Ecovyst Inc. (ECVT) Bundle
Understanding Ecovyst Inc. (ECVT) Revenue Streams
Understanding Ecovyst Inc.’s Revenue Streams
The company generates revenue primarily through two segments: Ecoservices and Advanced Materials & Catalysts. Below is a detailed breakdown of these revenue sources.
Revenue Breakdown by Segment
| Segment | Q3 2024 Revenue (in millions) | Q3 2023 Revenue (in millions) | Year-over-Year Change (in millions) | Percentage Change |
|---|---|---|---|---|
| Ecoservices | $153.9 | $147.6 | $6.3 | 4.3% |
| Advanced Materials & Catalysts | $25.3 | $25.7 | $(0.4) | (1.6)% |
| Total Revenue | $179.2 | $173.3 | $5.9 | 3.4% |
For the nine months ended September 30, 2024, total sales were reported as follows:
| Segment | 9M 2024 Revenue (in millions) | 9M 2023 Revenue (in millions) | Year-over-Year Change (in millions) | Percentage Change |
|---|---|---|---|---|
| Ecoservices | $449.4 | $443.4 | $6.0 | 1.4% |
| Advanced Materials & Catalysts | $73.1 | $74.9 | $(1.8) | (2.4)% |
| Total Sales | $522.5 | $518.3 | $4.2 | 0.8% |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate reflects a stable performance with total revenue increasing by 3.4% in Q3 2024 compared to Q3 2023, driven by strong performance in the Ecoservices segment. The nine-month total revenue growth was 0.8%.
Contribution of Different Business Segments
For the three months ended September 30, 2024, the contributions of each segment to total revenue were:
- Ecoservices: 85.9% of total revenue
- Advanced Materials & Catalysts: 14.1% of total revenue
For the nine months ended September 30, 2024, the contributions remained similar:
- Ecoservices: 86.0% of total revenue
- Advanced Materials & Catalysts: 14.0% of total revenue
Analysis of Significant Changes in Revenue Streams
The increase in Ecoservices revenue for Q3 2024 was attributed to higher average selling prices and increased sales volume, specifically for virgin sulfuric acid. In contrast, the Advanced Materials & Catalysts segment saw a 1.6% decrease in revenue, primarily due to timing issues with niche custom catalysts sales.
For the nine-month period, Ecoservices demonstrated a 1.4% increase, while Advanced Materials & Catalysts faced a 2.4% decline. This trend indicates a shifting demand landscape within the company's product offerings, with Ecoservices showing resilience amid fluctuating market conditions.
Overall, the financial data from both quarterly and year-to-date results illustrate the company's ability to maintain a robust revenue stream, particularly from Ecoservices, despite challenges in the Advanced Materials & Catalysts segment.
A Deep Dive into Ecovyst Inc. (ECVT) Profitability
A Deep Dive into Ecovyst Inc.'s Profitability
Gross Profit Margin
For the three months ended September 30, 2024, gross profit was $54.7 million, compared to $53.2 million for the same period in 2023, representing an increase of 2.8%. The gross profit margin was 30.5% in 2024, slightly down from 30.7% in 2023.
Operating Profit Margin
Operating income for the three months ended September 30, 2024, was $31.6 million, a decrease from $32.0 million in 2023, resulting in an operating income margin of 17.6%, down from 18.4%.
Net Profit Margin
Net income for Q3 2024 was $14.3 million, compared to $16.6 million in Q3 2023, leading to a net profit margin of 8.0% in 2024, down from 9.6% in 2023.
Trends in Profitability Over Time
The following table illustrates the trends in profitability metrics over the past two years:
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Gross Profit | $54.7 million | $53.2 million | $1.5 million (2.8%) |
| Gross Profit Margin | 30.5% | 30.7% | -0.2% |
| Operating Income | $31.6 million | $32.0 million | -$0.4 million (-1.3%) |
| Operating Income Margin | 17.6% | 18.4% | -0.8% |
| Net Income | $14.3 million | $16.6 million | -$2.3 million (-13.9%) |
| Net Profit Margin | 8.0% | 9.6% | -1.6% |
Comparison of Profitability Ratios with Industry Averages
The company’s profitability ratios compared to industry averages are as follows:
| Ratio | Ecovyst Inc. (Q3 2024) | Industry Average |
|---|---|---|
| Gross Profit Margin | 30.5% | 32.0% |
| Operating Income Margin | 17.6% | 15.0% |
| Net Profit Margin | 8.0% | 10.0% |
Analysis of Operational Efficiency
For the nine months ended September 30, 2024, selling, general and administrative expenses increased to $64.3 million, up from $59.5 million in the same period of 2023, reflecting a rise of 8.1%.
Other operating expenses decreased significantly to $9.9 million for the nine months ended September 30, 2024, compared to $17.2 million in 2023, a reduction of 42.4%.
Overall, the operational efficiency metrics indicate a mixed performance with increased administrative costs but improved management of other operating expenses.
Debt vs. Equity: How Ecovyst Inc. (ECVT) Finances Its Growth
Debt vs. Equity Structure
As of September 30, 2024, the company reported total debt of $873.0 million, which includes a term loan facility of $873.0 million and excludes the original issue discount of $7.4 million and deferred financing costs of $2.9 million.
The breakdown of the debt as of September 30, 2024, is as follows:
| Debt Type | Amount (in millions) |
|---|---|
| Term Loan Facility | $873.0 |
| Original Issue Discount | ($7.4) |
| Deferred Financing Costs | ($2.9) |
| Total Debt, Net | $862.7 |
| Current Portion of Debt | ($8.7) |
| Total Long-Term Debt | $854.0 |
The company's debt-to-equity ratio, as of September 30, 2024, stands at 1.20, calculated using total liabilities of $1,110.7 million against total equity of $929.5 million. This ratio is slightly above the industry average of approximately 1.0, indicating a moderate level of financial leverage.
Recent activities include the amendment of the term loan facility in June 2024, which resulted in a reduced interest rate to 7.50% and extended the maturity date to June 2031. The company incurred debt extinguishment costs of $4.6 million during the nine months ended September 30, 2024, primarily related to the amendment.
As of September 30, 2024, the company maintained a robust liquidity position with cash and cash equivalents of $123.5 million and availability under its asset-based lending revolving credit facility of $64.5 million, leading to a total available liquidity of $188.0 million.
The following table summarizes the company's recent debt issuances and credit ratings:
| Debt Issuance | Amount (in millions) | Interest Rate | Maturity Date | Credit Rating |
|---|---|---|---|---|
| Term Loan Facility | $873.0 | 7.50% | June 12, 2031 | B3 (Moody's) |
The company actively balances its financing strategy between debt and equity. As of the latest reporting period, the equity portion stands at $929.5 million, reflecting the company's strategy to maintain a healthy capital structure while pursuing growth initiatives.
Assessing Ecovyst Inc. (ECVT) Liquidity
Assessing Ecovyst Inc.'s Liquidity
Current and Quick Ratios
The current ratio as of September 30, 2024, was 2.53, calculated from current assets of $283.5 million and current liabilities of $111.8 million. The quick ratio stood at 1.55, considering cash and cash equivalents of $123.5 million, accounts receivable of $74.0 million, and inventories of $53.7 million.
Analysis of Working Capital Trends
Working capital has shown a positive trend, with total current assets increasing from $245.9 million in December 2023 to $283.5 million by September 2024, while current liabilities decreased from $119.1 million to $111.8 million. This results in a working capital of $171.7 million as of September 30, 2024.
Cash Flow Statements Overview
For the nine months ended September 30, 2024, cash flows from operating activities totaled $106.4 million, compared to $73.4 million for the same period in 2023. The significant increase was driven by favorable changes in working capital and a decrease in accounts payable.
Investing activities resulted in a cash outflow of $56.2 million, primarily for capital expenditures. Financing activities accounted for a cash outflow of $15.1 million, which included stock repurchases totaling $5.0 million compared to $90.5 million in the prior year.
Cash Flow Trends
| Cash Flow Type | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Operating Cash Flow | $106.4 | $73.4 |
| Investing Cash Flow | ($56.2) | ($53.6) |
| Financing Cash Flow | ($15.1) | ($90.5) |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, total available liquidity was $188.0 million, which includes cash and cash equivalents of $123.5 million and $64.5 million available under the ABL facility. The company had no revolving credit facility borrowings at this date, indicating a strong liquidity position.
Compliance with all debt covenants was maintained, reflecting a stable financial standing. However, the increase in interest expense, which rose to $37.6 million for the nine months ended September 30, 2024, compared to $30.8 million in 2023, could pose future liquidity challenges if trends continue.
Is Ecovyst Inc. (ECVT) Overvalued or Undervalued?
Valuation Analysis
To determine whether this company is overvalued or undervalued, we will analyze key valuation metrics including price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios, stock price trends, dividend yield, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The current P/E ratio stands at 43.5, reflecting the market's expectations for future growth. The trailing twelve months (TTM) earnings per share (EPS) is reported at $0.19.
Price-to-Book (P/B) Ratio
The P/B ratio is calculated at 4.1, with the book value per share being $2.20.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is currently at 14.2, indicating how the company is valued relative to its earnings before interest, taxes, depreciation, and amortization.
Stock Price Trends
Over the last 12 months, the stock price has shown a trend that peaked at $9.50 in early March 2024 and dipped to a low of $6.70 in late November 2023. As of the last trading session, the stock price is $8.25.
| Metric | Value |
|---|---|
| P/E Ratio | 43.5 |
| EPS (TTM) | $0.19 |
| P/B Ratio | 4.1 |
| Book Value per Share | $2.20 |
| EV/EBITDA | 14.2 |
| 12-Month High | $9.50 |
| 12-Month Low | $6.70 |
| Current Stock Price | $8.25 |
Dividend Yield and Payout Ratios
Currently, there is no dividend yield as the company has not declared any dividends. The payout ratio remains at 0%.
Analyst Consensus
The current analyst consensus rating is Hold, with the average target price set at $9.00, indicating a potential upside from the current trading price.
| Analyst Rating | Average Target Price |
|---|---|
| Hold | $9.00 |
Considering these metrics, investors can assess the company's market valuation in relation to its financial health and future prospects.
Key Risks Facing Ecovyst Inc. (ECVT)
Key Risks Facing Ecovyst Inc.
Overview of Internal and External Risks
Ecovyst Inc. faces several internal and external risks that could impact its financial health. Key risks include:
- Intense industry competition, particularly in the chemicals and materials sectors.
- Regulatory changes affecting environmental compliance and operational costs.
- Market conditions influenced by fluctuations in demand for its products.
Operational, Financial, or Strategic Risks
Recent earnings reports highlight several operational and financial risks:
- Interest expense, net for the nine months ended September 30, 2024 was $37.6 million, an increase of $6.8 million from $30.8 million in the same period in 2023.
- Net income for the three months ended September 30, 2024 decreased to $14.3 million from $16.6 million year-over-year.
- Equity in net income of affiliated companies dropped to a net loss of $0.9 million, compared to net income of $4.7 million in the prior year.
Mitigation Strategies
The company has implemented various strategies to mitigate risks:
- Utilizing interest rate cap agreements to hedge against fluctuations in interest rates.
- Maintaining a strong liquidity position with cash and cash equivalents totaling $123.5 million as of September 30, 2024.
| Risk Factor | Details | Financial Impact |
|---|---|---|
| Interest Rate Risk | Variable rates impacting interest expenses | Increase to $37.6 million in interest expense for the nine months ended September 30, 2024 |
| Net Income Volatility | Fluctuations in net income | Net income decreased to $14.3 million for Q3 2024 from $16.6 million |
| Equity Earnings Decline | Lower earnings from joint ventures | Net loss of $0.9 million for Q3 2024 |
| Liquidity Position | Cash reserves and available credit | Cash and cash equivalents at $123.5 million as of September 30, 2024 |
Future Growth Prospects for Ecovyst Inc. (ECVT)
Future Growth Prospects for Ecovyst Inc.
Key Growth Drivers
Product innovations and market expansions are critical to the growth trajectory of the company. The recent focus on enhancing regeneration services and developing advanced materials in the catalysts sector has positioned the company to capture additional market share.
Revenue Growth Projections and Earnings Estimates
For the nine months ended September 30, 2024, total sales reached $522.5 million, a modest increase of $4.2 million or 0.8% compared to the same period in 2023. This growth was primarily driven by higher sales volume in Ecoservices, which increased by $6.0 million to $449.4 million. However, the Advanced Materials & Catalysts segment saw a decrease in sales, down $1.8 million to $73.1 million.
Looking ahead, analysts forecast a continued upward trend in revenue, with estimated earnings growth driven by increased demand for regeneration services and virgin sulfuric acid.
Strategic Initiatives or Partnerships
The company is actively pursuing strategic partnerships and initiatives aimed at enhancing its operational capabilities. Notably, the investment in Pajarito for $4.5 million is expected to bolster the company's technological advancements in the catalysts market.
Competitive Advantages
The company benefits from several competitive advantages, including:
- Strong market presence in regeneration services and advanced materials.
- Established relationships with key suppliers and customers.
- Innovative product offerings that meet evolving customer needs.
Financial Performance Overview
Below is a summary of relevant financial metrics for the nine months ended September 30, 2024:
| Metric | 2024 | 2023 | Change ($) | Change (%) |
|---|---|---|---|---|
| Total Sales | $522.5 million | $518.3 million | $4.2 million | 0.8% |
| Gross Profit | $147.6 million | $150.6 million | ($3.0 million) | (2.0%) |
| Adjusted EBITDA | $162.3 million | $190.1 million | ($27.8 million) | (14.6%) |
| Net Income | $23.8 million | $41.2 million | ($17.4 million) | (42.2%) |
| Interest Expense, Net | $37.6 million | $30.8 million | $6.8 million | 22.1% |
Overall, the company is well-positioned to capitalize on growth opportunities through strategic initiatives, product innovations, and market expansion, despite facing challenges in certain segments.
Ecovyst Inc. (ECVT) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Article updated on 8 Nov 2024
Resources:
- Ecovyst Inc. (ECVT) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Ecovyst Inc. (ECVT)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Ecovyst Inc. (ECVT)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.