Ecovyst Q1 2026 Earnings Call - EBITDA Surges 87% as Sulfur Spikes and Calabrian Acquisition Expands Portfolio

Stephanie, Conference Operator: 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. Currently, all participants have been placed in listen-only mode to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer session. If you’d like to ask a question at that time, please press star 1 on your telephone keypad. I’d like to now hand the call over to Gene Shiels, Director of Investor Relations. Please go ahead.

Gene Shiels, Director of Investor Relations, Ecovyst: 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 Chief Executive Officer, and Mike Feehan, Ecovyst 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 in 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.

Kurt Bitting, Chief Executive Officer, Ecovyst: 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 alkylation 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.

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 bisulfite 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 two businesses. Looking at a rough breakdown of Calabrian’s 2025 sales, nearly a third of sales were to the mining sector, where we have well-established and long-standing relationships.

Roughly a quarter of Calabrian’s 2025 sales were in water treatment, a market that we currently participate in with our virgin sulfuric acid, sodium bisulfite, and aluminum sulfate sales. Approximately 15% of sales were into specialty chemical applications, and the balance of 2025 sales included stations. 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 two manufacturing locations: Port Neches 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 twelve-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 three 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 2 times. 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. 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 Waggaman 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.

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.

Mike Feehan, Chief Financial Officer, Ecovyst: Thank you, Curt, 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. A 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 1.2 times, unchanged from year-end, and our available liquidity remains strong at $237 million as of March 31st. 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 passed through in 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. This is 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 the 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 1.2 times, unchanged from December 31st.

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 costs passed 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-$970 million, up from our previously guided range of $860 million-$940 million.

With a strong start to the year and having one 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-$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-$55 million. 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-$45 million. I will now turn the call back to Kurt for some closing remarks.

Kurt Bitting, Chief Executive Officer, Ecovyst: 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. We are extremely pleased with our project 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 Catalyst 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. 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. 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 Calabrian, which will broaden our portfolio of sulfur products that we can offer to growing end users.

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.

Stephanie, Conference Operator: Thank you. We’ll take our first question from John McNulty with BMO Capital Markets. Please go ahead, your line is open.

John McNulty, Analyst, BMO Capital Markets: Yeah, good morning. Thanks for taking my question. Congrats on a really solid start to the year. I wanted to dig into, you know, 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. Also the strength of U.S. refining, which I know you were looking for things to be better. Seems like now that may be even greater in terms of how that industry is reacting to kind of what’s gone on in the Middle East. I guess, can you help us to think about how your expectations have changed and how that’s woven into the guide?

I guess I’m a little surprised with a couple things being reasonably better, that you weren’t quite ready to necessarily raise the, at least the upper end of the guide? Can you help us to think about that a little bit?

Kurt Bitting, Chief Executive Officer, Ecovyst: 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. You know, 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, you know, strength is clearly a tailwind for us. We also are tempered with some of the other, you know, potential macroeconomic items that are going on. We still wanna continue to keep our guide relatively to where we were.

We did raise the bottom end of it. Our midpoint is up to $187.5. We believe that there is strength in the numbers of what we’ve seen, but, you know, wanna be tempered with what we’re expecting for the rest of the year.

John McNulty, Analyst, BMO Capital Markets: Fair enough. Understand it’s a little bit of a fluid situation. 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?

Kurt Bitting, Chief Executive Officer, Ecovyst: Yeah, sure. Thanks for the question, John. I mean, it’s going back, you know, Calabrian’s been in, you know, its current form really since, you know, the 1980s. You know, it’s had the site at Port Neches. They built a site in 2017 up in Timmins, Ontario, which is primarily used to service the mining sector up in Canada. A lot of the growth in the Calabrian segment has been, you know, one, from the mining, you know, and that backstops gold, which obviously gold mining is at current gold prices has been very healthy, their business has grown from that. There’s also been some growth in terms of their, some of their pharma, food and other, I’d say, industrial applications.

When we look at that business, you know, it’s probably GP to GP plus type, you know, 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. They have a really nice position. They have a great technology that’s, you know, proprietary that’s, you know, completely different than how it’s produced by the competitors. We’re real happy with the acquisition and, you know, we confident in its future potential.

John McNulty, Analyst, BMO Capital Markets: Great. Thanks very much for the color.

Stephanie, Conference Operator: Thank you. We’ll take the next question from Patrick Cunningham with Citigroup. Please go ahead, your line is open.

Rachel Liang, Analyst (covering for Patrick Cunningham), Citigroup: Hi, everyone. This is Rachel Liang for Patrick. Adjusted EBITDA margins were meaningfully stronger than we expected this quarter, driven by higher volumes and incremental pricing above the sulfur pass-through, despite some other headwinds from transportation and manufacturing costs. As we look to the balance of the year, how should we think about the net price cost dynamics?

Kurt Bitting, Chief Executive Officer, Ecovyst: Thank you for the question. The margins were favorable. Obviously, as we’ve talked in the past. The pass-through of the sulfur cost is relatively neutral to EBITDA, it does lower the margins. We did see some positivity around overall pricing and volume that dropped straight through the bottom line. That did, you know, 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, you know, 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, you know, comparatively.

While the margin % will look lower because of the sulfur price through, the earnings is actually positive. We expect that to continue throughout the rest of the year.

Rachel Liang, Analyst (covering for Patrick Cunningham), Citigroup: Great. Thank you so much for that. 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?

Kurt Bitting, Chief Executive Officer, Ecovyst: Yeah. The business is similar, I would say, to the general construct of the Ecoservices acid business, where there are long term agreements. There’s certainly long term, you know, customers with, you know, with blue chip, blue chip users, you know, whether it’s in mining, industrials, pharma, food, and so forth. The contracts are also have a high passthrough component similar, you know, because it is a sulfur-based chemistry. You know, passing sulfur is obviously passing through sulfur is very important. They have a similar dynamic to the Ecoservices business. In terms of visibility, you know, again, the customers tend to be very steady offtake.

It’s a, you know, the products that they purchase from Calabrian are very important to their process, so there’s generally a very good visibility in terms of, you know, the forecasting and, you know, the ratability of the volume and so forth.

Rachel Liang, Analyst (covering for Patrick Cunningham), Citigroup: Thanks so much.

Stephanie, Conference Operator: Thank you. We’ll take our next question from Laurence Alexander with Jefferies. Please go ahead.

Daniel Rizzo, Analyst (covering for Laurence Alexander), Jefferies: Good morning. This is Daniel Rizzo for Laurence Alexander. Thanks for taking my questions. 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, you know, what’s going on in the Middle East. Do you expect a similar structural reset in sulfur prices over the long term that will flow through to your business, or should we view the sulfur spike as a net negative because it hurts industrial volumes?

Kurt Bitting, Chief Executive Officer, Ecovyst: Yeah. For our business, I mean, you know, sulfur is at really all-time highs right now. It was the run-up in sulfur had actually started well before the conflict in Iran, a lot of that is due to, you know, simply, you know, the need for the sulfur molecule for sulfuric acid for things, you know, to produce copper and other metals and so forth. There, you know, we do feel that, you know, there’s a definite demand for sulfur out there, which will lead to higher prices. I do think right now we’re in a extremely high situation just given the geopolitical conflict that’s going on right now. Long term, you know, we continue to have the ability to pass through sulfur to our customers.

Our customers as opposed to, like, a fertilizer industry, which, you know, is very heavily dependent on the commoditized, you know, commoditized market, and sulfur impacts demand there a lot. Ours not so much. Our customers tend to, you know, sulfuric acid tends to be only a very small component of their overall cost and their process. While it’s not, you know, 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.

Daniel Rizzo, Analyst (covering for Laurence Alexander), Jefferies: Thanks. That’s actually very helpful. Then just thinking about the most recent acquisition. As we think about synergies, I mean, I guess it’s mostly logistical, not logistical, like supply synergies as opposed to a production and revenue? Is that how we should think about it? I don’t think you said you’re gonna quantify it later too, I think you said, right?

Kurt Bitting, Chief Executive Officer, Ecovyst: Yeah. I mean, when we look at, when we look at the synergies, there’s certainly some cost-based synergies when you look at we’re obviously both involved in sulfur chemistry, so there’s gonna be, you know, 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. We also see revenue synergy upside as well, just given, you know, the ability to leverage our sales forces across, again, those sulfur products, right? One of which we already sell, sodium bisulfite.

We really see a, you know, 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, you know, the products are very closely related.

Daniel Rizzo, Analyst (covering for Laurence Alexander), Jefferies: Thank you very much.

Stephanie, Conference Operator: Thank you. We’ll take our next question from Hamed Khorsand with BWS Financial.

Hamed Khorsand, Analyst, BWS Financial: Hey, good morning. First off, on the acquisition, you were talking about, you know, potentially selling sulfuric acid into Canadian mining. Would these be relationships that, you know, Calabrian brings to the table?

Kurt Bitting, Chief Executive Officer, Ecovyst: Hi, Hamed. How are you? They would be selling sulfur dioxide to Canadian mines. Yes, these would be new mining relationships, you know, where, you know, Ecovyst mining relationships are primarily focused in, you know, I would say the southwestern part of the U.S.

Hamed Khorsand, Analyst, BWS Financial: Okay. Then on the refinery side, is the increase in activity and utilization, is that more about the current environment, or does that have to do with more of a normalization given where Q4 was?

Kurt Bitting, Chief Executive Officer, Ecovyst: The answer is yes. It’s both. Coming into this year, we had guided 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. Utilization was expected to be high. I would say the current conflict that’s going on has certainly added a tailwind to that, right? 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. 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, you know, 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. I would say the current environment certainly provides a tailwind for everything to run as hard as it can.

Hamed Khorsand, Analyst, BWS Financial: Okay, great. Thank you.

Stephanie, Conference Operator: Thank you. At this time, I’d like to thank everybody for joining today’s event. You may now disconnect.