Yeah, good afternoon, everybody, and thank you for joining us for our twenty-second Best Ideas Conference for CL King. We're very pleased to have the management of Ecovyst here. Representing the company, we have the CEO, Mr. Kurt Bitting. Mike Feehan is the Chief Financial Officer, and Gene Shiels is the Director of Investor Relations. The format will be that I will shortly turn the floor over to the management for some opening remarks. I'll then follow with a series of questions. If you would like to ask a question, please use the box on your webpage. Alternatively, if you prefer anonymity, you could email me your question at dsilver@clking.com. That's D-S-I-L-V-E-R @C-L-K-I-N-G.com. Okay, with that, I'm gonna turn the floor over to the Ecovyst management for some introductory or opening remarks. Gentlemen? Yeah, thanks, David. I mean, we are very pleased and excited to be a part of this conference, as always. I mean, you in particular have a high degree of knowledge and experience and history in our sector. So it's... We always love participating in your events and some of the questions that we get from you and others. So we're excited to be here, and we're excited about Ecovyst's future, right? It's a very unique mix of a company where we have very market-leading positions across everything that we really touch. And you look at our Eco Services segment, very long-term contracts, very stable business. You know, providing critical products and services into the value chains of our customers, generating, you know, great returns and EBITDA and even free cash flow, and then our Advanced Materials and Catalysts segment has, again, the same leadership position properties, as well as a lot of nascent technologies, right? That support, you know, particularly, areas that are linked to sustainability and technology gains in green infrastructure, so we're excited where we're at, as a company, and look forward to taking your questions. Okay, great. Thank you. First question would just be to get your take on the economic environment. So, you know, I would say demand for a number of your products in end markets, such as mining, plastics, fuels, et cetera, is tied to the general economy, as well as maybe durable goods, auto and housing activity. So, you know, most recently, we'd say costs for energy, fuel, and borrowing have begun to decline, but, you know, the demand outlook is still influenced by some geopolitical factors. How has demand trended overall, as well as for your most economically sensitive products? And what, if anything, has changed in the pace of economic activity, let's say, over the past quarter? Mm-hmm. Well, I think, you know, we talk about the large chunks of the business is probably easiest to walk through that way. For regeneration services, alkylate still continues to be the highest value gasoline blending component, so the utilization of alkylation units remains high, and our, you know, demand for our regeneration services remains high. In terms of virgin acid, you know that that goes into a very wide and diverse basket of end uses. You know, two of the larger ones are mining, which makes up probably about 20% of our virgin acid sales. Mining remains strong. You know, there's a tremendous push for minerals and metals to support just the general conductivity and connectivity of, of the economy when you talk about, you know, power production or even use for things like data centers and stuff that support AI technology. You know, that... It's all gonna require copious amounts of materials to, to support that, which our sulfuric acid participates in, so that remains strong. Nylon is another major end segment that's, we do believe, gonna be up year over year. So we've seen some recovery in that space. However, it's probably not, you know, back to its, I'd say, historical norms at this point, but albeit better than last year. In terms of the advanced materials and catalyst segment, you know, polyethylene demand is gonna be up year over year in twenty twenty-four, but we are mindful of potential softness really in the back half of the year, and that really comes as a part of, you know, slow recovery, clearly in Europe, as well as places like China, where recovery hasn't been as quick. But we are, as we've talked about before, more exposed to producers that are in North America or the Middle East, which generally are well-positioned on their cost curves. You know, and then finally, I think our, you know, most recent earnings guidance, David, we gave a update on our sustainable fuels, which has obviously suffered somewhat due to the low RINs, value of the RINs credits, which has led to deferrals in decisions for people making sustainable fuels investments, as well as longer, you know, catalyst use life, which has, you know, impacted the sales into that space. ... Okay, maybe I'll just pick up on that last point. Maybe we could talk about the catalyst technology side of your business, but you know, you manufacture a wide range of zeolite-based catalysts for refinery, hydrocracking, emissions control, as well as for production of a range of renewable fuels. Just can you discuss the overall prospects for your Zeolyst catalysts joint venture with Shell, and where you anticipate the strongest growth? And regarding sustainable SAF, sustainable aviation fuels, can you just discuss your overall positioning, and over what timeframe do you anticipate this significant growth opportunity will, you know, enter a period of more rapid commercialization? Okay. Yeah, sure. So with Zeolyst, I think you, you ticked off the major, components of that, of that group. I mean, I'll, I'll walk through a few of them. From a hydrocracking standpoint, which is really was the, genesis of the joint venture, you know, Shell remains a leader in hydrocracking catalysts, and, you know, we have great technology in that space. Max, it's called Max technology, which has enabled, us to pick up share, particularly with the large mega refineries, 'cause the technology allows refineries to swing on the spectrum of, you know, distillates and increase yields there, which is, which is advantageous to, to large scale refineries to be able to make more distillates. So we've got great technology there and feel good about that moving forward. The other spaces within Zeolyst that are growing is, we don't talk about it a whole lot, but custom catalysts, where we make, very specific and niche dewaxing and lube-type plant catalysts, which are very... I'd say they're niche in nature, but very important and generate very high returns for, the customers in that area. And then, you know, advanced recycling is probably the most nascent area within the Zeolyst joint venture, where you have, zeolites give recyclers of plastics the ability to lower the energy intensity of those, of that plastics recycling process, as well as, get less, what they call char, through the process, right? As you're decomposing the plastics, you get char, basically. You know, think about, you burn a piece of food, and you get black, you know, carbon on it, something like that. It reduces that 'cause you're doing it at lower temperatures. So we feel good about those growth prospects there. We actually recently invested in a unit, a pilot plant, advanced recycling unit within the Conshohocken facility, which enables us to basically take plastics and recycle them into pyoil using the zeolite. So we feel there's a lot of value there, and as those advanced recycling plants get built out, particularly, I would say in the Eurozone, is where it's probably further ahead, we feel that that's gonna be a very good market segment for zeolites. And then lastly, I think you had touched on SAF. SAF, we've always viewed as probably a late 2025, 2026, phenomenon, and that's, you know, gonna come from two areas, right? You have existing sustainable fuels producers that may be making renewable diesel, that are converting units into sustainable aviation fuel, which requires an even more intense dewaxing process, which the dewaxing is where our catalysts, our materials play in, in the process. We feel that'll be beneficial to us as that, you know, as airlines start to purchase the fuel. Europe has a mandate that is going into effect in 2026, so we think that will pick up in that time period. As well as, you know, there's technology that we have, and there's others that are making sustainable aviation fuel out of things like methanol and alcohols, it's kind of a reverse process, where you're taking those short carbon chains and building them up. Our zeolites also enable that process through oligomerization. So we've got technology on both sides and, you know, we are bullish really on the long-term prospects for sustainable aviation fuel. Got it. Okay. Next question would be about your silica catalyst investment. So I think this is your biggest discrete, you know, CapEx project. But I think about a year ago, you announced a major new investment in your silica catalyst production facility in Kansas City, Kansas, aimed at boosting the production capacity at that location by roughly 50% by late 2025. Kansas City is your largest silica catalyst production site, and the products there were mainly utilized for large volume plastics, including polyethylene and MMA. Can you just update us on the timing and the expected capacity growth or revenue potential underlying this major investment? And then, what is your longer term outlook for growth in silica catalyst demand? Mm-hmm. Well, I think, you know, we view. You know, working backwards, I think we view the polyethylene demand growth globally to be growing at around 3% per year, right? Which is a little less than what it's done historically, so we think that we're pretty confident in that 3% number. And, you know, why is that? And as you know, David, I mean, polyethylene continues to replace things like metal, wood, and other materials that, you know, formerly would've. You know, polyethylene can displace them 'cause it's lighter. It has, you know, certain heat-resistant aspects to it. The other interesting thing, as we get more into the advanced recycling side, you know, polyethylene is one of the more recyclable plastics as well, right? It's actually, you know, the most favorable recyclable plastic. So we're pretty confident in that long-term demand growth for polyethylene, and then obviously how that translates into polyethylene catalyst sales for us. Over the long term, we've demonstrated a two. We've been able to outpace the polyethylene demand growth by about two X. And why is that? We've won disproportionately and continue to win disproportionately higher share of new polyethylene plant builds. And that's because we're able to dial in really specific catalysts for producers that may be targeting a certain polyethylene market, whether that's piping or some niche application, that they, they want their unit to deliver a certain quality and characteristic polyethylene. They like to work with us 'cause we have a high degree of knowledge. Our pilot facilities allow us to kind of prove out that technology and really develop a catalyst for them that delivers, allows them to deliver into that specific market. So all that being said, yes, we are expanding our Kansas City facility by 50%. That project's on track to be completed at the end of 2025. So 2026, early 2026, we'll be commissioning it, producing products, and then we really, what's more important is the customers that that plant that are committed to taking the output of that plant, their projects are also on time to be landing in that 2026, 2027 time period. So, you know, things are aligning well there. Okay. Thanks for that. You know, I do have a question here from a client, and I'll stipulate that you could probably take the entire remaining time to answer this if you wanted to. Okay. But maybe just, what's the word? I don't know, consolidated or concise. Okay. The question is: How do you differentiate yourself in sulfuric acid from competitors like Veolia and Chemtrade? Yeah. So just, you know, you service very different parts of the market in general, but anyway, I'll let you handle that. But, if you could just touch on that. Yeah. So we are the North American leader in both regeneration and virgin sulfuric acid, which, you know, both of those, Chemtrade and Veolia. So we differentiate ourselves in one, our reliability and plant network, I would say, robustness. So, you know, we have in the Gulf Coast, for instance, which is the largest market, where 60% of our assets sit, you know, we have four or really five sulfuric acid units spread across three plants, right? All of them have marine access, rail access, truck access. There's pipeline connections to customers there. So we have a tremendous robust network. So when refineries or large customers want a very reliable supply, they look to somebody that can provide that seamless supply through multiple plants in a very robust supply chain network, which is what we have. So, you know, our competitors each only have one facility in the Gulf Coast, for instance, right? The Chemtrade business is largely concentrated, I would say, in the Midwest and the Pacific Northwest. We don't really operate in those regions. The Veolia or now Nexpara business is really concentrated, I'd say, more in the Northeast. So there's more differentiation there when you think about Ecovyst, more centered in the Gulf Coast, which, by the way, is where the largest refining pad is. It's also where most of the product exports, 95% of fuel exports leave from the Gulf Coast. And then we're also big in California, where alkylate, which is the product that regeneration is supporting, is huge in terms of its importance in the California gasoline pool, because California has a very niche gasoline specification that requires a higher concentration of alkylate. The other portion, I would say, how we differentiate ourselves on the virgin sulfuric acid side is our quality of materials. So we make, we're the largest producers of oleum, which is used primarily, well, you know, main thing is for nylon production. So oleum is a supersaturated, high-strength sulfuric acid, but we sell a very pure form of oleum and other sorts of sulfuric acid that go into very niche and specialty applications. Things like batteries, semiconductor production, people that generally need very low contaminants in the sulfuric acid because they don't want it ending up in their product or poisoning their catalyst or something along those lines. So our capabilities in producing very high-quality sulfuric acid is another differentiating factor. Okay. Thanks for that. I'd like to maybe just shift over to your capital deployment strategies in the current environment, but your company has been and remains a generator of significant free cash flow, and I think our models estimated at around $70 million or so for this year, a little bit lower than previous years. We would characterize your approach to capital deployment since the beginning of 2022 as somewhat, you know, imbalanced, with significant outlays for share buybacks and rather modest discretionary CapEx and little or no outlays for either debt pay down, M&A, or a regular dividend. Could you discuss maybe your medium-term priorities for capital deployment? In particular, you know, does it make sense to more aggressively or continue to repurchase your stock here at, you know, at levels close to, you know, your lowest recent share price? Yeah, David, I'll start with an answer here, and Kurt can chime in. You know, our company generates a good amount of free cash flow each year. We've, you know, have two businesses that operate in the low to mid-30% EBITDA margin area. So both of those businesses generate, you know, some good cash flow. I think our free cash flow guidance is around midpoint of $80 million, so it'll be up a little bit this year. You know, we certainly have gone through a couple iterations of capital allocation strategies over the last couple of years. As you pointed out, we have used some capital to repurchase shares, and that was in light of secondary offerings that we've seen. What are... You know, what we're, you know, continuing to try to do is increase shareholder value and find the best way to do that. So the first dollar that we, you know, generate from an operation standpoint, we want to go back into organic growth opportunities. So we've talked about organic growth opportunities, both on the polyethylene side, as we expand our facility in our Kansas City location, as well as expanding our Chem32 business, the catalyst activation side on Eco Services, right? So we want to make sure that we're looking to grow the company as appropriate. We also see opportunities out there in the market for other growth opportunities that would be inorganic, right? While there hasn't been anything that we have announced or done since the Chem32, we do look at opportunities like that that would be, you know, call it bolt-on size opportunities that would be, you know, strategic, adjacent to our current business, and accretive to our business. We do understand that leverage is an important factor for many investors. We've talked about, you know, being able to de-lever about a half a turn a year. We're currently expected to finish the year around three times, which is consistent with where we were last year, even though our adjusted EBITDA is going to be down a bit compared to the year before. So we want to continue to look to increase shareholder value through opportunities for growth, by also being mindful of the leverage profile, in a you know company our size, in an environment that we're in. Okay. No, thank you for that. I'd like to maybe ask you to go back to, you know, your catalyst technology segment a minute, and this would be more along the lines of stronger growth opportunities within that. So, you know, I do know the investment in silica catalyst at Kansas City is going to be very important. But, amongst kind of some of your niche catalyst products, I mean, you do service a lot of potentially exciting kind of higher growth areas. So if we're speaking in a couple of years from now, Kurt, you know, what are going to be the two or three, or the couple of catalyst products under development now that you think are gonna, you know, probably surprise us to the upside or have the greatest, you know, incremental growth potential? You know, among emissions control and recycling and sustainable and renewable fuels, what should we be looking for, let's say, over a couple year period from here? Yes, thanks for the question. I think... Now, I'll give you three that, you know, there's more than that that we're excited about. But I think the three large trend ones are, one, you know, we're starting with the Zeolyst Advanced Plastics Recycling, I already talked about that. That has a, there's a tremendous push across the globe to improve recycling, the amount of recycling, as well as how that recycling is done, and making it more efficient. And then finally, what's the output of that recycling, right? Right now, a lot of the recycling is very mechanical in nature and can't be reused for things like food packaging. So I think, you know, one of the holy grails in the recycling is: can you produce a product that's been recycled that can be used right back into the medical and food industry and, you know, kind of do the full loop there? I think that's where our zeolite catalyst and that advanced plastic-plastics recycling technology takes that to that next level and allows those recycled plastics to be used in a much wider spectrum of areas, right? Secondly, our biocatalysis in the advanced silicas areas. The silica structure right now, when we think about high-density polyethylene catalyst, is. Think about a very porous structure, where we attach metals to that catalyst, and it's used to produce polyethylene. That porous structure that silica has allows it to be used to attach things like enzymes to it. So, there's a large push across the globe and, you know, already existing technology, quite frankly, in terms of using enzymes to produce things like food or green chemistry. Our silica structure is a great carrier of those enzymes. And there, you know, we have the ability to, you know, kinda go into where existing enzymes are being used and maybe displaced, you know, other carriers that are already being used that are less efficient, like polymer beads and so forth. Or take existing processes that are usually maybe energy intense or, you know, require a lot of pressure, and just putting enzymes into those processes allows you to reduce that pressure, reduce that energy intensity, and allows for a much cleaner process. So we think we're very, very excited about that. And then finally, I mean, you know, getting back to sustainable fuels, long term, if, you know, if there is gonna be a decarbonization effort on some of these, I would say, trickier areas of transportation. What I mean, high, you know, heavy duty transportation, aviation transportation, right? Things that are harder to, you know, put batteries into and or electrify, that's gonna require sustainable fuel. So we do remain excited about that, especially on the sustainable fuels front, right? Where, you know, you could see a pathway to, you know, ten or 15% sustainable fuel being blended in by a twenty thirty time period. All right, great. Just going back, I think, to the virgin acid business. You know, you did talk about some of the key end markets, mining, et cetera. I guess plastics, you know, has been a market with some, you know, volatility over the past year or two. And earlier today, I spoke to maybe one of the other nylon producers domestically, and they talked about that market. What would the word be? Improving gradually during the year. Mm-hmm. For that part of your business, could you maybe discuss kind of some of the puts and takes there, and what your expectations are for maybe some improvement in that part of your business over the next, you know, six months or so through the balance of the year? Yeah, I think we, you know, we have seen. I would say that's a fairly what you referenced in terms of the description of the recovery in nylon. I mean, again, our, you know, about 25% of our sales go into that space, and I would say we see a similar outlook there. We've said we expect nylon to be up year over year, but not, again, not at certainly anything that, you know, historically would signal a high rate or anything along those lines. So it's a gradual improvement. You know, the other 20%, another 20% chunk of virgin sulfuric is mining, which has really remained very strong, right? For copper leaching, borate production, and even things like gold leaching now, right? So there's very, very strong pull for sulfuric acid and additional mining production in the U.S., and we see that long term remaining strong as there's new mining projects planned. And, you know, lots of sulfuric acid will be demanded by that segment. After you get out of those two areas, there's, you know, it gets to a much diverse, much more diverse basket of things, you know, lead acid batteries and other petrochemical and chemical production. For the most part, we, you know, that stuff is held up pretty well and demand is good. Where we see some little bit of caution is, I would say, more on the fringe areas, where we talk about spot market sales, which makes up a, you know, call it maybe 10%-ish of our virgin acid portfolio. That's where we potentially see some uncertainty, because you when you see things like the ISM or other industrial indicators pull back or show, I would say, some weakness, that market can be impacted in terms of just volume. Again, that's a very, you know, one of the smaller overall segments. So in large, I think we see a pretty stable and, you know, improving virgin sulfuric acid market, but we do have some caution, I think, over the next three to six month, as it particularly just relates to that overall, you know, what's the current on the, you know, industrial production here in the U.S. And then globally, you obviously still see some on a global basis, China and Europe being weak, which impacts some of our customers in the U.S. who are producing products that go overseas. Okay, and, you did mention this a little bit earlier, but you talked about kind of the declining RIN, or Renewable Identification Number, values as kind of impacting some of your catalyst business. I'll stipulate, I don't think I'm ready for a whole, you know, tutorial on RIN values, but from your perspective, I used to follow ethanol, and I don't want to go back there. I Yeah. Heebie-jeebies, but just from our perspective, Kurt, you know, what kind of milestones, or what kind of signals, should we be looking for, for that, that market to rebalance? Mm-hmm ... in your opinion? Yeah, I think the couple things and, you know, we've not, you know, we've come out and we said we think that'll take some time to recover. It's not a, you know, a three-month recovery. In our mind, there's a few things. You know, first, from a regulatory standpoint, the, you know, Renewable Volume Obligation, which kind of sets the tone for how much demand there's gonna be, has not been reset. It needs to be reset, and EPA is saying, hey, they're gonna wait till after the election. So I think there's some certainty that needs to come from that, you know, from just the regulatory environment, and that'll provide just more clarity for people and say, "Okay, here, here's what the demand profile's gonna look like for another period of time." So that's, that's one thing I think that needs to be settled. And, you know, secondly is, you mentioned it before, you know, so, sustainable aviation fuel, right? When that starts to come and starts to demand more and more product, you know, end of 2025, 2026, you know, we see that pulling, and really that's gonna, you know, take away for some of the renewable diesel capacity, right? So some folks are actually gonna convert their existing renewable diesel capacity to SAF, which, you know, will obviously benefit them in selling into the SAF, but, you know, theoretically, should also pull up the value for renewable diesels 'cause it'll take out the, any overcapacity in that, in that segment. So those, I think, are the two things that we look at to really would provide meaningful improvement long term for both renewable diesel and sustainable aviation fuel, which we package into the term sustainable fuels. But long term, you know, really if the, you know, if we are gonna decarbonize those modes of transport, that's the most ready, available way to do so. So, you know, the, we do think there is tailwinds on it once we push through, you know, kind of this period of uncertainty. Okay, we have a couple minutes left. I hope this is not a question that, again, takes a day, half a day to answer appropriately, but that's my fault. You know, on the advanced recycling, I'd just like to go back to that opportunity and, you know, I'm sure you've made a very fine product, but, you know, my sense is, with recycling, there are multiple kind of other pieces that kind of have to fall into place to really, you know, make that opportunity kind of really take off. And, you know, from your perspective, I mean, are you partnering with, I don't know, either waste collection, you know, service companies or, you know, the actual, I don't know, the actual recyclers or, people who do the chemical reactions? I mean, you know, I guess this is kind of the ecosystem or the infrastructure, you know. I mean, the recycling industry's been up and down a little bit over time. You know, but what's your sense of kind of the commitment or the infrastructure that, you know, that is in place or needs to be in place for you to take full advantage of the opportunity you see? Yeah, you make an astute observation there. You know, so I'll first preface it saying that we work with numerous people that are looking to produce in this area. Admittedly, those are Euro-focused, right? So, we, you know, the collection and just general attitude around recycling in Europe is more advanced, no pun intended, than it is here in the US. They're just a more disciplined system in terms of its collection, sorting. So, the people that we are working with in this space have partnerships with, you know, mechanical sorting or advanced sorting material, which gives them that ability. You know, and then when you think about on the back end, where is their product going, and their pyrolysis or pyoil, where, you know, where is that going, into what outlet, right? So you really do, you pointed out that you have to be working with people that are looking at that whole scope, and that's not just, you know, "How do I, you know, turn plastic into pyoil?" You have to think about upstream, you have to think about downstream, and we're working with major players that have all that in mind and have other partners. And, you know, we're only partnering with them in, you know, the, you know, advanced recycling, what we would call advanced recycling, you know, thermal pyrolysis piece, right? They have other partners that they're working upstream on the, on the sorting and recycling, you know, sorting side, and then downstream on how they're blending it. So these are partnerships where people are working with multiple different parties to kind of plug in all these different puzzle pieces. Okay, great. We have kind of reached the end of our allotted time. I'd really like to thank Kurt, Mike, and Gene for participating in our conference, and especially sharing, you know, all the insight and perspective on their company. I'd also like to thank the audience for their participation. With that, I will call an end to the meeting. Have a great rest of the day and a great rest of the conference. Thank you. Thank you, David.