeds from the sale of the AM&C business, we paid down $465 million of our term loan, resulting in a 1.2x net leverage ratio, leaving $265 million of available liquidity.

Diving a bit deeper into the numbers, fourth quarter sales were $199 million, up $51 million or 34%. Excluding the $28 million impact of higher sulfur costs passed through in price, sales were up 15%. In the fourth quarter, regeneration services sales volume continued to be adversely affected by unplanned and extended customer downtime. However, this was more than offset by higher sales of virgin sulfuric acid, including the contribution from the acquired Waggaman assets and favorable contractual pricing for regeneration services.

The 8% increase in adjusted EBITDA for the fourth quarter reflects the favorable volume and price impact at a sales level, partially offset by higher planned fixed manufacturing costs, including incremental costs of the acquired Waggaman assets.

While the adjusted EBITDA margin decreased to 630 basis points compared to the fourth quarter of 2024, this reduction primarily reflects a significant increase in sulfur costs, which we passed through with no material impact on adjusted EBITDA. The pass-through effect accounts for approximately 500 basis points of the period-over-period decrease in margin.

Turning to the adjusted EBITDA bridge. I will highlight the major components of the change in adjusted EBITDA for the quarter. As previously noted, sulfur costs in the fourth quarter were approximately $28 million compared to the year-ago quarter, with the pass-through having no material impact on adjusted EBITDA.

Our price/cost impact was a positive $8 million for the fourth quarter, primarily driven by favorable contractual pricing in our regeneration services business. And while we had lower regeneration services volume in the quarter due to unplanned and extended customer downtime, higher volume from our virgin sulfuric acid asset sales, including the contribution from our Waggaman acquisition, drove the nearly $6 million volume benefit in adjusted EBITDA.

Other costs increased approximately $11 million, with the majority of which reflect incremental fixed costs associated with the acquired Waggaman assets, along with higher planned manufacturing costs associated with general inflation.

As we move to cash and debt on the next slide, for the year, we generated adjusted free cash flow of $78 million, which included both continuing and discontinued operations. We utilized our cash generation to execute on our capital allocation strategy, including the $41 million acquisition of our Waggaman sulfuric acid assets and share repurchases, aggregating $47 million for the full year. We currently have approximately $183 million remaining under our share repurchase authorization.

As part of the divestiture of the Advanced Materials and Catalysts segment, we used $465 million of the net proceeds to pay down our term loan, resulting in outstanding debt of $397 million and net debt of approximately $200 million, leading to a net debt leverage ratio of 1.2x and $265 million of available liquidity.

With our significantly reduced leverage, our ample liquidity and in light of our historic cash generation capability, we believe that we have significant flexibility as we look to fund our growth initiatives, both organic and inorganic, and continue to return capital to shareholders through an active share repurchase program.

Turning to our 2026 outlook. As Kurt noted, our expectation for 2026 include higher sales volume for both virgin sulfuric acid, driven by higher projected mining demand, and higher volume for regeneration sulfuric acid as we expect less customer downtime compared to 2025.

However, we remain cautious about the near-term outlook for global macroeconomic activity and the potential for weakness in some industrial applications for virgin sulfuric acid and sales of oleum grades used in the production of nylon precursors. We also anticipate continued favorable contractual pricing in regeneration services.

Sulfur costs are expected to be up significantly this year with an estimated pass-through impact on sales of approximately $125 million compared to 2025. With the higher expected volume, price and the pass-through of higher sulfur costs, we currently anticipate full year sales to be in the range of $860 million to $940 million.

As we have previously discussed, we expect higher turnaround activity at our manufacturing plants in 2026, in part due to the addition of the Waggaman assets. Given the scope and number of turnarounds planned for the year, we expect turnaround costs to be higher by approximately $8 million in 2026.

With the favorable volume and price impact at the sales level, partially offset by higher manufacturing and transportation costs, including additional turnaround costs, we expect full year adjusted EBITDA to fall in the range of $175 million to $195 million.

With our capital allocation strategy to continue to grow our business, we are opportunistically investing growth capital in 2026, including the funding of a number of projects to debottleneck assets and accelerate organic growth. These include the ongoing expansion of tank storage and adding additional rail capacity in the Gulf Coast.

As a result of these growth projects, we expect higher capital expenditures this year will be approximately $20 million higher, resulting in a range of $80 million to $90 million. As a result of the higher growth capital spending as well as an expected $10 million increase in working capital driven by the impact of higher sulfur costs on inventory and accounts payable and the associated pass-through impact on sales and accounts receivable, we expect adjusted free cash flow to be in the range of $35 million to $55 million.

In addition, with the significant reduction in our term loan, we expect interest expense to be approximately $18 million to $22 million in 2026. With our current cash balance and expected free cash flow generation, we plan to continue to execute on our capital allocation strategy, driving value for shareholders through growth opportunities and further share repurchases in 2026.

As we move to the next slide, I'll provide some directional guidance by quarter for next year. As you will recall, our results for the first quarter of 2025 reflected significant planned customer downtime as well as higher level of planned turnaround activity at our sites. While we have an active turnaround schedule in the first quarter, increasing our expected turnaround costs with 3 of our 7 planned turnarounds, we do not expect the same negative impact on sales volume for the customer downtime.

For the first quarter, we expect continued favorable contractual pricing and we expect increased volume for virgin sulfuric acid. As a result, we expect first quarter adjusted EBITDA to be up $8 million to $13 million compared to the first quarter of 2025.

And as has been our usual practice, our presentation slides include some commentary around our quarterly directional guidance for the balance of the year. We expect the second and third quarters to be peak quarters for adjusted EBITDA consistent with historical experience driven by high alkylate demand and regeneration activity during the summer driving season.

We have also provided our current expectations for turnaround cadence by quarter for the year. As we have previously noted, the cost for individual turnarounds can vary by site and scope and the timing is subject to change.

I'll now turn the call back to Kurt for some closing remarks.

Thank you, Mike. We are extremely pleased with our progress in 2025, and I want to thank my Ecovyst colleagues for their efforts in supporting our customers, delivering on our commercial objectives and for their contributions as we continue to implement our strategic plan.

In a challenging demand environment, our business demonstrated resilience in 2025. Sales of virgin sulfuric acid increased in part driven by the acquisition of our Waggaman sulfuric acid assets. And as the integration of the Waggaman site continues, we are benefiting from the positive network effect Waggaman's assets have on the reach and capability of our supply chain.

Although our regeneration services business was adversely affected by a significant number of unplanned and extended customer outages in 2025, the favorable business fundamentals of our regeneration services business remain unchanged in terms of demand driven by high refinery utilization, the critical role we continue to play in our customers' production of alkylate and the value represented by alkylate economics.

In 2026, we are expecting growth for both our virgin sulfuric acid sales and for our regeneration services business with stable pricing expected for virgin sulfuric acid and continued positive contractual pricing for regeneration services.

Moreover, as we look beyond 2026, we believe the demand outlook remains positive for all of our businesses. The divestiture of the Advanced Materials and Catalysts business at year-end represents a transformative event in our ongoing portfolio optimization.

As we move forward, driving growth for the Ecoservices platform, we will do so with a more stable and predictable business profile, a significantly strengthened balance sheet and with a cash generation capability and liquidity position that we anticipate will provide for significant capital allocation flexibility.

This year, we are increasing our capital budget to support targeted organic growth projects that we believe will enhance our capabilities in servicing customers. Key initiatives include expanding Gulf Coast storage and optimizing logistics, which will strengthen our service offering for mining clients. These projects are scheduled for completion in the first half of 2027. We plan to take a disciplined approach towards inorganic growth, prioritizing accretive acquisitions that extend our reach to customers and end segments.

Concurrently, we remain committed to returning capital to stockholders through an active share repurchase program. In 2025, we repurchased approximately $50 million in common stock. During the first quarter of 2026, we plan to continue this strategy with an additional repurchases totaling between $25 million and $40 million.

As the year progresses, we expect to execute our capital allocation strategy consistently. In summary, our focus this year will remain on driving profitable growth, positioning Ecovyst for future opportunities and optimizing value for the benefit of our stockholders.

At this time, I will ask the operator to open the line for questions.

[Operator Instructions] We'll go first today to John McNulty of BMO Capital Markets.

Congratulations on a solid year. I just wanted to dig into Waggaman, the Waggaman opportunities a little bit more. So you've had the asset for a bit of time, you've made some investments in it. I guess, can you help us to think about how much capacity that's freed up for you and as a result how much growth you could necessarily get without having to put in much capacity or incremental capacity? Because it sounds like you're even further trying to unlock some flexibility with the storage increase and the rail increase. So I guess, can you help us to contextualize all of this?

Sure. Thanks for the question, John. So the Waggaman sulfuric acid assets that we added last year, of course, added roughly around 10% of volume to the overall network. So it came along with its own customer book and sales, which we're obviously servicing.

Where we're really seeing, I think, the positive network effect is, it's a force multiplier really with our Gulf Coast network where just all the sites now can back each other up in terms of turnarounds and so forth and enable themselves to take advantage of additional opportunities that they may have had to pass on if they were on their own.

So it filled the cracks in, in terms of the supply network and allows us to take advantage of more opportunities. It also comes -- and I think we talked about it last year, it's our only site that has a deep water vessel dock. We actually did export a ship of sulfuric acid there, so it adds a lot of capability to our overall site.

And as we move forward, the way we look at our Gulf Coast network and the investments that we're making is we're clearly want to -- we see the rising tide on the mining demand. So we're making additional investments that we talked about on our logistics and storage capabilities which are going to be Houston-based. But the Waggaman assets and the production that that brings allows us to service more of the Gulf Coast assets with that plant and focus the Houston production more to the west.

Does that make sense?

Yes. No, completely. No, that definitely helps. And then I guess on the regen contract pricing lift that we should be thinking about in 2026, I guess can you help us to quantify that a little bit? Sounds like -- I mean you were getting some benefits in 2025, it sounds like that's a continual kind of repricing. But how should we think about the lift in '26?

Yes. John, thanks for the question. This is Mike. Yes, it's going to be a similar lift. I think as we've talked in the past, every year, the contractual agreements that we have start to roll off. It's usually between 15% and 20% a year, just depends on the size of the customers and how they shape up.

With basic costs going up, with the inflation and how the contracts are structured with indexing and other factors, it does provide a benefit. So it is a continued benefit, similar to what we saw this year that we're going to extend into next year. And again, it just depends on timing of when some of those customer or contracts come up and when they're put in place.

We'll go next now to Patrick Cunningham of Citi.

Just regarding the weakness that you're citing in industrial applications, nylon, obviously, we've seen some pretty promising indicators with U.S. PMI inflecting, maybe nylons bottoming out, but are there any specific applications that you want to call out or factors that you would highlight, which is giving you some caution here?

No, I don't -- Patrick, thank you for the question. I don't think there's anything specifically. As you know, sulfuric acid is the most widely used chemical in the world. And it's our basket of what we call industrial uses, spans a very wide spectrum of folks using it for anything from chloralkali and chloralkali production to nylon to other petrochemicals. So there's a lot of different things and a lot of different drivers there.

We just see some caution in some of those areas. I don't think it's overcaution or real worry. We serve such a wide and diverse basket of folks there that could be impacted by any of the global things going on between tariffs or some of the downturns and some of the chemical end markets. So it's just a general sense of caution in that space.

For us, our biggest one is, as you referred to, nylon, as we've clearly pointed out. We expect to be roughly on par with where we were in 2025, so we don't really project any degradation there.

Perfect. And then just, as you think about CapEx or investment on a go-forward basis, it seems like there's a lot that you may want to do or need to do to meet long-term mining demand. I guess, how does the economics of greenfield versus debottlenecking compare to current acquisition multiples for existing virgin facilities?

Yes. That's a great question. I think the way we've treated over the past, I would say, 10 or 15 years, the demand for sulfuric acid from the mining sector has risen and our supply into the mining segment has risen. We've met that through a campaign of debottlenecking our sites from both a production standpoint as well as a logistics standpoint. We're going to continue to do that.

So as that rising tide happens with the mining, we're able to stay ahead of it by making the logistics and storage investments that we just talked about in Houston. The Waggaman acquisition was a part of that as well. It adds additional capability and capacity into our Gulf Coast system, which enables us to further service that. And going forward, we're going to kind of continue that pattern, right, where we've got some additional debottlenecking that we could do. We can leverage more of Waggaman's production to stay ahead of the demand there.

We'll go next now to Aleksey Yefremov of KeyBanc Capital Markets.

I just wanted to follow-up on the same subject. The expansion that you're undertaking in '26, is it tied to any specific ramp at your customers in mining or elsewhere that you anticipate? In other words, do you have contracts or some sort of indication from your customers that they'll need additional volumes this year or next that you're trying to address? Or is this just a more general view that you're trying to get ahead of the growth that you anticipate, but maybe not as specific of a customer pull?

Thanks for the question, Aleksey. I mean we've been, actually, believe it or not, the Ecoservices legacy business has been serving the mining sector since 1894. So we've got really long-term relationships with some of the major mines out there. So we see their forward demand. And based on what we've been doing and how we've grown with them over -- again, over the last 10 or 15 years and seen that rising demand coming for sulfuric acid, specifically as it relates to copper.

So we're confident that the demand will be there. And we feel it's appropriate for us to add this additional capacity and logistics capacity to meet that growing demand long-term. We have, obviously, long-term relationships with those customers, have been servicing a lot of these mines. It's a mixed bag of additional demand from existing mines to there's actually some new projects that have come online. It's all -- it's a mixed bag of what's driving that additional demand coming from our plants in the Gulf Coast.

And as a follow-up, how would you characterize the current state of the merchant acid market, either right now or if you have a view on '26? Is the market sort of long, tight or about balanced from a supply-demand perspective?

Thanks for the question. I would say, it's in a balanced position. I think we talked about in our call. We see pricing as being stable. So there are certain segments of the market, as we talked about, things related to industrials, which is all over the board in terms of the different end-use applications. Some of those are up. Some of those may be down. I'd say, it's a push in general.

Other sectors that use sulfuric like mining are obviously rising. So -- but on the whole, our view, I would say at this point, and as we look at, certainly as we said on the call, as we see pricing, it's being stable. So I would say it's leaning towards a balanced market. However, the long-term trend, certainly as you look at things like mining, we projected growing demand there.

We'll go next now to David Begleiter with Deutsche Bank.

Kurt, on your full year guidance, the low end looks maybe a little conservative. What would you need to see to get to the low end of the range? And conversely, what type of drivers would you need? Would you expect to see to get to the high end or above that range for the year?

Thank you for the call or for the question. I think starting at the high end of the range, I would say, if there's a lift in things like virgin acid pricing, just referring to the previous question, that comes about because of demand growing and it pushing up upward pressure on pricing, certainly in the virgin sulfuric acid market.

Our outlook on regeneration services, as we talked about, there's less customer outages this year. We expect a pretty healthy year in terms of regeneration. So I don't think there's really going to be tremendous movement on that because that's expected to run at pretty high utilization.

So I would say upper end it's going to be the virgin acid and if there's some positivity in things like pricing or spot volumes that become available. And then on the low end, which again, we don't expect, that largely would be driven by things like unplanned customer outages, similar to what we had last year or potentially a macroeconomic event that causes a deterioration in either pricing or volumes on virgin sulfuric acid.

Very clear. And Kurt, now with the balance sheet restored to strength, how do you see Ecovyst in 3 to 5 years? Where do you want to be? Where do you want to go? And from an inorganic standpoint, in terms of M&A, what could be additive to the portfolio that you're looking at today or maybe down the road?

Yes. Thanks for the question. So the Board and the management team are obviously carefully looking at our capital allocation priorities as we focus on maximizing the value for our shareholders over the long run.

So number one, that's going to entail us investing in organic growth as we see the opportunities in front of us. We talked about mining and other spaces. Our long-term view on sulfuric acid and the sulfur molecule is that the demand for it will grow. And so we want to make investments there and continue to be a leading supplier in that space.

Number two, we're looking for accretive bolt-on acquisitions that make sense that are either adjacent to us from a chemistry standpoint or a service standpoint, so we can further service our existing customers or the existing industries that we service in a better way, so growth through sensible and accretive acquisition to become bigger.

And then finally, as we've talked about with our flexible capital allocation strategy, we still -- we see value in share repurchases as well as a tool. So we'll continue to lean into that. So we're really going to be -- it's a flexible strategy that allows us to push in all 3 of those directions, which we think can help us drive better value for shareholders over the long run.

We'll go next now to Hamed Khorsand at BWS Financial.

Sorry if I missed this, but are you done with the investments you need to make at Waggaman?

Thank you for the question. Good to talk to you, Hamed. No, so we've owned the site now for really about 9 months, so the integration is going well. We talked about it's had a -- certainly a positive network effect on our ability to supply our customers in the Gulf Coast. But there are still some -- there's additional investments that we want to make from a, I would say, from an operating standpoint and an integration standpoint.

The site is going to have a maintenance outage this quarter where there will be some investments made. And we expect that there will be further investments necessary in the near future as we further integrate it and try to raise the operating rate on the location.

Okay. And then let's say if this nylon or industrial end markets are as weak as you're expecting, are you able to deliver the sulfuric acid to mining that might be a little bit higher in demand or are your contracts pretty much fixed on volume?

We have some -- so the answer is we have some flexibility to move around. We generally get pretty good and accurate forecasts from our customers from not only mining and some of the other sectors in terms of industrial. As we've talked about before, and I know people who have followed the company, most of our virgin sulfuric acid business is 100% supply contract. So we have very close relationships with our customers. They provide us great forecasts into what they're going to do.

So that helps us plan as we look at our year and say where we're going to place our volume. But if there is a downturn or something that goes on that's unexpected, yes, we do have the ability to place some additional product into different end use segments and move things around, whether it's into mining or other industrial segments that may be in the Gulf Coast, we do have the ability to move that, probably not all of it, but some portion thereof.

We'll go next now to Laurence Alexander of Jefferies.

Just can you give a sense now that -- the higher level view on your M&A opportunity sets. When you look at the landscape in terms of other assets producing sulfuric acid, is there any titration in terms of the quality of the assets? Can you separate out the market in terms of the addressable versus the assets that you would just -- like is it 30%, 40% of the market that you would just have no interest in or is it basically potentially all of interest?

Yes. Thank you for the question. I think we would -- we have interest. We're pretty broad in terms of our sulfuric acid and the end uses we service. We service a pretty broad swath of the market. So we're not just a regeneration sulfuric acid producer or just a virgin sulfuric acid producer like some of the others are out there. So we would generally be interested in all those types of assets because we'd have use for both since we're a leader in both spaces.

But I would also say that extends to other sulfur chemistries as well where we do have some exposure in terms of making sulfur derivatives for water treatment or various things where the sulfur molecule is important as well as services as well. We're obviously the regeneration services, our hazardous waste services business, our Chem32 businesses are all very high-value service businesses that expanding further into those spaces would also be of interest.

[Operator Instructions] And gentlemen, it appears we have no further questions in queue at this time. So this does conclude the Ecovyst fourth quarter 2025 earnings call and webcast. Thank you for your time and participation. You may disconnect at any time.

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" BMO Capital Markets

" Citigroup Inc.

" KeyBanc Capital Markets

" BWS Financial Inc.

" Jefferies LLC

Please stand by, we are about to begin. Good morning, everyone. My name is Paul, and I will be your conference operator today. Welcome to the Ecovyst Third Quarter 2025 Earnings Call and Webcast. Please note, today's call is being recorded and should run approximately 1 hour. [Operator Instructions] I would now like to turn the conference over to Mr. Gene Shiels, Director of Investor Relations. Please go ahead, sir.

Thank you, operator. Good morning, and welcome to Ecovyst's Third Quarter 2025 Earnings Call. With me on the call this morning are Kurt Bitting, Ecovyst's Chief Executive Officer; and Michael Feehan, Ecovyst's Chief Financial Officer. Following our prepared remarks this morning, we'll take your questions.

Please note that some of the information shared today is forward-looking information, including information about the company's financial and operating performance, strategies, our anticipated end-use demand trends, and our 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. Any forward-looking information shared today speaks only as of this date. These risks are discussed in the company's filings with the SEC.

Reconciliations of non-GAAP financial measures mentioned in today's call with their corresponding GAAP measures can be found in our earnings release and in the presentation materials posted in the Investors section of our website. I'll now turn the call over to Kurt Bitting. Kurt?

Thank you, Gene, and good morning. The third quarter of 2025 was a pivotal quarter for Ecovyst. Following an extensive strategic review of our advanced materials and catalysts segment, we announced an agreement to sell the business to Technip Energies for a purchase price of $556 million. 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 million to $500 million of the net proceeds to reduce our long-term debt, resulting in an expected net debt leverage ratio of less than 1.5x.

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 Ecovyst Board has amended our existing $450 million stock repurchase plan to remove the April 2026 expiration date. 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. 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. 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. 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 5. We believe the near- and longer-term outlook for the company remains favorable. For our regeneration services business, we expect favorable alkylate economics will continue to drive demand for our regeneration services, with growth in the business driven by both volumetric and pricing dynamics. In 2025, we expected a higher-than-average number of planned refinery customer maintenance outages. In addition to these planned outages, refinery customer experienced extended downtime throughout most of the year due to a fire incident. 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, we now expect 2 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. 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 2 expansion projects with existing customers come online in the second half of this year. 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.

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 U.S. will also contribute to an increase in sulfuric acid demand. 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 6 and nylon 66. 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. 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 our sulfuric acid that is under contract with our refining customers as makeup acid used in our regeneration process. This basket of industrial applications typically exhibits demand growth in line with GDP. However, the prospects of further onshoring in the U.S. may drive incremental demand for sulfuric acid in a number of industrial applications.

The addition of the Waggaman sulfuric acid plant has already had a positive effect on our manufacturing and supply chain network. With the positive network effect from the Waggaman sulfuric acid plant and capital projects underway to support organic growth, 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 Waggaman site to enhance efficiency and increase capacity for virgin sulfuric acid and regeneration services. 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.

Lastly, we continue to see robust demand for our Chem32 catalyst activation services, and this is driven by activation of third-party catalysts used in both conventional and sustainable fuel production. 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 for growth through both organic and inorganic projects.

I'll now turn the call over to Mike, who will review our financial results.

Thank you, Kurt. Good morning. In light of the announced agreement to divest our advanced materials and catalysts 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, we continue to report ecoservices as a separate single segment, along with unallocated corporate costs. From a comparability perspective, no changes were made to the reporting of the ecoservices segment 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.

Our strong cash position and liquidity continue to provide us with the flexibility needed to execute on our capital allocation strategy. At the top line, 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 in price, sales were up nearly 17%. Total adjusted EBITDA, including both segment ecoservices adjusted EBITDA and unallocated corporate costs, was $58 million, up 18%, reflecting the benefits of positive pricing and volume.

I will refer you to the adjusted EBITDA bridge on Slide 9 as this highlights the major components of the period-over-period change in adjusted EBITDA. Pricing, excluding the pass-through of higher sulfur costs, was up $9 million compared to the third quarter of 2024, primarily driven by favorable contractual pricing in 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. Overall volume was favorable in the third quarter, led by higher sales volume for virgin sulfuric acid and the contribution from our Waggaman site. 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 Waggaman site, along with higher manufacturing costs associated with general inflation and transportation costs.

Turning to the results of the ecoservices 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. 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. We also saw volume contribution from our new Waggaman 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 as many of our refinery customers were down for extended periods of time during the quarter.

Segment adjusted EBITDA for ecoservices was $64 million, up 15% and within the guidance range provided during our second quarter call. 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. In addition, while our third quarter financial results include Waggaman, 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.

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 AM&C business. Through the first 9 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 million 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, 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 AM&C segment, we currently anticipate applying between $450 million to $500 million of the net proceeds to reduce our term loan, resulting in an expected cash balance of between $150 million and $200 million. This would lead to an expected net debt leverage ratio of less than 1.5x. 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.

Turning to Slide 12. In light of the announced agreement to divest the AM&C segment, we have revised our 2025 guidance to reflect our expectations for our financial results from continuing operations. 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. 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. We expect full year sales to be between $700 million and $740 million, including an expectation of higher sulfur cost pass-through of approximately $70 million.

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 Waggaman assets. For 2025, we expect corporate costs of approximately $30 million, slightly favorable to our previous guidance range. As we have previously noted, following the disposition of the advanced materials and catalysts segment, we expect a slight reduction in corporate costs in 2026 of a few million dollars compared to this revised guidance for 2025. Our expectations for adjusted EBITDA from continuing operations for 2025, including corporate costs, will be approximately $170 million. This implies adjusted EBITDA for our ecoservices segment to be approximately $200 million, slightly below our previous guidance range. This reflects a onetime 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.

Excluding the impact of the unplanned and extended customer downtime, we would have expected adjusted EBITDA for our ecoservices segment to have landed in the middle of our recent guidance range of $205 million to $215 million. 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&C business, we expect free cash flow to be modestly lower. CapEx for 2025 is expected to be between $60 million and $70 million. We anticipate higher CapEx in 2026, driven by the inclusion of our Waggaman site and as we look to accelerate organic growth initiatives. Interest expense attributable to continuing operations is expected to be in the range of $32 million to $34 million.

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. As we expect the paydown of the term loan to be in the range of $450 million to $500 million, cash interest in 2026 is expected to be lower from a range of $46 million to $50 million in 2025 to a range of $21 million to $25 million in 2026. The effective tax rate for 2025 remains in the mid-20% range. Then, looking into 2026, with the disposition of the AM&C segment and with some benefits arising from the 2025 tax bill, we believe our cash tax position will benefit, 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.

I will now turn the call back to Kurt for some closing remarks.

Thank you, Mike. This year has proven to be another challenging year for the chemical industry. However, Ecovyst has continued to demonstrate resilience. 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. 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. 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. 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, we expect to have a cash position of $150 million to $200 million, which will provide ample funding for growth projects and position us for the additional return of capital to stockholders.

Specifically, with regard to capital allocation, we will prioritize funding organic growth projects that support our growth expectations that I mentioned earlier. At the same time, we will continue our disciplined approach towards evaluating inorganic growth opportunities. Consistent with our recent acquisitions of Chem32 and the Waggaman assets, 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, 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. We are enthusiastic about the opportunities that lie ahead for Ecovyst. Mike summarized our high-level expectations for 2026. And based upon these expectations, we anticipate positive growth and favorable financial results in 2026. We look forward to sharing updates with you as we close the sale of our advanced materials and catalysts segment and as we move forward with the implementation of our strategy to accelerate growth for Ecovyst.

At this time, I will ask the operator to open the line for questions.

[Operator Instructions] We go first today to John McNulty of BMO Capital Markets.

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. So, I guess maybe a question on that. Are there any specific projects internally that you kind of had on hold that now you kind of have the opportunity 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 when your stock is at kind of this valuation?

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. 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 Waggaman facility, which will give us, I'd say, further logistics and capacity at that site as well to support our network. So, we're able to advance those quicker to meet some of the near-term demand trends that we see.

I think Ecovyst is in a good position really to go after our growth opportunities, both organic and inorganic. 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? So, as we see organic opportunities, we'll make those investments. As we see our shares being undervalued as we believe they are now, we'll do the share repurchases.

And then maybe can you give us some color as to how you're thinking about pricing and its impact for next year? 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. I guess, can you help us to think about how that may carry into 2026 a little bit more?

I think it's a similar pace as we've said before. So, we'll have our typical contracts on the regeneration side that will reprice as we've seen flow through in the history of ecoservices. In terms of virgin sulfuric acid, I'd point to 2 things. I think there's obviously sulfur prices are way up, which Mike pointed to in his comments, which those will look -- prices in general look higher year-over-year. We see really good demand heading into next year, especially in terms of the mining sector, which will support general virgin sulfuric acid pricing. And then I would point to our Waggaman facility, right, where a lot of those contracts that were inherited with the acquisition of that are rolling off this year that will be repriced going into next year as well.

We'll go next now to Patrick Cunningham of Citigroup.

Sort of a related question to that last one, which is or your last comment on the Waggaman integration. Just how should we think about how that's progressing? And what should we expect in terms of the potential EBITDA lift from 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?

I think it's really both. So, the contract repricing is obviously an important element. That will be somewhat, as we've talked about, the uplift there will be somewhat offset by -- we are going to have a pretty significant turnaround there that we're planning for, I think, 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 and grow over time as mining and some of the other opportunities become more and more -- demand more and more sulfuric acid, Waggaman will play a bigger part. So, some of that is already happening within the system.

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. Do you have any early thinking on how we should think about the growth algorithm? Is it an EPS growth range that's bolstered by pretty ratable repurchases? Is it just a simple sort of free cash flow conversion percentage? Or is that maybe too much stability and sort of predictability that I'm forecasting into what the go-forward business might look like?

Yes, Patrick, thanks for the question. I think we see some very positive trends as we articulated going into 2026. 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, right? So, we do continue to expect to have a high cash yield on our business. Certainly, we will continue to drive organic investments that we think are necessary, certainly impacting the cash line as we take that first dollar from operations and put it back into the business for quality organic growth projects.

But we do see a strong free cash flow generation going forward. We do see that this business is one that can grow both volumetrically and through pricing, given our structure. So we see that to be something that will continue to go out beyond 2026, whether that's in the mid-single digits or mid-single-digit plus. We certainly expect to provide some more granularity around 2026 as we come into next year when we provide our full 2026 guidance, and we can give some additional clarity on kind of where we see the rest of the business going out more on a long-term basis.

We'll go next now to Aleksey Yefremov of KeyBanc Capital Markets.

This is Ryan on for Aleksey. Mike, I just wanted to kind of circle back to thinking about debt reduction and your leverage. If I think back to Investor Day about 2 years ago, I think your long-term target was leverage in the 2 to 2.5x range. And now you guys are talking about being below 1.5x after using the AM&C proceeds. So, have your thoughts changed in terms of kind of like what your target wants to be in the longer-term? Or just maybe short-term kind of action and longer-term, we can kind of relever back up?

Yes. Thanks, Ryan, for the question. So, 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 1.5x, right? So, our gross leverage ratio, as we articulated in the materials, will probably be closer to 2x. So, 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, right? So, we believe that probably below 1.5x is too low. We want to use our cash appropriately to grow the business but believe that we can also flex up 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 strategy. So, our target of 2 to 2.5 is still a relevant target. We just think that it's going to ebb and flow depending on both the timing of when we divest the AM&C business and the net leverage that will result, and what kind of capital allocation strategies we deploy over the coming years.

And then just a second question. On Slide 5, I mean, nylon is kind of really the only cautionary short-term demand outlook. So, wondering kind of how you're thinking about this trending into '26. I know, like the long-term outlook is pretty strong. But I think customers, we were talking about maybe gaining some share there in the near-term. So maybe into early '26, how are you thinking about nylon?

Yes. I mean, I think for this year, the way we look at it, it's been up moderately this year versus last year. So, recovery has been good. For next year, I think we expect it to kind of be status quo with where we're at. We don't expect a big movement up or down either way. But long-term, as we said, we're confident in the fundamentals of nylon.

We'll go next now to Hamed Khorsand of BWS Financial.

Could you just talk about the clarity you have from your customers, as they're talking to you about these downtimes that are unexpected and how are you managing inventory through that process?

Yes. Thanks for the question, Hamed. I think this year, in 2025, coming into the year, we expect it to be not only a heavy refining turnaround year across the industry, but as well in our customer base. And that was reflected in our original guidance. I think what's happened as the year has gone on, we had one customer who suffered a fire at the beginning of the year, as we mentioned in our comments. And then there's been a multitude of various things, which have created additional downtime for a customer of 30 days, and then others taking unplanned outages, which Ecovyst's economics are favorable. So, these customers really try to avoid doing these things as much as possible. We generally will get a planned turnaround, almost 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.

They're not prone to outages. When they have disruptions like they are now and things are going sideways on them mechanically, they have to plan those very quickly. And those can be a matter of weeks when they plan those types of downtime. So, we don't, necessarily, when there's unplanned outages, get a whole bunch 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, and we try to manage inventories accordingly where we can.

And just a follow-up on it, going forward, is the best way to measure the business on a rolling 2-year process because of these maintenance issues?

No. Hamed, that's a good question. Refinery outages can range anywhere from 2 to 4 years in terms of the alkylation equipment. So, I wouldn't say 2 years is a good marker, plus there are volume increases that go on with refineries over time and different things. So, it's probably a longer cycle than that.

We'll go next now to Laurence Alexander at Jefferies.

Can you give some updated perspective on kind of the emerging kind of mining CapEx cycle in the U.S. and what that could mean for you, first, in terms of potential capacity spend over, say, the next 5, 7 years to keep up with demand for virgin sulfuric acid and also the degree to which you can get any operating margin lift or earnings lift to sort of a structurally higher sulfuric acid price if one were to occur?

Sure. Great question, Laurence. Thanks for that. I think when you look at near-term, when I say near-term, maybe 1 to 5 years, there's a lot of mining projects, particularly in the copper space that are coming online in the Southwest 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 higher tech leaching technologies. Those will require 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 Waggaman, which will allow us to put a lot more tons down range there to meet that demand.

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. And we are in conversations with customers on how we meet that further demand, and we want to make the investments there and be the supplier of choice for those projects.

And I think your question, just to get back to the pricing, I mean, and the uplift in margin, we do see 2 things going on long-term, demand for sulfuric acid rising because of the mining activity and the processing of the minerals in the U.S., and onshoring, driving that. At the same time, the sulfur molecule is becoming scarce around the globe, right, as people are using it for, obviously, mining applications like they are in the U.S., or fertilizer, and so forth. And we believe you'll see the value of sulfuric acid rise over time accordingly.

And gentlemen, it appears we have no further questions in the queue at this time. So, this will bring us to the conclusion of the Ecovyst Third Quarter 2025 Earnings Call and Webcast. Thank you all for joining us today, and we wish you all a great day. Goodbye.