Ecovyst Stock

Ecovyst Inc. operates as an integrated and innovative global provider of specialty catalysts and services.

The company’s products, which are predominantly inorganic, and services contribute to improving the sustainability of the environment. Its products contribute to lower emissions and cleaner air, higher fuel efficiency and cleaner fuels, and help advance the global transition to clean energy. Specifically, the company’s products and solutions help companies in the production of renewable fuels and help to produce vehicles with improved fuel efficiency and cleaner emissions. In 2022, the company served global customers across many end uses.

The company is a leading supplier of zeolite-based catalyst used to remove sulfur in the refinery hydrocracking process, and emission control catalysts used in the heavy- and light-duty diesel industries to reduce nitrogen oxides emissions. The company is also a global supplier of silica catalysts and supports for polyethylene manufacturers and other niche custom catalyst applications, including supplying catalyst used to produce methyl methacrylate (‘MMA’).

The company collaborates with leading multinational companies that often seek global solutions. The company’s customers include large industrial companies, such as Exxon Mobil, BASF and Chevron Products; and global catalyst producers, such as Albemarle and Grace. The company also supplies catalysts to leading chemical and petrochemical producers, such as BASF, Dow Chemical, Mitsubishi Chemical, LyondellBasell and Shell.

Business Segments

The company operates through two reporting segments: Ecoservices and Catalyst Technologies (including its 50% interest in the Zeolyst Joint Venture).

Ecoservices segment

The company’s Ecoservices segment is a leading provider of sulfuric acid recycling (‘Regeneration Services’) and end-to-end logistics to North American refineries to support the production of alkylate, a high value gasoline blending component required for meeting gasoline specifications and producing premium grade fuel. The company is also a leading North American producer of on-purpose virgin sulfuric acid for water treatment, mining, and industrial applications (‘Virgin Sulfuric Acid’).

The company provides treatment services for hazardous/non-hazardous industrial wastes (‘Treatment Services’) and with the acquisition of Chem 32, LLC (‘Chem32’) in March 2021. The company is also a leader in ex situ sulfiding and pre-activation for hydro-processing catalysts, which are used in production of traditional and renewable fuels. By providing regeneration services, as well as purchasing by-product sulfur from customers for use in manufacturing virgin sulfuric acid, the company provides its refining customers with a complete solution for their sulfuric acid needs.

The company’s network of facilities is concentrated in the Gulf Coast and the state of California, where more than 60% of the United States refining capacity is located. The strategic locations of the company’s plants in these key refining regions contribute to the company’s highly efficient supply chain networks with the company’s customers, including in some cases captive pipelines connecting the company to the company’s refinery customers. Alternatively, product can be shipped by barge, rail and truck.

Primary Product Groups

Regeneration Services serves a critical need for refining customers. Sulfuric acid serves as a catalyst in the alkylation process. The resulting spent sulfuric acid needs to be regenerated or recycled, which is no longer a core competency of most refiners. Since storage space for fresh and spent sulfuric acid is typically limited, and the cost to refineries of interruption to their alkylation units would be significant, refineries seek to have a continuous and reliable source of supply for sulfuric acid regeneration services.

The company’s end-to-end regeneration service offering takes the spent acid from the refinery, through the company’s network of plants and transportation systems, and recycles the sulfuric acid into high strength fresh sulfuric acid for reuse in the alkylation process. Because of the number and strategic locations of the company’s plants, and the breadth of its transportation logistics, the company brings the highest reliability and flexibility to its refining customers, allowing them to focus on their core competency by optimizing their alkylation capacity.

Virgin sulfuric acid is created either through the incinerating sulfur in furnaces, or as a by-product of other industrial processes, primarily the smelting of copper and other base metals. The company’s sulfur-derived, high-quality virgin sulfuric acid products supply a diverse set of end uses. Sulfur derived acid is generally considered to be of higher purity and quality than smelter-produced acid and, as a result, smelter-produced acid is not suitable for some industrial users, including several of the company’s larger customers who require higher quality and differentiated sulfuric acid products, such as super-saturated sulfuric acid (oleum). Virgin sulfuric acid is produced at all of the company’s facilities utilizing the same production equipment as its regeneration services.

The company’s Treatment Services business is a niche offering providing a thermal destruction solution for the management of bulk quantities of hazardous and non-hazardous by-products, co-products and waste materials. The company specializes in handling sulfur-bearing materials, acidic materials, high-temperature molten materials and other hard to handle liquids. The company’s processes provides a beneficial reuse alternative to traditional disposal by capturing the energy value and sulfur content of these materials, supplementing the company’s processes, and offsetting the use of virgin raw materials.

Competition

The company competes in the North American refining services industry with competitors, such as Chemtrade and Veolia.

Catalyst Technologies segment

This segment is a leading global provider of customized and innovative catalyst products and process solutions to leading producers and licensors of polyethylene, or PE, and methyl methacrylate, or MMA. The company’s finished silica-based catalysts and catalyst supports are necessary to produce high strength and high stiffness plastics used in packaging films, bottles, containers, and other molded applications. The company’s zeolite-based catalysts enable the removal of nitrogen oxides from diesel engine emissions, as well as sulfur dioxide from fuels during the refining process. The continued expansion of stricter global regulations for reducing sulfur in fuels is expected to drive the ongoing demand for the company’s products.

The company’s product groups include Silica Catalysts and Zeolite Catalysts. Zeolite Catalyst products are sold through the Zeolyst Joint Venture.

Silica Catalysts supplies both the finished catalyst and catalyst supports, which are critical catalyst components for the production of HDPE, a high strength and high stiffness plastic used in bottles, containers, and molded applications and LLDPE used predominately for films. The company also produces a catalyst that is used globally for the production of MMA, the monomer for acrylic engineering resins, a clear scratch-resistant plastic used in sheet or molded form to replace glass and as a durable surface coating. Because these catalysts are highly technical and customized for the company’s customers to produce resins with specific properties, they are often covered under long-term supply agreements and, in some cases, the company is a customer’s sole source supplier. In addition, the company supplies silica anti-blocking products that are used to prevent opposite faces of polyethylene and polyester films from adhering to one another during manufacturing and in use.

The Zeolyst Joint Venture (formed in 1988 specifically as Zeolyst International and Zeolyst C.V., the company’s 50% owned joint venture with Shell Catalysts & Technologies, an affiliate of Royal Dutch Shell plc. or ‘Shell’) supplies high technology specialty zeolites and zeolite-based catalysts to customers for the following major end uses: refining (primarily hydrocracking catalyst and dewaxing), petrochemicals, renewable fuels, and emission control systems for both on-road and non-road diesel engines.

The company also supplies custom zeolites to catalyst companies who compete in similar industries. The Zeolyst Joint Venture leverages each partner’s technology and production expertise, including Shell’s expertise in hydrocracking catalyst to maximize liquid product yields, especially distillate while at the same time removing sulfur, and Ecovyst’s expertise in zeolite technology. The Zeolyst Joint Venture is a first mover in zeolite fuels and emissions control technology and the company expects continued expansion as environmental emissions standards increase globally.

The Zeolyst Joint Venture is the sole supplier of hydrocracking catalyst to Shell, but a majority of catalyst sales are to third-party refineries. The company also provides precursor supports to many of the hydrocracking catalyst suppliers, positioning the company as a leading supplier in the global hydrocracking catalyst supply chain.

To meet nitrogen oxides (‘NOx’) emission control regulations that are expanding globally, many of the company’s zeolite powders are used in an advanced emission control technology called selective catalytic reduction, largely focused on heavy duty diesel (‘HDD’) transportation. This process uses ammonia to react with engine exhaust gases via the company’s catalysts in order to convert NOx, a pollutant, into harmless nitrogen and water. The company’s zeolite catalysts can enable selective catalytic reduction technology to reduce the amount of nitrogen oxides in such exhaust gases by more than 90% and is one of the most cost-effective methods to reduce diesel engine emissions.

Competition

The company’s Silica Catalysts product group primarily competes with Grace. The Zeolyst Joint Venture competes with global catalyst producers, such as Grace, BASF, UOP, Axens, and Haldor Topsoe. Some direct competition with niche companies exists, including competitors, such as Tosoh and Clariant.

Zeolyst Joint Venture

The Zeolyst Joint Venture is a long-standing partnership with Shell Catalysts & Technologies, an affiliate of Royal Dutch Shell plc. or ‘Shell’ and is focused on the development, manufacture and sale of zeolite-containing catalysts through manufacturing facilities located in Kansas and the Netherlands. The company combines its expertise in zeolite supply and technology with the company’s partner’s expertise in global refinery catalyst sales and technology.

The company has a 50% ownership stake in the Zeolyst Joint Venture. The company produces specialty zeolites that are precursors for the production of hydrocracking catalyst and other refinery and renewable fuels catalysts. The company’s extensive expertise in zeolite production enables the company to manage the production of specialty zeolites. Specialty zeolite catalysts include aromatic catalysts that upgrade aromatic by-product streams, dewaxing catalysts that improve lube oil performance and diesel cold flow performance, and paraffin isomerization catalysts that upgrade olefins to high octane gasoline blending components for refinery and petrochemical customers.

Intellectual Property

As of December 31, 2022, the company owned 20 patented inventions in the United States, with 197 patents issued in countries around the world and 40 patent applications pending worldwide. As of December 31, 2022, the company also had trademark rights in 50 trademark registrations worldwide, including 5 U.S. trademark registrations. The company also had 16 pending trademark applications, which include applications in the United States and worldwide.

Seasonality

The company’s Ecoservices segment typically experiences seasonal fluctuations as a result of higher demand for gasoline products in the summer and lower demand in the winter months. These demand fluctuations result in higher sales and working capital requirements in the second and third quarters (year ended December 2022).

Environmental Regulations

The company applies the principles of the Environmental Management standard of the International Organization for Standardization (ISO 14001) at its facilities throughout the world. For chemical facilities in the United States, the company also adheres to the Responsible Care RC14001 Technical Specifications of the American Chemistry Council.

The company has established a Product Safety and Product Stewardship management system that is compliant with the RC14001 technical specification and is supported by two highly skilled Product Stewardship Managers, one of which is a REACH Specialist. The company conducts Product Stewardship reviews as part of new product development and routinely evaluate product safety risk for raw materials, intermediates, and products.

The company’s high-volume chemicals have been registered under REACH; lower-volume chemicals (mainly catalysts) were registered by the applicable 2018 deadline.

Research and Development

The company’s research and development costs were $7,232 for the year ended December 31, 2022.

History

The company was founded in 1831. It was incorporated in Delaware in 2015. The company was formerly known as PQ Group Holdings Inc. and changed its name to Ecovyst Inc. in 2021.