Ecovyst Inc (ECVT) 2024 Q2 法說會逐字稿

My name is Madison, and I will be your conference operator today and welcome to the Ecovyst Inc second-quarter 2024 earnings call and webcast. (Operator Instructions)

我叫麥迪遜，今天我將擔任您的會議操作員，歡迎參加 Ecovyst Inc 2024 年第二季財報電話會議和網路廣播。 （操作員說明）

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

現在我想將會議交給投資者關係總監吉恩希爾斯 (Gene Shiels)。

Thank you, operator.

謝謝你，接線生。

Good morning, and welcome to Ecovyst Second Quarter 2024 earnings call. With me on the call this morning are Kurt bidding, Ecovyst, Chief Executive Officer, and Mike Feehan, Ecovyst, Chief Financial Officer. Following our prepared remarks this morning, we'll take your questions.

早安，歡迎參加 Ecovyst 2024 年第二季財報電話會議。今天早上與我一起參加電話會議的是 Ecovyst 執行長 Kurt bid 和 Ecovyst 財務長 Mike Feehan。在我們今天早上準備好的發言之後，我們將回答你們的問題。

Please note that some of the information shared today is forward-looking information, including information about the company's financial and operating performance strategies, our anticipated end-use demand trends and our 2024 financial outlook. This information is subject to risks and uncertainties that could cause the actual results and the implementation of the Company's plans to vary materially.

請注意，今天分享的一些資訊是前瞻性訊息，包括有關公司財務和經營績效策略、我們預期的最終用途需求趨勢以及我們的 2024 年財務展望的資訊。該資訊存在風險和不確定性，可能導致實際結果和公司計劃的實施出現重大差異。

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 on the Investors section of our website at ecovyst.com.

今天分享的任何前瞻性資訊僅代表當前情況。這些風險在公司向 SEC 提交的文件中進行了討論。今天電話會議中提到的非 GAAP 財務指標與其相應的 GAAP 指標的對帳可以在我們的收益報告和簡報中找到，以及我們網站 ecovyst.com 投資者部分發布的資料。

I'll now turn the call over to Kurt bidding.

我現在將把電話轉給庫爾特出價。

Thank you, Gene and good morning. Overall, we are pleased with our results for the second quarter of 2024. We delivered financial results above our forecast and we made solid progress on a number of strategic initiatives.

謝謝你，吉恩，早安。總體而言，我們對 2024 年第二季的業績感到滿意。

During the quarter, we continued to see strong demand for regeneration services supported by high refinery utilization and favorable economics for alkylate with regeneration volume up compared to the second quarter of 2023. The Sales volume was also look for virgin sulfuric acid and treatment services compared to the year ago quarter.

在本季度，我們繼續看到對再生服務的強勁需求，這得益於煉油廠的高利用率和有利的烷基化油經濟效益，與2023 年第二季度相比，再生量有所增加。與2023 年第二季相比，銷售量還包括純硫酸和處理服務。

And in our Advanced Materials and Catalysts segment, sales of advanced silicone increased compared to the second quarter of 2023 on higher sales of chemical catalysts. However, during the quarter, we saw lower sales of catalyst materials used in the production of sustainable fuels & emission control applications. All in, for the second quarter, we delivered adjusted EBITDA of $57 million.

在我們的先進材料和催化劑領域，由於化學催化劑的銷售額增加，先進有機矽的銷售額與 2023 年第二季相比增加。然而，在本季度，我們看到用於生產可持續燃料和排放控制應用的催化劑材料的銷售額下降。總而言之，第二季我們的調整後 EBITDA 為 5700 萬美元。

In terms of the continued strategic positioning of Ecovyst, it was a very successful quarter. By the end of May, we had completed the 4 turnarounds planned for eco services in the first half of the year. The work also progressed for our polyethylene catalyst production capacity expansion at our Kansas City site. Reflecting our balanced approach to capital allocation, during the quarter, we also repurchased 552,000 shares of Ecovyst common stock for a total cost of $5 million.

就 Ecovyst 的持續策略定位而言，這是一個非常成功的季度。截至5月底，我們完成了上半年生態服務計畫的4次週轉。我們堪薩斯市工廠的聚乙烯催化劑產能擴充工作也取得了進展。為了體現我們平衡的資本配置方法，本季我們也回購了 552,000 股 Ecovyst 普通股，總成本為 500 萬美元。

In addition, as we announced last week, our work during the quarter culminated in an equity investment in Pajarito Powders, a company with expertise and supports and catalysts for green hydrogen and fuel cells. This transaction is consistent with our stated strategy of leveraging our material science capabilities as we continue to position Ecovyst for growth in emerging markets.

此外，正如我們上周宣布的那樣，我們在本季度的工作最終對 Pajarito Powders 進行了股權投資，該公司擁有綠色氫和燃料電池的專業知識、支援和催化劑。這項交易符合我們利用我們的材料科學能力的既定策略，因為我們繼續將 Ecovyst 定位於新興市場的成長。

Through this investment, we gain access to and support for scaling technologies that we believe will position us to support and participate in future growth of hydrogen economy as we believe hydrogen produced through electrolysis can be widely used as a low carbon fuel for heavy-duty transportation and industrial applications.

透過這項投資，我們獲得了擴展技術的機會和支持，我們相信這些技術將使我們能夠支持和參與氫經濟的未來成長，因為我們相信透過電解產生的氫可以廣泛用作重型運輸的低碳燃料和工業應用。

Lastly, during the quarter, we strengthened our balance sheet through an amendment and extension of our term loan facility which reduced the interest rate spread and extended the maturity of the facility until June of 2031.

最後，在本季度，我們透過修改和延長定期貸款便利性來加強我們的資產負債表，從而降低了利差並將便利的期限延長至 2031 年 6 月。

As we turn to Slide 6, I'll discuss our near-term demand outlook. In Ecoservices, we anticipate a favorable demand forecast for regeneration, treatment services and catalyst activation throughout the remainder of the year. We anticipate that regeneration will continue to experience strong demand, driven by persistent high refinery utilization rates and healthy afloat margins.

當我們轉向幻燈片 6 時，我將討論我們的近期需求前景。在生態服務領域，我們預計今年剩餘時間再生、處理服務和催化劑活化的需求將呈現良好的預測。我們預計，在煉油廠持續高利用率和健康的營運利潤率的推動下，再生需求將持續強勁。

Our Treatment Services segment is expected to continue to experience high volumes as it serves as a sustainable waste management solution for numerous chemical producers along the Gulf Coast. And despite anticipating a dip in utilization rates among renewable diesel manufacturers, we are observing a rising need for ex-situ catalyst activation which is expected to contribute to a buoyant outlook for 1032 in the latter half of the year.

我們的處理服務部門預計將繼續保持高產量，因為它為墨西哥灣沿岸眾多化學品生產商提供可持續的廢棄物管理解決方案。儘管預計再生柴油製造商的利用率會下降，但我們觀察到對異位催化劑活化的需求不斷增加，預計這將有助於 1032 下半年的樂觀前景。

For virgin sulfuric acid, we expect continued positive demand for mining with copper demand sustained by continued expansion of copper mining projects in North America and borates demonstrating a normalization of inventories and stable demand. And even though the nylon industry's rebound remains subdued, we anticipate a year-over-year increase in virgin sulfuric acid sales for the nylon end use in 2024.

對於純硫酸，我們預計採礦需求將持續積極，北美銅礦開採項目的持續擴張將維持銅需求，而硼酸鹽則表明庫存正常化和需求穩定。儘管尼龍產業的反彈依然疲軟，但我們預計 2024 年用於尼龍最終用途的原生硫酸銷售將比去年同期成長。

For the remainder of our virgin sulfuric acid sales which supports a wide range of industrial end uses, including chlor-alkali and chemicals, water treatment, paper and packaging and spot sales into various end uses, we have adopted a more conservative view of demand and pricing for the second half of 2024.

對於我們剩餘的原始硫酸銷售支持廣泛的工業最終用途，包括氯鹼和化學品、水處理、紙張和包裝以及各種最終用途的現貨銷售，我們對需求和需求採取了更保守的看法。下半年的定價。

Turning to Advanced Materials and Catalysts. In advanced silicones, global polyethylene demand is expected to be up 2% to 3% in 2024. However, the demand outlook continues to vary by geography. In North America, demand is positive with operating rates expected to approach 90% supported by exports. Producers in North America and in the Middle East, where we have sales concentration continue to have a cost advantage with lower energy and feedstock costs and we expect these geographies to benefit disproportionately as global polyethylene demand recovers.

轉向先進材料和催化劑。在先進有機矽方面，預計 2024 年全球聚乙烯需求將成長 2% 至 3%。在北美，需求積極，在出口的支持下，開工率預計將接近 90%。我們銷售集中的北美和中東生產商繼續擁有成本優勢，能源和原料成本較低，我們預計隨著全球聚乙烯需求的復甦，這些地區將受益匪淺。

However, projections for Europe reflect flat demand with lower operating rates of approximately 80%. And in Asia, operating rates also continue in the low 80% range with subdued demand and new capacity continuing to come online. Overall, we continue to expect our sales of polyethylene catalysts and supports to be up in 2024 relative to 2023 but the magnitude of the increase remains dependent upon global demand conditions as well as customer sourcing and inventory decisions.

然而，對歐洲的預測反映需求持平，開工率較低，約 80%。在亞洲，由於需求疲軟和新產能繼續上線，開工率也持續維持在 80% 的低水準。總體而言，我們繼續預期 2024 年聚乙烯催化劑和載體的銷售額將比 2023 年有所成長，但成長幅度仍取決於全球需求狀況以及客戶採購和庫存決策。

For the Zeolyst Joint Venture, we now see weaker demand for catalyst materials used in sustainable fuel production and emission control application and this has led us to revise our sales expectations for these end uses in the second half of this year. As a reminder, we provide catalyst materials that are used in the dewaxing phase of renewable diesel production and these catalyst materials sales are primarily made to the licensors of sustainable fuels production technology.

對於 Zeolyst 合資企業，我們現在看到可持續燃料生產和排放控制應用中使用的催化劑材料的需求疲軟，這導致我們修改了今年下半年對這些最終用途的銷售預期。謹此提醒，我們提供用於再生柴油生產脫蠟階段的催化劑材料，這些催化劑材料的銷售主要面向可持續燃料生產技術的許可方。

Market conditions and customer sentiment evolved rapidly over the course of the second quarter and this is leading to our revised outlook for sales into renewable diesel production. Specifically, the pricing and value for renewable identification numbers or RINs which are a key incentive for renewable diesel producers declined significantly.

第二季市場狀況和客戶情緒迅速變化，這導致我們修改了再生柴油生產的銷售前景。具體來說，再生能源識別號碼或 RIN 的定價和價值大幅下降，這是對再生柴油生產商的關鍵激勵。

RIN credits traded above $1.50 for several years, contributing positively to the overall economics for renewable diesel production, particularly for smaller producers. However, with the development of an imbalance between renewable diesel production and demand, value of RINs credits has decreased significantly recently falling below $0.50.

RIN 積分的交易價格連續幾年高於 1.50 美元，為再生柴油生產的整體經濟做出了積極貢獻，特別是對於小型生產商而言。然而，隨著再生柴油生產和需求之間不平衡的發展，RIN 積分的價值最近大幅下降，跌至 0.50 美元以下。

With the lower pricing for RINs credits and with increased feedstock costs and higher overall costs due to inflation, many producers are re-evaluating production economics. As a result, there has been a slowdown in new capacity additions and with lower near-term operating rates. We expect catalyst light to be extended, pushing out sales associated with periodic catalyst change-outs. Longer term, we continue to believe the leading technologies offered by our Zeolyst Joint Venture position us well to participate in the future growth opportunities for sustainable fuel production.

隨著 RIN 積分定價較低、原料成本增加以及通膨導致的總體成本上升，許多生產商正在重新評估生產經濟學。因此，新增產能放緩，近期開工率較低。我們預計催化劑點燃時間將會延長，從而推動與定期催化劑更換相關的銷售。從長遠來看，我們仍然相信 Zeolyst 合資企業提供的領先技術使我們能夠很好地參與永續燃料生產的未來成長機會。

While near-term economics for renewable diesel were challenged, we believe that demand for our catalyst materials will improve as producers retrofit the renewable diesel processes and add new units to produce sustainable aviation fuels, where demand is expected to triple by 2030 due to both governmental mandates and carbon reduction targets set by the airlines.

雖然再生柴油的短期經濟性受到挑戰，但我們相信，隨著生產商改造可再生柴油工藝並增加新裝置來生產可持續航空燃料，對我們催化劑材料的需求將會改善，由於政府和政府的推動，預計到2030 年需求將增加兩倍。

We have also revised our expectations for sales of our catalyst used in emission control applications for the balance of the year. Economic conditions in the EU, the UK and in the US, including the effects of inflation and higher interest rates has adversely impacted purchasing activity for heavy-duty diesel vehicles.

我們也修改了今年剩餘時間用於排放控制應用的催化劑的銷售預期。歐盟、英國和美國的經濟狀況，包括通貨膨脹和利率上升的影響，對重型柴油車的購買活動產生了不利影響。

For the month of May, sales of Class 8 trucks in the US were down 18% compared to May of 2023, with May 2024 representing the 10 consecutive month of sales declines for Class 8 vehicles. Year-to-date, sales of these heavy-duty vehicles in the US are down 15%.

5月份，美國8級卡車銷量較2023年5月下降了18%，其中2024年5月是8級車輛銷售連續10個月下降。今年迄今為止，這些重型車輛在美國的銷售量下降了 15%。

In addition, although Euro 7 legislation was previously expected to go into effect in 2025, the EU has softened NOx reduction requirements and has delayed the implementation of Euro 7 for heavy-duty vehicles for 4 years, significantly impacting vehicle sales in 2024.

此外，雖然先前預計歐7立法將於2025年生效，但歐盟已經軟化了氮氧化物減排要求，並將重型車輛歐7的實施推遲了4年，這對2024年的汽車銷量產生了重大影響。

Given the delay in both the implementation of Euro 7 and the need for compliance with more fuel emission requirements, there is little incentive to upgrade truck fleet now and this is having an adverse impact on our catalyst material sales for emission control applications for the balance of 2024.

鑑於歐盟 7 實施的延遲以及遵守更多燃油排放要求的需要，現在幾乎沒有動力升級卡車車隊，這對我們用於排放控制應用的催化劑材料銷售產生了不利影響，以平衡2024 年。

For sales of hydrocracking catalysts, we continue to see good demand which led to a strong first half and expect a similarly strong second half for 2024. However, as we discussed in our first quarter earnings call, with 2023 representing a peak year in the replacement cycle for hydrocracking catalysts, we expect overall sales of hydrocracking catalysts in 2024 to be below peak levels in 2023.

對於加氫裂解催化劑的銷售，我們繼續看到良好的需求，這導致了上半年的強勁增長，並預計2024 年下半年也將同樣強勁。那樣，2023 年是替代品的高峰年根據加氫裂解催化劑的周期，我們預計 2024 年加氫裂解催化劑的整體銷量將低於 2023 年的峰值水平。

And as we look into the future, we still have a positive outlook for catalyst sales and advanced recycling technologies. We expect sales to grow over the next 2 years. We are aligned with key players in the industry and expect a dozen advanced recycling plants to be built and commissioned in the next few years.

展望未來，我們對催化劑銷售和先進回收技術仍抱持正面的前景。我們預計未來兩年銷售額將會成長。我們與該行業的主要參與者保持一致，預計未來幾年將建成並調試十幾個先進的回收工廠。

I'll now turn the call over to Mike for a more detailed discussion of our financial results for the second quarter.

現在我將把電話轉給麥克，以便更詳細地討論我們第二季的財務表現。

Thank you, Kurt. Ecovyst sales for the second quarter of 2024, including our proportionate 50% share sales from the Zeolyst Joint Venture were $212 million, down $17 million compared to the second quarter of 2023. Eco Services benefited from strong demand for regeneration services and virgin sulfuric acid. And sales in advanced silicas increased on higher chemical catalysts.

謝謝你，庫爾特。 2024 年第二季的Ecovyst 銷售額（包括我們來自Zeolyst 合資企業的50% 份額銷售額）為2.12 億美元，比2023 年第二季減少1700 萬美元。需求。高級二氧化矽的銷量因高級化學催化劑而增加。

However, lower net pricing in Ecoservices associated with the timing and contractual pass-through effect of lower variable costs as well as lower sales for catalyst materials used in the production of sustainable fuels & emission control applications drove the overall lower sales year-over-year.

然而，與可變成本降低的時間安排和合約傳遞效應相關的生態服務淨定價較低，以及用於生產可持續燃料和排放控制應用的催化劑材料銷售下降，導致整體銷售額同比下降。

Second quarter 2024 adjusted EBITDA was $57 million, down compared to $79 million in the second quarter of 2023, reflecting the lower sales within the Zeolyst Joint Venture, unfavorable net pricing, mostly attributable to the timing of the contractual cost pass-through effect and higher planned turnaround and maintenance costs in Ecoservices. This was partially offset by the higher sales volume in both Ecoservice and Advanced silicas.

2024 年第二季調整後EBITDA 為5,700 萬美元，低於2023 年第二季的7,900 萬美元，反映出Zeolyst 合資企業銷售額下降、不利的淨定價（主要歸因於合約成本轉嫁效應的時機以及更高的成本）生態服務的計畫週轉和維護成本。這被 Ecoservice 和高級二氧化矽銷量的增加部分抵消。

Moving to the next slide. The unfavorable net pricing impact is reflected in the price and variable cost drivers, netting to a $13 million negative impact on our adjusted EBITDA in the second quarter. The lower net pricing was driven primarily by the timing and the mechanical contractual pass-through of certain costs, including energy and other index costs.

轉到下一張投影片。不利的淨定價影響反映在價格和變動成本驅動因素中，對我們第二季調整後的 EBITDA 產生了 1,300 萬美元的負面影響。淨定價較低主要是由於某些成本（包括能源和其他指數成本）的時間安排和機械合約轉嫁所致。

Our pricing continues to exceed our variable costs. The unfavorable variance is a result of the period-over-period comparison and the quarterly timing lag. Overall, volume and mix were lower in the quarter as the lower sales in the Zeolyst Joint Venture more than offset the increase in regeneration services and virgin sulfuric acid. The balance of the decrease is largely associated with higher costs, including the costs associated with the planned turnaround and maintenance activity, higher networking costs and costs associated with our reliability initiatives which we had previously discussed.

我們的定價繼續超過我們的可變成本。不利的差異是同期比較和季度時間滯後的結果。總體而言，本季銷量和產品組合均有所下降，因為 Zeolyst 合資企業銷售額的下降遠遠抵消了再生服務和純硫酸的成長。減少的餘額很大程度上與成本上升有關，包括與計劃週轉和維護活動相關的成本、更高的網路成本以及與我們之前討論過的可靠性計劃相關的成本。

Turning to the segment results. I'll start with the highlights for Ecoservices. Ecoservices sales for the second quarter of 2024 were $154 million, down 3%. Sales volume was up for regeneration services, virgin sulfuric acid and treatment services. However, the sales contribution from higher volume in Ecoservices was offset by the unfavorable net pricing in the quarter.

轉向細分結果。我將從生態服務的重點開始。 2024 年第二季生態服務銷售額為 1.54 億美元，下降 3%。再生服務、純硫酸和處理服務的銷售量有所成長。然而，生態服務銷售增加所帶來的銷售貢獻被本季不利的淨定價所抵銷。

Looking to the second half of the year, we believe headwinds associated with the unfavorable timing and contractual pass-through effect of certain costs are largely behind us. Second quarter 2024 adjusted EBITDA for Ecoservices was just under $50 million. The decrease in adjusted EBITDA and adjusted EBITDA margin was primarily driven by the net pricing impact, the higher planned turnaround and maintenance costs and networking costs to support the turnarounds. These items were only partially offset by the benefit of higher volume in the quarter.

展望今年下半年，我們認為與某些成本的不利時機和合約傳遞效應相關的不利因素基本上已經過去。 2024 年第二季生態服務調整後 EBITDA 略低於 5,000 萬美元。調整後 EBITDA 和調整後 EBITDA 利潤率的下降主要是由於淨定價影響、計劃週轉和維護成本以及支援週轉的網路成本增加所致。這些項目僅被本季銷售增加的好處部分抵銷。

Sales for advanced silicas of $29 million were up nearly $3 million on higher sales of chemical catalysts. However, sales for the Zeolyst Joint Venture decreased $16 million on lower sales of catalyst materials used in the production of sustainable fuels & emission control applications.

由於化學催化劑銷售額的增加，高級二氧化矽的銷售額成長了近 300 萬美元，達 2,900 萬美元。然而，由於用於生產永續燃料和排放控制應用的催化劑材料銷售額下降，Zeolyst 合資企業的銷售額減少了 1,600 萬美元。

As Kurt noted, we now expect softer demand for catalyst materials used for sustainable fuel & emission control in the second half of the year. Adjusted EBITDA for Advanced Materials and Catalyst was just under $15 million. The decrease compared to the second quarter of 2023 was primarily driven by the lower volume in the Zeolyst Joint Venture.

正如庫爾特指出的那樣，我們現在預計下半年用於永續燃料和排放控制的催化劑材料的需求將會疲軟。先進材料和催化劑的調整後 EBITDA 略低於 1500 萬美元。與 2023 年第二季相比下降的主要原因是 Zeolyst 合資企業的銷售下降。

Turning to cash and leverage on the next slide. Ecovyst continues to have strong cash generation capability which we believe will continue to support a balanced approach to capital allocation. For the first 6 months of the year, adjusted free cash flow was just over $14 million compared to $2 million for the first half of 2023, reflecting higher dividends received from the Zeolyst Joint Venture in the first quarter, offsetting the lower earnings, higher interest and taxes.

下一張投影片轉向現金和槓桿。 Ecovyst 繼續擁有強大的現金產生能力，我們相信這將繼續支持平衡的資本配置方法。今年前6 個月，調整後的自由現金流略高於1400 萬美元，而2023 年上半年為200 萬美元，反映出第一季從Zeolyst 合資企業獲得的股息增加，抵消了收益下降和利息上升的影響和稅收。

During the quarter, we refinanced our term loan, extending the maturity to 2031 and reducing the interest rate spread by 35 basis points, saving over $3 million in annual interest costs. In light of this transaction, our balance sheet is in exceptionally strong shape. We continue to have interest rate caps in place that limit our interest rate exposure and our average cost of debt is expected to be approximately 5.5% during 2024.

本季度，我們對定期貸款進行了再融資，將期限延長至 2031 年，並將利差降低了 35 個基點，每年節省超過 300 萬美元的利息成本。鑑於此交易，我們的資產負債表狀況異常強勁。我們繼續實施利率上限，以限制我們的利率風險，預計 2024 年我們的平均債務成本約為 5.5%。

During the second quarter, we repurchased 552,000 shares of our stock at an average price of $9.05 per share for a total of $5 million. We ended the second quarter with $83 million of cash and have available liquidity of $156 million.

第二季度，我們以每股 9.05 美元的平均價格回購了 552,000 股股票，總金額為 500 萬美元。第二季末，我們擁有 8,300 萬美元現金，可用流動資金為 1.56 億美元。

Considering the use of cash for refinancing our term loan and share repurchases and with the reduction in the trailing 12-month adjusted EBITDA, our net debt leverage ratio at quarter end was 3.3x. With the expected cash generation over the balance of the year and excluding any impact of share repurchases or M&A activity, we expect to end the year with a leverage ratio of approximately 3x.

考慮到使用現金為我們的定期貸款再融資和股票回購以及過去 12 個月調整後 EBITDA 的減少，我們季末的淨債務槓桿率為 3.3 倍。考慮到今年剩餘時間的預期現金產生量，並排除股票回購或併購活動的任何影響，我們預計年底槓桿率約為 3 倍。

As noted in this morning's earnings release, we have revised our outlook for the balance of the year, considering the expected softer demand for sales of catalyst materials used for the production of sustainable fuel& emission control applications and to reflect the moderate impacts of Hurricane Beryl and a more cautious view with regard to industrial demand, particularly for sales versus sulfuric acid.

正如今天上午的財報中所指出的，考慮到用於生產可持續燃料和排放控制應用的催化劑材料的銷售需求預期疲軟，並反映颶風貝裡爾和對工業需求的看法更加謹慎，特別是相對於硫酸的銷售。

The revisions to our full year 2024 expectations are reflected on Slide 13 with the revised outlook as follows. We now expect that GAAP sales will be in the range of $700 million to $740 million, $15 million lower at the midpoint compared to our prior guidance range. With the revised outlook for catalyst sales used in the production of sustainable fuel& emission control applications, we now expect sales for the Zeolyst Joint Venture to be between $115 million to $135 million, down $30 million at the midpoint. Adjusted EBITDA is expected to be in the range of $230 million to $245 million.

我們對 2024 年全年預期的修訂反映在投影片 13 中，修訂後的前景如下。我們現在預計 GAAP 銷售額將在 7 億美元至 7.4 億美元之間，比我們之前的指導範圍中位數低 1500 萬美元。隨著用於生產可持續燃料和排放控制應用的催化劑銷售前景的修訂，我們現在預計 Zeolyst 合資企業的銷售額將在 1.15 億美元至 1.35 億美元之間，中間值下降 3000 萬美元。調整後 EBITDA 預計在 2.3 億至 2.45 億美元之間。

In terms of segment expectations; for the full year 2024, we expect adjusted EBITDA for Ecoservices will be in the range of $195 million to $205 million. Advanced Materials and Catalyst is expected to be in the range of $65 million to $70 million and we continue to expect our corporate cost to be around $30 million on an annual basis.

就細分市場預期而言； 2024 年全年，我們預計生態服務調整後 EBITDA 將在 1.95 億美元至 2.05 億美元之間。先進材料和催化劑預計將在 6,500 萬美元至 7,000 萬美元之間，我們仍然預計每年的企業成本約為 3,000 萬美元。

We have revised our guidance for free cash flow to a range of $75 million to $85 million, down $15 million at the midpoint. But we are also providing full year guidance for adjusted net income to be in the range of $53 million to $74 million and we expect adjusted diluted income per share to be in the range of $0.45 to $0.63. In terms of specific guidance for the third quarter, we expect third quarter adjusted EBITDA for Ecoservice to be between $53 million and $57 million.

我們已將自由現金流指引修訂為 7,500 萬美元至 8,500 萬美元，中間值減少了 1,500 萬美元。但我們也提供調整後淨利潤在 5,300 萬美元至 7,400 萬美元範圍內的全年指導，預計調整後稀釋每股收益在 0.45 美元至 0.63 美元範圍內。就第三季的具體指引而言，我們預計 Ecoservice 第三季調整後 EBITDA 將在 5,300 萬美元至 5,700 萬美元之間。

For Advanced Materials and Catalysts, we expect third quarter adjusted EBITDA to be between $13 million to $15 million. Assuming unallocated corporate expenses of $7 million to $8 million, we expect consolidated adjusted EBITDA for the third quarter to be between $58 million and $65 million. We expect adjusted net income of $14 million to $21 million with adjusted diluted income per share to be in the range of $0.12 to $0.18.

對於先進材料和催化劑，我們預計第三季調整後的 EBITDA 將在 1,300 萬美元至 1,500 萬美元之間。假設未分配的公司開支為 700 萬美元至 800 萬美元，我們預計第三季綜合調整後 EBITDA 將在 5,800 萬美元至 6,500 萬美元之間。我們預計調整後淨利潤為 1,400 萬美元至 2,100 萬美元，調整後稀釋每股收益為 0.12 美元至 0.18 美元。

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

現在我將把電話轉回給庫爾特，讓他發表一些結束語。

Thank you, Mike. Reflecting upon our results for the first half of 2024, I believe the Ecovyst team has done well in executing relative to our operational and strategic plan as we continue to manage through an uncertain economic environment. In doing so, for the first half of the year, we exceeded our internal expectations for financial results.

謝謝你，麥克。回顧我們 2024 年上半年的業績，我相信 Ecovyst 團隊在執行我們的營運和策略計劃方面做得很好，因為我們繼續應對不確定的經濟環境。這樣一來，上半年我們的財務表現就超出了我們的內部預期。

For Ecoservices, we believe the volumes for all Ecoservices products as well as Ecoservices EBITDA will demonstrate year-over-year gains. For our regeneration business, in particular, despite indications that refining margins are under pressure, I'll reiterate that demand for our regeneration services is more associated with the profitability of the Appalachian units which is expected to remain positive for the balance of 2024.

對於生態服務，我們相信所有生態服務產品的銷售以及生態服務 EBITDA 將呈現同比增長。特別是對於我們的再生業務，儘管有跡象表明煉油利潤面臨壓力，但我要重申，對我們再生服務的需求與阿巴拉契亞裝置的盈利能力更相關，預計到2024 年剩餘時間將保持積極的狀態。

For our sales of virgin sulfuric acid, we still expect sales volumes to be up in 2024 compared to 2023 but we remain cautious about the economic environment which leads to some uncertainty about overall industrial demand for virgin sulfuric acid.

對於我們的純硫酸銷售，我們仍然預計 2024 年銷售量將比 2023 年增加，但我們對經濟環境保持謹慎態度，這導致對純硫酸的整體工業需求存在一些不確定性。

And while ecoservice results for the second quarter reflected net pricing pressure associated with the timing effect of contractual pass-through of variable costs, we believe the headwinds of this timing effect are largely behind us as we go into the third quarter.

儘管第二季的生態服務業績反映了與可變成本合約轉嫁的時間效應相關的淨定價壓力，但我們認為，進入第三季後，這種時間效應的不利因素基本上已經過去了。

With our revised outlook for sales into sustainable fuel & emission control applications for the second half of the year, we aim to mitigate the impact of these softer near-term market conditions through manufacturing cost reductions and deferring spending. We continue to be enthusiastic about the growth prospects for Ecovyst in both our foundational businesses and in emerging technologies. We're equally eager to support our new partner, Pajarito Powders, as they develop and scale their solutions for fuel cells and green hydrogen generation.

透過修訂下半年永續燃料和排放控制應用的銷售前景，我們的目標是透過降低製造成本和延遲支出來減輕近期市場狀況疲軟的影響。我們繼續對 Ecovyst 在基礎業務和新興技術方面的成長前景充滿熱情。我們同樣渴望支持我們的新合作夥伴 Pajarito Powders，因為他們正在開發和擴展其燃料電池和綠色氫發電解決方案。

In closing, even with our revised financial outlook, we expect free cash flow generation for 2024 to be up year-over-year, providing for continued flexibility for capital allocation as we position Ecovyst for the future. While we see near-term softness in 2 specific end uses for the Zeolyst Joint Venture, we expect modest volume growth in Ecoservices and advanced silicone and we will continue to execute on the strategic plan that we have established to deliver long-term growth across the entirety of the Ecovyst portfolio.

最後，即使我們修改了財務前景，我們預計 2024 年的自由現金流產生量仍將同比增長，為我們為 Ecovyst 的未來定位提供持續的資本配置靈活性。雖然我們看到 Zeolyst 合資企業的 2 個特定最終用途近期表現疲軟，但我們預計生態服務和先進有機矽的銷量將適度增長，我們將繼續執行我們已製定的戰略計劃，以實現整個領域的長期增長整個Ecovyst 產品組合。

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

這時候我就會請接線生開通線路詢問問題。

Thank you. (Operator Instructions)

謝謝。 （操作員說明）

John McNulty, BMO Capital Markets.

約翰·麥克納爾蒂 (John McNulty)，BMO 資本市場部。

Hey, good morning. This is Caleb on for John. I'm just curious, how much of the lower guide is tied to the impact from Hurricane Beryl and then lower industrial demand and then also the impact from the renewable fuels outlook.

嘿，早安。這是迦勒為約翰代言的。我只是很好奇，較低的指導值有多少與颶風貝裡爾的影響、工業需求下降以及可再生燃料前景的影響有關。

Hi, Caleb. Good morning and thanks for the question. The Beryl impact is a few million dollars. The guidance outlook, we provided some ranges for the 2 businesses. Ultimately, about half of it is coming from the Ecoservice side and the other half is coming from the AM&C side.

嗨，凱萊布。早安，謝謝你的提問。綠柱石的影響為數百萬美元。在指導前景方面，我們為這兩項業務提供了一些範圍。最終，大約一半來自生態服務方面，另一半來自 AM&C 方面。

Related to the softness on the virgin on the industrial side, that's primarily in the Ecoservice business. And then, of course, the change in our outlook related to both sustainable fuels, primarily and then a little bit related to the emission control is driving the change in AM&C.

與工業方面的疲軟有關，這主要是在生態服務業務方面。當然，我們對永續燃料的看法的變化，主要是與排放控制有關，正在推動 AM&C 的變化。

Okay. Thanks for that. And then just in terms of the headwinds on the renewable fuels, how long do you expect that to last for? Is that kind of '25 thing? Or is that just like the next couple of quarters kind of dynamic?

好的。謝謝你。那麼就再生燃料的不利因素而言，您預計這種情況會持續多久？這是25年的事嗎？或者這就像接下來幾季的動態一樣嗎？

Thanks for the question, Caleb. Our view is the renewable diesel market which is really the driver right now. It's going to face headwinds probably over the next 12 to 18 months. And there's been a sustained decline in the RIN credits which has obviously led to deferred investment decisions for producers as well as slowed utilization rates in that space which affects the consumption of the catalyst. Our view is that, that will likely go for 12 to 18 months.

謝謝你的提問，凱萊布。我們的觀點是再生柴油市場，它是目前真正的驅動力。未來 12 至 18 個月內，它可能會面臨阻力。 RIN 信用額持續下降，這顯然導致生產商推遲投資決策，並且該領域的利用率下降，從而影響催化劑的消耗。我們的觀點是，這可能會持續 12 到 18 個月。

However, we do see positivity coming in the future as sustainable aviation fuel units are built where there is expected to be a tripling of demand between 2025 and 2030. So there'll be new units that will be built that will require dewaxing catalyst materials like we make as well as the existing renewable diesel units if the core economics continue. Producers and some have already made announcements where they'll convert their existing renewable diesel units into sustainable aviation units.

然而，隨著可持續航空燃料裝置的建成，預計 2025 年至 2030 年間需求量將增加兩倍，我們確實看到了未來的積極前景。核心經濟持續下去，我們將生產以及現有的再生柴油機組。生產商和一些生產商已經宣布，他們將把現有的可再生柴油機組轉變為可持續的航空機組。

Okay. Thanks for the color.

好的。謝謝你的顏色。

Alexey Yefremov, KeyBanc Capital Markets.

Alexey Yefremov，KeyBanc 資本市場。

Thanks, and good morning. Can you provide some maybe reference how low is your renewable diesel business now relative to pre-downturn levels? I don't know, is it down 20%, 100%? And is there more pressure here? Or has it stabilized a little, like go sideways for the next 12, 18 runs?

謝謝，早安。您能否提供一些參考，您的再生柴油業務目前相對於經濟衰退前的水平有多低？我不知道，是下降了20%，還是100%？這裡的壓力更大嗎？或者它已經穩定了一點，例如在接下來的 12、18 次運行中橫向移動？

Yes, Alexey, thanks for the question. Previously, we had said that the sustainable fuel business represented around 10% or a little more than 10% of our total sales for the AM&C segment. Now what we see for the remainder of the year is below that 10%, so call it, mid-to-high single-digit percent.

是的，阿列克謝，謝謝你的提問。先前，我們曾說過，永續燃料業務約占我們 AM&C 部門總銷售額的 10% 或略高於 10%。現在，我們預計今年剩餘時間的成長率將低於 10%，即所謂的中高個位數百分比。

And as Kurt just alluded to, what we're seeing that is on a short-term basis. But in the longer term, we do see there is the ability for that to grow, particularly around changes in the dynamics in the supply and demand as well as the SAF business.

正如庫爾特剛才所提到的，我們所看到的是短期的。但從長遠來看，我們確實看到這種成長的能力，特別是在供需動態以及 SAF 業務的變化方面。

Okay. And then on the pricing in Ecoservices you have the lag effect in the first half. Do you expect them to go away in the second half? Or if not, when do you think that would happen? And what do you think pricing would look like when we no longer see the lag effects.

好的。然後，就生態服務的定價而言，上半年存在滯後效應。你預計他們會在下半場消失嗎？或者如果沒有，您認為什麼時候會發生？當我們不再看到滯後效應時，您認為定價會是什麼樣子？

Yes, sure. So first, I just want to comment that we don't have any concerns around our base pricing. Our overall pricing is exceeding our variable costs and we obviously have a profitable business. A lot of what this is, is really the mechanical pass-through nature and the timing of when those costs are incurred.

是的，當然。首先，我只想評論說，我們對基本定價沒有任何擔憂。我們的整體定價超出了我們的可變成本，而且我們顯然擁有盈利的業務。這在很大程度上實際上是機械傳遞性質以及這些成本發生的時間。

So when you're looking at a period-over-period comparison, we had a big benefit in the second quarter of last year. And this year, you just don't have the same compares the same benefit. So it looks as a big negative. So we do not expect that trend to continue.

因此，當您進行同期比較時，我們在去年第二季度獲得了巨大的收益。而今年，你只是沒有相同的比較相同的好處。所以這看起來是一個很大的負面影響。因此，我們預計這種趨勢不會持續下去。

So you'll see a much more muted impact going forward for the rest of the year but the overall impact from the first half does impact your overall year-over-year comparison. But for the second half, you're not going to see that same dynamic.

因此，您會看到今年剩餘時間的影響要小得多，但上半年的整體影響確實會影響您的整體同比比較。但在下半場，你不會看到同樣的動態。

Okay. Thanks a lot.

好的。多謝。

Patrick Cunningham, Citi.

派崔克‧坎寧安，花旗銀行。

Hi, good morning. I think I just want to continue on the thread with the weaker outlook in our renewable fuels as well as emission control catalysts. First, can you maybe talk about the regulatory uncertainty, whether it's the Chevron decision, election results and what customers are saying in terms of their buying patterns?

嗨，早安。我想我只是想繼續討論再生燃料和排放控制催化劑的疲軟前景。首先，您能否談談監管的不確定性，無論是雪佛龍的決定、選舉結果還是顧客對購買模式的評價？

And then just in terms of the cooling demand for renewable fuels, is any of that cost optimization and how you're positioning your business taking place? Are you taking actions as a result of this weaker forecasted demand in the next 12 to 18 months?

然後就再生燃料的冷卻需求而言，是否有任何成本優化以及您如何定位您的業務？由於未來 12 至 18 個月的預測需求疲軟，您是否會採取行動？

Sure. Thanks. Thanks for the question, Patrick.

當然。謝謝。謝謝你的提問，派崔克。

I think in terms of just the macro environment for renewable or sustainable fuels right now, fee driven in the supply-demand imbalance, creates pressure on those RIN credits which leads to lower utilization leads to deferral of investments that we've mentioned before. In terms of regulatory, I mean, there still are some issues to be resolved, the RFS, I guess the renewable volume obligation will be set post the election.

我認為，就目前可再生或可持續燃料的宏觀環境而言，供需不平衡導致的費用驅動，給這些 RIN 信用帶來了壓力，導致利用率降低，從而導致我們之前提到的投資推遲。在監管方面，我的意思是，還有一些問題需要解決，RFS，我猜再生能源發電義務將在選舉後確定。

So I think that could have a future impact on that. And the EPA has already announced that they're not going to make that call until post the election. So I think we're in a little bit of a holding pattern here with that. But long term, as we mentioned, we do see momentum behind sustainable aviation fuel because the airlines have made large commitments to the volumes that they intend to purchase for sustainable aviation fuels as well as actual regulations that have been put in place in the EU and ones that are being contemplated elsewhere.

所以我認為這可能會對未來產生影響。美國環保署已經宣布，他們不會在選舉後做出這項決定。所以我認為我們在這方面有點停滯不前。但從長遠來看，正如我們所提到的，我們確實看到了可持續航空燃料背後的動力，因為航空公司對其打算購買的可持續航空燃料數量以及歐盟和歐盟已實施的實際法規做出了巨大承諾。

In terms of cost controls, we've already taken steps in July to remove costs from those impacted, I would say, underutilized units that are really concentrated in the Zeolyst Joint Venture in terms of the emission controls and renewable fuels. And to put it in perspective, it's probably the equivalent of removing a shift out of the production schedule. We've also deferred some spending.

在成本控制方面，我們已經在 7 月採取了措施，以消除那些受影響的單位的成本，我想說的是，在排放控制和可再生燃料方面，這些單位真正集中在 Zeolyst 合資企業中。從長遠來看，這可能相當於從生產計劃中刪除一個班次。我們也推遲了一些支出。

But they're all going to be concentrated towards those areas. Now those cost controls are going to impact the other things that we have going on in our catalyst and advanced materials space where we're expanding the Kansas City site for polyethylene, all those things are still going to move forward and these cost reductions won't impact that at all.

但他們都會集中在這些領域。現在，這些成本控制將影響我們在催化劑和先進材料領域正在進行的其他事情，我們正在擴大堪薩斯城的聚乙烯生產基地，所有這些事情仍在向前推進，這些成本降低將不會影響這一點。

Got it. And then, just a question for Mike. You've indicated when you get below 3x leverage, eventually in the low 2s. What do you expect to be the balance of debt pay down? I know you said probably limited focus on M&A and repurchases for the balance of the year? And are there any discrete headwinds or tailwinds that will make cash conversion come in better or where some of your base is?

知道了。然後，我想問麥克一個問題。您已指出槓桿率何時低於 3 倍，最終降至 2 倍以下。您預計債務償還餘額是多少？我知道您說過今年剩餘時間對併購和回購的關注可能有限？是否存在任何離散的逆風或順風可以使現金轉換更好，或者您的一些基礎在哪裡？

Yeah. Thanks for the question. So from a leverage standpoint, we expect to end the year based on our guidance of roughly 3 times levered. We do expect our free cash flow to still remain strong. You'll notice that our free cash flow guidance is down but not as much as what our EBITDA is.

是的。謝謝你的提問。因此，從槓桿的角度來看，我們預計今年年底的槓桿率將達到約 3 倍。我們確實預計我們的自由現金流仍將保持強勁。您會注意到我們的自由現金流指引有所下降，但幅度沒有我們的 EBITDA 下降那麼多。

We still believe that we have strong cash generation and expect it to be higher than it was last year. So we continue to generate cash. Our core businesses are intact. And as Kurt mentioned, we've been doing some other things to defer spending and take the appropriate actions to help support that generation going forward.

我們仍然相信我們擁有強勁的現金產生能力，並預計會高於去年。所以我們繼續創造現金。我們的核心業務完好無損。正如庫爾特所提到的，我們一直在做一些其他事情來推遲支出，並採取適當的行動來幫助支持這一代人的前進。

Thank you so much.

太感謝了。

Laurence Alexander, Jefferies.

勞倫斯·亞歷山大，杰弗里斯。

Good morning. So first, can we maybe look at the adjustments that you've made in separate out like the transitory versus structural. And as you think about what the baseline is for building the bridge for 2025 EBITDA, what you think we should be using and the puts and takes there?

早安.首先，我們可以看看你們分別所做的調整，例如暫時性調整與結構性調整。當您思考為 2025 年 EBITDA 建造橋樑的基準是什麼時，您認為我們應該使用什麼以及在那裡的看跌期權和拿走期權？

And then secondly, given the discussions you've had with the customers at this point, can you talk a little bit about what the kind of revenue opportunity is over 4, 5 years now on both the SAF front and the recycling front? If your plans go through and the industry builds out as expected, what's the revenue opportunity for you if you get your fair share of the supply chain?

其次，考慮到您目前與客戶進行的討論，您能否談談 4、5 年內 SAF 方面和回收方面的收入機會是什麼？如果您的計劃得以實現並且行業按預期發展，那麼如果您獲得了供應鏈的公平份額，那麼您的收入機會是什麼？

Yeah. Thanks for the question. So I'll just start and just note that we're not going to provide any updated guidance on 2025 but I would tell you that from a directional standpoint, we're certainly happy with what we've seen this year from a volume standpoint, particularly around the regeneration services. We do see growth in virgin sulfuric acid as we talked about.

是的。謝謝你的提問。因此，我首先要指出的是，我們不會提供任何有關2025 年的更新指導，但我想告訴您，從方向的角度來看，從數量的角度來看，我們當然對今年所看到的情況感到滿意，特別是圍繞再生服務。正如我們所討論的，我們確實看到了純硫酸的增長。

However, a little more cautious than earlier in the year but it's still a good growth component over the previous year. We do have that strong base pricing that we expect to continue going forward into future years.

然而，比今年早些時候更加謹慎，但與去年相比仍然是一個良好的成長成分。我們確實擁有強大的基本定價，我們預計未來幾年將繼續如此。

And with our cost structure and Ecoservice is now managed at an appropriate level with the higher cost that we talked about related to the reliability program and higher turnaround costs, that will moderate going forward. So we expect 2025 to continue to go in the right direction at 18 months. So that will impact us going into next year.

由於我們的成本結構和生態服務現在管理在適當的水平，我們談到的與可靠性計劃相關的更高成本和更高的周轉成本，這將緩和未來的發展。因此我們預計 2025 年 18 個月將繼續朝著正確的方向發展。這將影響我們進入明年。

Our hydrocracking catalyst actually is doing well this year. It's not quite at the peak that it was in 2023 last year. However, it is having a strong year and we continue to see that being a positive into next year as well. So with some of the newer areas, whether it's advanced recycling or in the functionalized silicas business with enzyme development, those are all positives that are going to take us into a positive nature around those for 2025 as well.

今年我們的加氫裂解催化劑實際上表現良好。與去年 2023 年相比，還沒有達到高峰。然而，今年是強勁的一年，我們繼續認為這對明年也有正面的影響。因此，對於一些較新的領域，無論是先進的回收利用還是酵素開發的功能化二氧化矽業務，這些都是積極的因素，它們也將使我們在 2025 年的發展中保持積極的態度。

Yes. I would just add, Laurence. I mean, I think we look at -- Mike mentioned a little bit sustainable aviation fuel. We see that growth, as we've said before, to be anticipated to really come in at '25 and '26 as those units get built out and the regulations and so forth go into effect.

是的。我想補充一點，勞倫斯。我的意思是，我認為我們會關注——麥克提到了一點可持續航空燃料。正如我們之前所說，隨著這些單位的建成以及法規等的生效，我們預計這種增長將在 25 和 26 年真正實現。

[Advanced recycling] there's 12 units under construction we expect, an uptake in our products in that space to begin 2025, 2026 and going beyond. And I'll just circle back really on the Eco Services, I mean all the products we're going to have volume uptick (technical difficulty)

[進階回收]我們預計有 12 個裝置正在建造中，我們的產品將於 2025 年、2026 年及以後開始在該領域得到應用。我只想回到生態服務，我的意思是我們將增加所有銷售量的產品（技術難度）

Hamed Khorsand, BWS Financial.

Hamed Khorsand，BWS Financial。

Hi. I just wanted to ask about what's going on Zeolyst. The string comments you've been making, RIN has been coming down for more than a year. So what's different now? Is it the Zeolyst lost a customer? It just sounds all of a sudden that the RIN being an excuse just sounds a little off -- (technical difficulty)

你好。我只是想問一下 Zeolyst 的情況。你一直在發表的字串評論，RIN 已經下降了一年多了。那麼現在有什麼不同呢？是Zeolyst失去客戶了嗎？突然間，RIN 作為藉口聽起來有點不對勁——（技術難度）

Please standby. Please stand by while we resolve technical difficulties, so it's higher, we back.

請等待。請耐心等待，我們會解決技術難題，因此更高，我們會回來。

Hello? Are we back?

你好？我們回來了嗎？

Hello. You are coming in clear.

你好。你說得很清楚了。

Hamed Khorsand, BWS Financial.

Hamed Khorsand，BWS Financial。

Hi. So what I wanted to ask about was on the sustainable fuel side and Zeolyst. Is this a customer loss perspective because RIN prices have been coming down for a year now. So I'm just surprised it took a year before you're seeing any kind of impact from that.

你好。所以我想問的是可持續燃料方面和 Zeolyst。這是客戶流失的觀點嗎，因為 RIN 價格已經下降一年了。所以我很驚訝你花了一年的時間才看到它的任何影響。

Yeah sure. Thanks, Hamed. I just want to apologize, there was a loss of audio here on the call, so we apologize to the participants for the disruption.

是的，當然。謝謝，哈米德。我只是想道歉，電話中出現了音訊遺失，因此我們對於造成的干擾向參與者表示歉意。

Good question, Hamed. I think we have not lost customers in this space. I mean, we are a leading provider in dewaxing catalyst materials. But that being said, our end customer, as we've stated, tends to be the catalyst technology provider or the technology provider for the renewable producers.

好問題，哈米德。我認為我們在這個領域並沒有失去客戶。我的意思是，我們是脫蠟催化劑材料的領先供應商。但話雖這麼說，正如我們所說，我們的最終客戶往往是催化劑技術提供者或再生能源生產商的技術提供者。

So we're, in most cases, once removed in terms of the actual producers themselves which, in some cases, are on purpose renewable producers or integrated refining companies that produce renewable fuels. Our view on this was reins credits came down, the sustained nature of that has led to these long-term decisions where people are going to defer investments as well as the catalyst life as the low utilization rates impacting the catalyst consumption or the use of the catalyst now is leading to the slower sales from that long-term low utilization from the RINs credit. Once removed there. I think it's more the long-term nature of the length that the RINs credits have been below that has started culminating in some of this activity.

因此，在大多數情況下，我們一旦將實際生產商本身排除在外，在某些情況下，他們是有意的可再生生產商或生產可再生燃料的綜合煉油公司。我們對此的看法是韁繩信用下降，其持續性導致了這些長期決策，人們將推遲投資以及催化劑壽命，因為低利用率影響催化劑消耗或催化劑的使用RIN 信貸長期低利用率導致銷售放緩。一旦刪除那裡。我認為 RIN 積分低於該長度的長期性質已經開始導致某些活動達到頂峰。

Got it. And then as far as your cost management is concerned, how manageable is that you're reducing costs when sales come back, do those costs come back as well? Or are you able to keep those permanent?

知道了。然後就您的成本管理而言，當銷售回升時，您降低成本的可控性如何，這些成本也會回來嗎？或者你能將它們永久保留嗎？

We'll obviously, we'll look at that when those come back. We do have the ability to scale up. Essentially, what I mentioned before was the removal of the equivalent of the shift to the production sites or the production lines that are affected. So we would have the ability to scale that back and it would just be a manner of at what pace that comes back. Can we handle it with our existing capacity? Or do we have to go back and add those costs back. So it will really be a function of the pace of the return of the sales.

顯然，當這些人回來時我們會考慮這一點。我們確實有能力擴大規模。本質上，我之前提到的是取消相當於轉移到受影響的生產地點或生產線。因此，我們將有能力縮小這一規模，而這只是恢復速度的一種方式。我們現有的能力能應付嗎？或者我們是否必須回去將這些成本加回去。因此，這實際上是銷售回報速度的函數。

Okay. I appreciate. Thank you.

好的。我很欣賞。謝謝。

Thank you. (Operator Instructions)

謝謝。 （操作員說明）

David Silver, CL King.

大衛·西爾弗，CL·金。

Yeah, hi. Thank you. I guess the first question I'd like to ask would be maybe to get your view on the back half of the year in terms of the opportunities for your virgin acid product. I think the demand on that side has been weaker or hasn't really been exceptionally strong for a few quarters now? And I'm just thinking about the step down or the implied step down in your guidance.

是的，嗨。謝謝。我想我想問的第一個問題可能是了解您對今年下半年的初榨酸產品機會的看法。我認為這方面的需求已經減弱或已經有幾季沒有特別強勁了？我只是在考慮您的指導中的下台或暗示的下台。

But is there a dynamic in that market, maybe, Kurt, where when industrial activity weakens that there are some new players that enter in other words, they can't use all their captive product internally and then that they tend to look for outlets into your preferred markets. In other words, is this just the demand that you see falling away? Or is there maybe something a little more complex where weaker industrial demand turns into some increased competition in some of your traditional markets?

但是，庫爾特，這個市場是否有一種動態，當工業活動減弱時，有一些新的參與者進入，換句話說，他們不能在內部使用所有的專屬產品，然後他們傾向於尋找出口您的首選市場。換句話說，這只是您所看到的正在消失的需求嗎？或者是否存在更複雜的情況，即工業需求疲軟導致某些傳統市場的競爭加劇？

Good question, David. So for the back half of the year, overall for virgin sulfuric acid again, we do expect volumes to be up year-over-year and actually the EBITDA of Ecoservices in the second half of the year to be up year-over-year. That being said, when we gave our initial guidance coming into this year, we had planned to do 4 turnarounds in the first half of the year. We view the second half of the year would be a recovering marketplace.

好問題，大衛。因此，今年下半年，對於純硫酸而言，我們確實預計銷售量將同比增長，實際上下半年生態服務的 EBITDA 將同比增長。話雖這麼說，當我們給出今年的初步指導時，我們計劃在今年上半年進行 4 次週轉。我們認為下半年市場將會復甦。

Most of our turnaround activity was done. We have the volume to meet what generally is a spot and I'd say short-dated contract market where if industrial activity is healthy and other producers are taking turnarounds or such themselves, there's generally a healthy spot market to sell additional materials which are generally higher in price just due to their short-term and opportunistic nature.

我們的大部分週轉活動已經完成。我們有足夠的數量來滿足通常的現貨需求，我想說的是短期合約市場，如果工業活動健康並且其他生產商本身正在採取週轉或類似措施，那麼通常會有一個健康的現貨市場來銷售額外的材料，這些材料通常是價格較高只是由於其短期和​​機會主義性質。

So what we're seeing now is just generally the cautiousness with the overall industrial climate, not really impacting our existing demand but it just makes those marginal infringe spot sales that we typically have the ability to capitalize due to our scale. We're just cautious around our ability to capture those because they just might not be there because the existing market may be able to meet that demand.

因此，我們現在看到的是對整體工業環境總體上的謹慎態度，並沒有真正影響我們現有的需求，但它只是使那些邊際侵權現貨銷售，我們通常有能力利用我們的規模。我們只是對我們捕捉這些需求的能力持謹慎態度，因為它們可能不存在，因為現有市場可能能夠滿足該需求。

Okay. Thank you for that. I should have stipulated upfront, I think I've missed, you know, a few answers, whatnot, so I apologize for making you repeat yourself there.

好的。謝謝你。我應該預先規定，我想我錯過了，你知道，一些答案，等等，所以我很抱歉讓你在那裡重複一遍。

The second thing I'd like to ask you about is maybe the decision to redo and extend your term loan. So when I read the announcement originally, I noted that, that term loan wasn't really due to expire or mature until, I think, 2028 or so.

我想問您的第二件事可能是重做和延長定期貸款的決定。因此，當我最初閱讀該公告時，我注意到，該定期貸款要到 2028 年左右才會真正到期或到期。

And in effect, you've extended it out 3 years. My thinking or my assumption is the impetus to redo the term loan would have been on your side. Banks are always anxious to earn a few more fees but it's a lot of time and effort internally to a lot of paperwork.

實際上，您已將其延長了 3 年。我的想法或我的假設是重做定期貸款的動力本來就在你這邊。銀行總是渴望多賺一些費用，但內部的大量文書工作需要花費大量的時間和精力。

But maybe, Mike, if you wouldn't mind just sharing your thoughts about why now or why middle of June was the right time to extend that? And beyond the $3 million or so of annual interest savings, what other key features did you come away with from there that you think were part of your calculation and moving forward with that decision at that time?

但也許，麥克，如果你不介意分享你的想法，為什麼現在或為什麼六月中旬是延長這一期限的合適時間？除了每年節省 300 萬美元左右的利息之外，您還從那裡獲得了哪些其他關鍵功能，您認為這些功能是您計算的一部分並在當時推進了該決定？

Yeah. Certainly, David. So I mean, so there's certainly a bit of a question in the market around companies and their balance sheet. And we saw this as an opportunity to go out into the market. Our bankers that we've used have done a nice job helping us guide through when the right opportunities might arise.

是的。當然，大衛。所以我的意思是，市場上肯定存在一些圍繞公司及其資產負債表的問題。我們認為這是一個進入市場的機會。我們使用的銀行家做得很好，幫助我們在合適的機會出現時提供指導。

We certainly were able to do this at a relatively low cost for what we were able to do, extending the turnout for 3 years as well as reducing the overall interest expense, as you mentioned, around $3 million a year. The NPV and the value of doing it was quite high.

我們當然能夠以相對較低的成本做到這一點，將投票率延長 3 年，並減少整體利息支出，正如您所提到的，每年約 300 萬美元。 NPV 和這樣做的價值相當高。

And we also felt very, very comfortable that it would help support our story of having a strong balance sheet from a capital allocation standpoint, generating cash and having the ability to use that cash for what we needed to do going forward. So we believe that it was the right time to go out of the market, gives the investors comfort that our balance sheet is strong and also allows us to continue with our strategy to add interest rate caps as needed.

我們也感到非常非常放心，這將有助於支持我們從資本配置的角度擁有強大的資產負債表、產生現金並有能力將這些現金用於我們未來需要做的事情的故事。因此，我們認為現在是退出市場的正確時機，讓投資人感到我們的資產負債表強勁，也讓我們能夠繼續執行根據需要增加利率上限的策略。

As we mentioned, we're about 75% hedged over the next several years. So our weighted average cost of capital is around 5.5% for the year. So again, it just gives that comfort for investors to know that interest is not a big concern for a company like ours.

正如我們所提到的，我們大約 75% 的資產將在未來幾年內進行對沖。因此，我們今年的加權平均資本成本約為 5.5%。再說一次，這只是讓投資者感到安慰，因為他們知道對於像我們這樣的公司來說，興趣並不是一個大問題。

Okay, thanks. And then last question, if I could. With this latest update, you'll be, I don't know, under-earning maybe or below trend or a little bit of a period of time. Any thoughts from your side on your major capital outlays and I'm thinking of Kansas City in particular. But does the original time line still make sense here? Or if we do enter a softer patch industrial activity wise, that's something that could probably be timed a little differently?

好的，謝謝。最後一個問題，如果可以的話。我不知道，透過這個最新的更新，你的收入可能會低於趨勢，或者在一段時間內會低於趨勢。您對主要資本支出有何想法，我特別想到堪薩斯市。但原來的時間線在這裡還有意義嗎？或者，如果我們確實進入了工業活動較疲軟的階段，​​時間可能會有所不同？

Thanks for the question, David. So with polyethylene, obviously, the growth in the polyethylene is a little lower than what it's been in the trend past 3% to 4%. As we said on the call, that is currently running around 2% to 3%. We do expect our polyethylene catalyst sales to be up year-over-year.

謝謝你的提問，大衛。因此，對於聚乙烯來說，顯然，聚乙烯的成長略低於過去 3% 至 4% 的趨勢。正如我們在電話會議上所說，目前這一比例約為 2% 至 3%。我們確實預計我們的聚乙烯催化劑銷售額將年增。

The Kansas City investments are really linked to customer commitments who are simultaneously constructing assets and such that we'll need those catalysts which, to our knowledge, they're rolling along. So we don't have any intention to slow those Kansas City expansion at this time, just we have commitments to meet downstream customers.

堪薩斯城的投資確實與客戶的承諾有關，他們同時在建立資產，因此我們需要這些催化劑，據我們所知，這些催化劑正在不斷發展。因此，我們目前無意放慢堪薩斯城的擴張速度，只是我們承諾滿足下游客戶的需求。

Okay. Thank you very much.

好的。非常感謝。

Thank you. We have no further questions in queue at this time. This does conclude the Ecovyst second quarter 2024 earnings call and webcast. Thank you for your participation and you may disconnect at any time.

謝謝。目前我們沒有其他問題在排隊。 Ecovyst 2024 年第二季財報電話會議和網路廣播到此結束。感謝您的參與，您可以隨時斷開連線。