Ecovyst (ECVT) has reported a robust first quarter for 2024, with a notable increase in demand for regeneration services and virgin sulfuric acid sales. The company's adjusted EBITDA rose to $45.5 million, marking a 6% increase from the previous year. A significant reduction in net debt leverage ratio to 2.9 times was achieved due to strong cash generation. Ecovyst maintains a positive outlook, expecting improved global demand for its advanced silicas and catalyst sales in sustainable fuel production. The full-year forecast for adjusted EBITDA remains steady, anticipated to be between $255 million and $275 million.
Key Takeaways
- Ecovyst's adjusted EBITDA for Q1 2024 increased by 6% to $45.5 million.
- Strong cash flow led to a reduction in net debt leverage ratio to 2.9x.
- The company expects increased demand for advanced silicas and catalysts for sustainable fuels.
- Full-year outlook is unchanged with adjusted EBITDA projected between $255 million and $275 million.
- Total liquidity at the end of Q1 stood at $173 million.
- Free cash flow for the year is expected to be between $85 million and $105 million.
- The Kansas City expansion, set to increase polyethylene capacity by 50%, is on track for completion by end of 2025.
- A tentative 3-year contract with the United Steelworkers Union at the Houston site has been reached.
Company Outlook
- Full-year GAAP sales forecasted to be $715 million to $755 million.
- Q2 adjusted EBITDA expected to be between $50 million and $55 million.
- A balanced capital allocation strategy is to be continued.
Bearish Highlights
- Ecoservices' adjusted EBITDA is expected to decline compared to the previous year.
- Advanced Materials and Catalysts' adjusted EBITDA projected to be flat.
Bullish Highlights
- Renewable fuels catalysts business, representing over 10% of sales, is expected to grow by 20%.
- Potential growth in sulfuric acid demand noted in copper mining and other industries.
- Stable market conditions and good visibility into customer forecasts bolster confidence for the year's performance.
Misses
- There are no specific misses mentioned in the earnings call summary provided.
Q&A Highlights
- Ecovyst has good visibility into major end-use customer forecasts.
- Demand for octane and outlet products is expected to continue, with exports increasing.
- Virgin sulfuric acid pricing has stabilized, and nylon end-use sales are projected to rise.
- Mining sector remains strong, and polyethylene catalysts are expected to see growth.
- Better visibility into hydrocracking orders later in the year.
- Two planned turnarounds in Q2 are expected to have minimal impact on operations, with 80% of turnaround activity for the year to be completed by end of May.
Ecovyst's first-quarter performance and steadfast full-year outlook reflect the company's strategic positioning to leverage global market dynamics and meet customer demand. The company's expansion plans and contractual agreements underscore its commitment to growth, particularly in the renewable fuels and polyethylene catalyst markets. With a strong financial foundation and strategic initiatives underway, Ecovyst appears poised to navigate the remainder of the year with confidence.
InvestingPro Insights
Ecovyst (ECVT) has demonstrated financial resilience and strategic growth in the first quarter of 2024. The InvestingPro data and tips provide deeper insights into the company's performance and future prospects:
InvestingPro Data:
- Market Cap (Adjusted): $1.15 billion USD
- P/E Ratio (Adjusted) for the last twelve months as of Q1 2024: 14.68
- Revenue Growth (Quarterly) for Q1 2024: -0.21%
InvestingPro Tips:
- ECVT's management has been proactively buying back shares, signaling confidence in the company's value.
- Analysts predict that Ecovyst will be profitable this year, which is in line with the company's positive full-year outlook.
These metrics indicate that Ecovyst is trading at a low P/E ratio relative to near-term earnings growth, suggesting that the company may be undervalued. Additionally, the fact that liquid assets exceed short-term obligations provides a cushion that may reassure investors about the company's ability to meet its financial commitments in the near term.
For readers interested in a more comprehensive analysis, there are additional InvestingPro Tips available at https://www.investing.com/pro/ECVT, which could provide further guidance on investment decisions. Use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and discover the full range of insights including valuation implications and free cash flow yield.
Full transcript - PQ Group Holdings (ECVT) Q1 2024:
Operator: Good morning. My name is Madison, and I will be your conference operator today. Welcome to Ecovyst's First Quarter 2024 Earnings Call and Webcast. Please note today's call is being recorded and should run approximately 1 hour [Operator Instructions]. I would now like to hand the conference over to Gene Shiels, Director of Investor Relations. Please go ahead.
Gene Shiels: Thank you, operator. Good morning, and welcome to the Ecovyst First Quarter 2024 Earnings Call. With me on the call this morning are Kurt Bitting, Ecovyst's Chief Executive Officer; and Michael Feehan, Ecovyst's Chief Financial Officer. Following our prepared remarks, 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 2024 financial outlook. This information is subject to risks and uncertainties that could cause the actual results and 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 presentation materials posted on the Investors section of our website at ecovyst.com. I'll now turn the call over to Kurt Bitting. Kurt?
Kurt Bitting: Thank you, Gene, and good morning. Ecovyst delivered solid results for the first quarter of 2024. Continued strong demand for regeneration services and higher sales of virgin sulfuric acid drove the favorable results in Ecoservices. Sales within the Zeolyst joint venture were up on higher sales of catalysts used in sustainable fuel production and sales growth in customized catalyst applications. However, sales in advanced silicas were lower due to lower sales of polyethylene catalyst supports, which more than offset stronger sales in finished polyethylene catalysts. As a result, we delivered first-quarter adjusted EBITDA of $45.5 million, up 6% compared to the first quarter of 2023. Cash generation in the first quarter was particularly strong, reflecting the timing of dividends received from the Zeolyst joint venture that were deferred in the fourth quarter due to the timing of working capital needs within the joint venture. This favorable cash generation, along with higher adjusted EBITDA provided for further reduction in our net debt leverage ratio to 2.9 times at the end of the first quarter, down from 3 times at the end of last year. Overall, I'm pleased with our achievements in the first quarter. Our first quarter financial performance provides a good start to the year. We successfully completed two turnarounds in our Ecoservices segment during the quarter while maintaining a very favorable safety performance. In addition, we continue to execute on our long term strategic plan, positioning Ecovyst for continued growth in the future. As we turn to Slide 6, I'll provide an update on our near-term demand outlook. Starting with Ecoservices, for our Regeneration Services business, the outlook remains positive. We believe that the North American refining climate remains favorable with rising vehicle miles traveled, refining utilization rates expected to remain in the 90% range and increasing margins for [alkali]. And for our Gulf Coast refining customers, the lack of availability of Russian refined products in the global market is creating additional demand for US refined product exports. For virgin sulfuric acid, we see balanced conditions and expect sales volume to be up in 2024. Mining demand remained strong with continued demand strength expected to be driven by global copper demand and ongoing expansion of projects in North America. We continue to expect improvement this year for virgin sulfuric acid sales into the nylon end-use. Industrial demand remains a mixed bag with relative stability in many end uses, including lead acid batteries, chlor-alkali, and water treatment. While we continue to see some price weakness for spot and short-dated contracts as compared to 2023, we did not see a significant deterioration in overall demand conditions for industrial markets in the first quarter. For our Chem32 business, we continue to see high utilization and strong customer interest with continued growth in sustainable fuel production capacity being a contributing factor. Turning to Advanced Materials and Catalysts, for advanced silicas, global demand growth for polyethylene is expected to be up 2% to 3% this year, led by North America, where producers continue to benefit from favorable feedstock costs. Sales for the Advanced Silicas segment fell short of our expectations in the first quarter, where higher sales of finished polyethylene catalysts were offset by lower sales of polyethylene catalyst supports associated with customer order timing and limited destocking. Overall, we expect improved global demand conditions to benefit our sales of advanced silicas used to produce polyethylene, particularly in the second half of the year. We remain very optimistic about the long-term outlook for sales of catalyst using the production of sustainable fuels. In 2024, North American capacity for renewable diesel and sustainable aviation fuel is expected to grow by over 70%, supported by attractive production incentives for US based producers. With the EU mandating blending targets, EU renewable diesel and SAF capacity is expected to grow by 26% in 2024. Customer and prospective customer engagement and sustainable fuels remains high. We already have trial sales of catalysts for alcohol to jet SAF production technologies, and we expect activity to increase with a number of start-ups slated for next year. For hydrocracking catalysts, the growth in global diesel demand is a positive factor. Market conditions in the US remain favorable with diesel inventories below historic averages. The hydrocracking catalyst market remains competitive, but we believe we have a differentiated offering with our AMAC technology. Order timing for hydrocracking catalyst sales remains a function of change out activity, which makes the timing of sales difficult to predict with absolute certainty. While we expect a positive year for hydrocracking sales in 2024, we will not repeat the peak level of sales in 2023. Based upon our current expectations for sales timing, we anticipate a stronger second half for 2024. Sales of emission control catalysts, we are seeing a softer demand outlook for 2024. Increased borrowing costs are impacting purchase activity for new vehicles. While not commercial on a large scale yet, we continue to work with key players in advanced recycling industry, where our catalyst technologies can provide a meaningful reduction in energy intensity for thermal pyrolysis. We expect growth in recycling activity to increase in the next two years with 12 advanced recycling plants for plastic waste expected to be commissioned in 2024. I'll now turn the call over to Mike for a more detailed discussion of our financial results for the first quarter.
Michael Feehan: Thank you, Kurt. Ecovyst sales for the first quarter of 2024, including our proportionate 50% share of sales from the Zeolyst joint venture were $184 million, slightly higher than the first quarter of 2023. Ecoservices sales were up 3%, reflecting higher sales volume in virgin sulfuric acid and regeneration services. However, Advanced Materials and Catalyst sales were down as lower sales of advanced silicas used for the production of polyethylene were only partially offset by higher sales from the Zeolyst joint venture. Adjusted EBITDA for the first quarter was $45.5 million, up 6%, driven primarily by the contribution from higher sales volume. The adjusted EBITDA margin for the first quarter was 24.7%, up a 130 basis points over the prior year. Turning to the next slide, I will discuss the primary components of the change in adjusted EBITDA compared to the first quarter of last year. Looking at the major drivers of the change in adjusted EBITDA, the higher sales volume provided a pull-through benefit of approximately $10 million. However, while aggregate pricing, including the $5 million sulfur pass-through effect was down $16 million period-over-period, the lower pricing resulted from the pass-through of $17 million in lower variable costs, which included lower sulfur, natural gas, electricity, and other variable costs. Overall, the net impact resulted in a positive price-to-cost ratio for the quarter. The balance of the change in adjusted EBITDA is comprised of a number of factors, including approximately $3 million of higher planned turnaround costs, higher fixed manufacturing costs associated with our reliability initiative, costs attributed to winter storm Heather, and inflation in our labor costs. As we transition to our segment results, I'll start with the highlights for Ecoservices. Sales for the first quarter of 2024 were $142 million, up 3% on higher sales volume for virgin sulfuric acid and regeneration services, primarily reflecting recovery from the prior year's lower sales volume that was adversely impacted by winter storm Elliott and the extended turnaround. The sales increase was partially offset by the pass-through effect of lower sulfur prices of $5 million as well as the pass-through effect of other variable costs such as natural gas and electricity. First quarter 2024 adjusted EBITDA for Ecoservices of $41.5 million was up 13%, with the benefit of higher sales volume, partially offset by the higher turnaround costs, higher fixed manufacturing costs, and costs associated with the winter storm. Overall, it was a positive quarter for Ecoservices and a solid start to the year with adjusted EBITDA up 13% and the associated margins of 29%, up 260 basis points from the first quarter of 2023. For Advanced Materials and Catalyst, first-quarter sales, including our 50% proportionate share of Zeolyst joint venture sales were $42 million, down $3 million. Sales for the Zeolyst joint venture were up 6%, driven by higher sales of catalysts used in sustainable fuel production and sales growth in customized catalyst applications. However, sales for advanced silicas decreased year-over-year due to lower sales volume of advanced silicas used for the production of polyethylene. While sales of finished catalysts used to produce polyethylene were up, sales of polyethylene catalyst supports were lower due to customer order timing and limited destocking. For the full year, we continue to expect higher sales of advanced silicas used for the production of polyethylene compared to 2023 with an expected stronger second half of the year compared to the first half. Adjusted EBITDA for Advanced Materials and Catalyst was $11 million compared to $13 million in the year-ago quarter with higher sales volume and favorable mix in the Zeolyst joint venture offset by the lower sales in advanced silicas. Turning to cash and leverage on the next slide, cash generation in the first quarter of 2024 was particularly strong, benefiting from the dividends received from the Zeolyst joint venture that were deferred from the fourth quarter of 2023 due to the timing of working capital. As such, we ended the first quarter with cash of $103 million, including the $70 million of availability under our ABL facility. We ended the first quarter with total liquidity of $173 million. In light of the strong cash generation and higher adjusted EBITDA, we ended the first quarter with a net debt leverage ratio of 2.9x, down from 3.0x at the end of the year. At this time, we remain on target to generate free cash flow for this year of $85 million to $105 million. In terms of capital allocation, we expect to continue to maintain a balanced strategy. From an overall balance sheet perspective, we have one tranche of debt maturing in 2028. We have capped our interest exposure on approximately 75% of our outstanding debt out to the third quarter of 2026, and our weighted average cost of debt is expected to be approximately 5.5% during 2024. As it relates to our guidance, the full-year outlook that we provided in our fourth quarter earnings call in late February remains unchanged with GAAP sales of $715 million to $755 million, sales for the Zeolyst joint venture of $145 million to $165 million and consolidated adjusted EBITDA of $255 million to $275 million. As is our usual practice, the guidance ranges for specific modeling line items are included in today's earnings press release and in the earnings presentation. In terms of directional guidance for the second quarter, on a consolidated basis, we expect second quarter 2024 adjusted EBITDA to be between $50 million and $55 million. For Ecoservices, we expect adjusted EBITDA for the second quarter to be down compared to the prior year in a range of between $48 million and $52 million. While we expect sales volume to be higher in the second quarter compared to the prior year, higher fixed costs, including an increase in the number of turnarounds and the related costs, along with an unfavorable net pricing impact is expected to drive lower earnings for the quarter. The unfavorable net pricing is expected to reflect the timing and the contractual pass-through of certain costs, including energy and other index costs. For Advanced Materials and Catalysts, we expect the second quarter 2024 adjusted EBITDA to be sequentially flat to the first quarter of 2024, with a range of between $10 million and $12 million. The results are expected to be lower than the prior year's second quarter, driven by lower sales of advanced silicas used for polyethylene production, unfavorable product and customer mix, and the unfavorable impact of fixed cost absorption on inventory period-over-period. And we continue to expect corporate costs to be between $7 million and $8 million per quarter. I will now hand the call back to Kurt for some closing remarks.
Kurt Bitting: Thank you, Mike. As we move into the second quarter, we will continue to build upon the positive financial results we delivered in the first quarter. With the expectation of improved global polyethylene demand and higher sales of virgin sulfuric acid into the nylon end-use, the demand outlook across our portfolio remains positive for 2024. Ecoservices will have conducted four of its five major turnarounds in the first half of 2024, which will position the business to deliver virgin sulfuric acid and regeneration volumes in the second half of the year. We expect stronger demand fundamentals in the second half of the year, particularly for sales of polyethylene catalysts and for the timing of hydrocracking catalyst sales. As such, our previous guidance for 2024 remains unchanged. However, we will seek to leverage opportunities for incremental growth as they arise. Moreover, we believe favorable cash generation in 2024 will continue to support a balanced capital allocation strategy. Before we move to the Q&A session, I do want to comment on a recent development regarding our Houston site. The United Steelworkers Union represents a number of maintenance and operation employees at our Houston site. Unfortunately, despite our good faith efforts to reach a labor agreement with the union, the union workers went on strike on April 10. I am happy to report that we reached a tentative agreement with the union on a new 3-year contract. The Houston Plants Union ratified the new contract earlier this week, and our valued colleagues fully returned to work on May 1. During the course of the strike, operations at the Houston site continued allowing us to service our customers. Thank you for your interest in Ecovyst. And at this time, I will ask the operator to open the line for questions.
Operator: [Operator Instructions] And we will take our first question from John McNulty with BMO (TSX:BMO) Capital Markets.
John McNulty: So when I look at the outlook that you have for the various segments for 2024, it looks like a few things have maybe gotten a little bit more positive -- PVC outlook, and mining recovery, utilization rates in refining, yet you've largely maintained the guide. I guess, are there some negative offsets to that, that we should be thinking about or is it just, look, it's early in the year and you don't want to get too far ahead of yourselves? I guess, how should I be thinking about that?
Kurt Bitting: I would say we're still early in the year. As we mentioned on the call, we're in the first -- really in the first five months of the year, we're going to conduct four of our five maintenance outages, which I think really puts us in a nice position to meet what we see as good demand from the regeneration segment. We're happy with the virgin acid. We do expect to have increased virgin acid volumes year-over-year with some recovery in the nylon segment, mining remaining strong. Polyethylene as expected, we believe that will be stronger in the second half of the year, which is what we had thought it was on our last call. So essentially, we feel good about where we're at, and we're happy with our results so far in the first quarter, but there's still time left in the year, but we feel good about where we're at.
John McNulty: And then you spoke through the prepared remarks around a pushout in terms of timing around the polyethylene catalyst side. I guess can you help us to quantify that and think about the timing of when you expect that to roll in? It sounds like it may not necessarily all be 2Q or may be pushed out into the back half of the year?
Kurt Bitting: So for Q1, just to recap on for Q1, our finished polyethylene catalyst sales were up year-over-year. What fell short was the polyethylene catalyst supports, which are really intermediates that either coproducers in the catalyst industries or actually polyethylene producers themselves buy from us, these advanced intermediates and they impregnate them with their own metals. And that's around a fourth to a third of what we call our polyethylene catalyst sales. So that were some timing issues. Some of it was base shipping and just when -- the order actually landed at the customers. There was some limited destocking in that space. But overall, when we look at polyethylene, both for the finished catalysts side and supports, we do expect that to be picking up in the second half of the year and for both of them to be up year-over-year.
Operator: And we will take our next question from Alex Yefremov with KeyBanc Capital Markets.
Alex Yefremov: Just to stay with PE catalyst, could you just step back and tell us where do you think you are in this PE catalyst cycle for yourselves? In the back half of this year, would you be at a normal run rate, or is there still more recovery as you go into next year, maybe not looking for precise growth next year, but some idea of where you are in that cycle?
Kurt Bitting: I think we generally look at the polyethylene market and what's expected this year is 2% to 3% growth across the globe. Now that's segmented by -- there's different regions behaving differently here in North America and the Middle East, where feedstock costs are low, those advantaged producers are above that growth rate. Other regions, such as China continues to have sluggish growth as well as Europe. But we do see overall growth growing 2% to 3% this year. As we've talked about before, historically, we -- through capturing market share and getting a disproportionate amount of the new builds and new business, we've roughly been able to double that market growth rate. So we feel good about where polyethylene is going. It clearly is recovering from where it was last year. But we expect, I guess, the momentum of that recovery to pick up more in the second half of the year.
Alex Yefremov: And shifting to the merchant acid market, I mean you talked about some pricing headwinds in the second quarter. What is the net price headwind that you expect for the entire year either in dollars or percentage of price or any other metric?
Michael Feehan: So I think what -- for the second quarter, we really don't have any concerns around our overall base pricing. I mean we did see some headwinds in the virgin sulfuric acid pricing model from some of the spot sales that we talked about before and some of the shorter-dated contractual pricing. The net pricing impact that we were referring to in the second quarter is really generated on the pass-through nature of some of the contracts and the timing of when those costs are incurred versus when they're passed through, right? There's a quarterly lag. And when you have significant variances that can be intensified by the variable cost, the volatility, and the variable costs. So we see that hitting us really in the second quarter, but then really moderating out for the rest of the year, right? It's really partly due to the pass-through contract timing. So we don't expect that to be something that you'll see continuing in Q3 and Q4 for the full year.
Operator: And we will take our next question from Patrick Cunningham with Citi.
Patrick Cunningham: Maybe just on the Kansas City expansion that you referenced in the release, I guess, how big is that in terms of a percentage basis of your capacity? And are the long-term commitments you referenced linked to the latest wave of PE capacity additions? And is there anything baked in for the larger capacity additions you see in 2026 and 2027? Are you expecting there or is the timeline a bit closer to the first production?
Kurt Bitting: So in terms of the sizing of the Kansas City expansion, I think we've said it's a 50% expansion of our polyethylene capacity at the Kansas City site. We do have other production locations that we use around the globe, but the Kansas City, it's about a 50% production increase. And of course, as we talked about -- it is linked to contractual obligations with customers that are a part of this wave of new builds across the globe. Obviously, not at liberty to state the customers that are involved with that, but those volumes are essentially spoken for already from those customers that are expanding their polyethylene catalysts or their polyethylene production and need those catalysts. So in terms of timing of that, we do expect the expansion to be complete fourth quarter or the end of 2025, and that's really there to start meeting some of that demand that you see in call late '26, '27, '28, that time period.
Patrick Cunningham: And can you help size the growth that you've seen in renewable fuels catalysts in the first quarter and into 2024? How big is that business today? And what sort of growth rates are you forecasting into 2025 and beyond?
Michael Feehan: The growth rates that we see there are linked to the market, right? There's definitely a strong market push that are talking about significant growth rates. That business represents a little more than probably 10-plus percent of our overall sales from our AMAC group. We've talked about this during our Investor Day where the growth of that will be, call it, 20-plus percent over time. Obviously, that shifts quarter-on-quarter, year-on-year, but we definitely see some extremely good strength in that business as we continue to ramp it up and win new businesses.
Kurt Bitting: And I think the dynamic with that, Patrick, is we played a lot in -- we call it sustainable fuels. That's mainly been limited to renewable diesel at this point. When you talk about 2025 and 2026, SAF technology will start to take hold in terms of airlines consuming the fuel is getting approved. So that is going to provide further wins at the back for the sustainable fuels business.
Operator: And we will take our next question from Laurence Alexander with Jefferies.
Laurence Alexander: Just to follow up on that, do you have any rough metrics for kind of dollars per ton revenue opportunity for you if there are expansions in copper mining capacity if refineries move from gasoline and diesel production to chemical production, which I understand would probably increase the catalyst demand? And then also kind of your sensitivity to sort of SAF. Is there any way to help us to understand just how the kind of -- what the TAMs of the market might be on a dollar per ton basis? Are we talking $5 or hundreds of dollars or thousands?
Kurt Bitting: I could probably -- I can help you a little bit on some of the questions to put the usage, I guess, of sulfuric acid. So when you look at copper solvent extraction electro-winning, which is essentially copper leaching, that consumes anywhere from 3 to 5 tons of sulfuric acid per ton of copper produced. So that's a good kind of flag for what the potential growth is in terms of sulfuric acid and copper mining. And there's various -- when you look at lithium, that uses more anywhere up to 20 tons of sulfuric acid, some other metals use different ratios. In terms of regeneration business, our customer base, which is roughly two thirds located in the Gulf Coast has tremendous scale, and we believe they'll be in the refined products, and their business models will drive them towards exporting refined products as time goes along. And then for our West Coast refineries, obviously, the outlet that they're producing is highly valuable in the California market in order to meet those California gasoline specifications. So that's probably the best markers I can give you in terms of acid usage and some of those dynamics that you mentioned.
Laurence Alexander: And then just the opportunity for catalyst?
Kurt Bitting: So for catalyst, we do see the polyethylene catalyst or polyethylene demand, as we talked about, continuing to grow in that 3% range. We sell a lot of catalysts both into the Middle East and North American markets where we see continued expansions and there's planned expansions that have been announced, obviously, to take advantage of the low feedstock cost, low natural gas, and so forth. So we've always -- one of the reasons we made the expansion decision for Kansas City was to -- and those customer commitments that we have for backing that investment up or to meet some of that growing demand long term. That's benefiting from lower feedstock costs here in the US and Middle East.
Operator: [Operator Instructions] We will take our next question from Hamed Khorsand with BWS Financial.
Hamed Khorsand: So I just wanted to understand the level of conversation you're having with customers looking out for the rest of the year that gives you confidence that the rest of the year is not at risk, given where Q1 and potentially Q2 ends up falling.
Kurt Bitting: So if we look at -- if we just go across the spectrum of the major end-use customers, we obviously -- the products that we supply to those customers is very important. We're generally sole-sourced with a lot of our customers, so we do get a very good window into their forecast because some of the products obviously take longer to make if it's terms of catalyst and then the sulfuric acid and the sulfuric acid regeneration has very high utilization across the country. So the customers are generally very transparent with us in terms of their forecast. So when you look at regeneration, the things we mentioned on the call, there are very good margins for octane and [outlet] right now. So we see that demand carrying through the year. Exports are up due to the global dynamics going on right now and the US refining capacity having a nice advantage there. Virgin sulfuric acid, which we were uncertain with on the last call. What I would say is pricing there has stabilized from the last call as well as we expect the nylon end-use sales to rise year-over-year. Mining remains very firm. As you can see, the metals prices have firmed here in the last three to six months. And there are still some pockets in virgin acid for certain industrial applications that I would say are less certain. But in general, things have stabilized nicely there. And then moving over to polyethylene catalysts, as we just talked about, there's growth year-over-year. We do expect that to pick up more momentum in the second half of the year. And then hydrocracking, which is another large chunk, those orders, we do have good visibility to now -- or better visibility to now later on in the year. And again, those are longer lead-time catalyst items that have to be produced. So we generally have a good visibility on those.
Hamed Khorsand: And then could you just quantify what kind of impact you're expecting in Q2 as far as the downtime is considered?
Kurt Bitting: Well, we have two planned turnarounds for the quarter, which was one more than we had in Q2 of last year. But the downtime itself will be very similar to Q1, right? So we executed two maintenance turnarounds in this Q1 2024 this year. So it will be similar to Q1, slightly more than it was Q2 of last year. But we're happy with where we're set up really because those turnarounds will all be complete really by the end of May, which leaves us with 80% of our turnaround activity completed for the year and with a decent volume outlook for the remainder of the year.
Operator: Thank you. It appears that we have no further questions at this time. I will now turn the program back over to our presenters for any additional or closing remarks.
Gene Shiels: Thank you, Madison. Thank you to all of our participants this morning for your interest in Ecovyst and your thoughtful questions. With that, we'll conclude our call.
Operator: This does conclude today's program. Thank you for your participation. You may disconnect at any time.
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