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Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission File Number: 001-38221
Ecovyst Inc.
Delaware 81-3406833
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)
 
300 Lindenwood Drive 
Malvern, Pennsylvania
19355
(Address of principal executive offices) (Zip Code)
(484)
617-1200
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each classTrading symbolName of each exchange on which registered
Common stock, par value $0.01 per shareECVTNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes     No  ☒
The number of shares of common stock outstanding as of July 28, 2022 was 136,739,543.
1

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Ecovyst Inc.

INDEX—FORM 10-Q
June 30, 2022
Page

2

Table of Contents

PART IFINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS (UNAUDITED)

ECOVYST INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share and per share amounts)
(unaudited)
 
Three months ended
June 30,
Six months ended
June 30,
2022202120222021
Sales$225,172 $146,952 $404,886 $273,576 
Cost of goods sold165,313 108,479 297,292 204,984 
Gross profit59,859 38,473 107,594 68,592 
Selling, general and administrative expenses22,783 21,856 46,319 43,986 
Other operating expense, net9,665 4,965 17,428 10,472 
Operating income27,411 11,652 43,847 14,134 
Equity in net (income) from affiliated companies(8,504)(6,755)(14,253)(11,965)
Interest expense, net8,888 8,741 17,338 19,197 
Debt extinguishment costs 11,717  11,717 
Other expense (income), net485 (1,875)625 3,299 
Income (loss) from continuing operations before income taxes and noncontrolling interest26,542 (176)40,137 (8,114)
Provision for income taxes7,297 7,694 13,017 2,504 
Net income (loss) from continuing operations19,245 (7,870)27,120 (10,618)
Net income (loss) from discontinued operations, net of tax 6,520  (83,250)
Net income (loss)19,245 (1,350)27,120 (93,868)
Less: Net income attributable to the noncontrolling interest—discontinued operations 140  257 
Net income (loss) attributable to Ecovyst Inc.$19,245 $(1,490)$27,120 $(94,125)
Income (loss) from continuing operations attributable to Ecovyst Inc.$19,245 $(7,870)$27,120 $(10,618)
Income (loss) from discontinued operations attributable to Ecovyst Inc. 6,380  (83,507)
Net income (loss) attributable to Ecovyst Inc.$19,245 $(1,490)$27,120 $(94,125)
Net income (loss) per share:
Basic income (loss) per share—continuing operations$0.14 $(0.06)$0.20 $(0.08)
Diluted income (loss) per share—continuing operations$0.14 $(0.06)$0.19 $(0.08)
Basic loss per share—discontinued operations$ $0.05 $ $(0.61)
Diluted loss per share—discontinued operations$ $0.05 $ $(0.61)
Basic income (loss) per share$0.14 $(0.01)$0.20 $(0.69)
Diluted income (loss) per share$0.14 $(0.01)$0.19 $(0.69)
Weighted average shares outstanding:
Basic138,035,764 136,095,060 137,876,185 136,072,165 
Diluted139,149,560 136,095,060 139,175,659 136,072,165 
See accompanying notes to condensed consolidated financial statements.

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ECOVYST INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(unaudited)

 
Three months ended
June 30,
Six months ended
June 30,
2022202120222021
Net income (loss)$19,245 $(1,350)$27,120 $(93,868)
Other comprehensive income (loss), net of tax:
Pension and postretirement benefits(39)(42)(78)(85)
Net gain from hedging activities4,757 413 18,479 1,178 
Foreign currency translation(7,994)12,163 (10,299)8,302 
Total other comprehensive (loss) income(3,276)12,534 8,102 9,395 
Comprehensive income (loss)15,969 11,184 35,222 (84,473)
Less: Comprehensive income attributable to noncontrolling interests 593  316 
Comprehensive income (loss) attributable to Ecovyst Inc.$15,969 $10,591 $35,222 $(84,789)
See accompanying notes to condensed consolidated financial statements.

4

Table of Contents

ECOVYST INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
(unaudited)

June 30,
2022
December 31,
2021
ASSETS
Cash and cash equivalents$151,228 $140,889 
Accounts receivable, net113,177 80,802 
Inventories, net56,214 53,813 
Prepaid and other current assets35,953 16,165 
Total current assets356,572 291,669 
Investments in affiliated companies426,337 446,074 
Property, plant and equipment, net583,636 596,231 
Goodwill403,211 406,139 
Other intangible assets, net136,967 145,617 
Right-of-use lease assets30,039 30,115 
Other long-term assets31,023 15,374 
Total assets$1,967,785 $1,931,219 
LIABILITIES
Current maturities of long-term debt$9,000 $9,000 
Accounts payable57,938 51,860 
Operating lease liabilities—current8,374 8,306 
Accrued liabilities58,836 75,915 
Total current liabilities134,148 145,081 
Long-term debt, excluding current portion869,341 872,839 
Deferred income taxes144,114 126,749 
Operating lease liabilities—noncurrent21,528 21,719 
Other long-term liabilities20,470 24,094 
Total liabilities1,189,601 1,190,482 
Commitments and contingencies (Note 17)
EQUITY
Common stock ($0.01 par); authorized shares 450,000,000; issued shares 139,624,577 and 137,820,971 on June 30, 2022 and December 31, 2021, respectively; outstanding shares 137,817,183 and 136,938,758 on June 30, 2022 and December 31, 2021, respectively
1,396 1,378 
Preferred stock ($0.01 par); authorized shares 50,000,000; no shares issued or outstanding on June 30, 2022 and December 31, 2021
  
Additional paid-in capital1,084,790 1,073,409 
Accumulated deficit(288,587)(315,707)
Treasury stock, at cost; shares 1,807,394 and 882,213 on June 30, 2022 and December 31, 2021, respectively
(21,725)(12,551)
Accumulated other comprehensive income (loss)2,310 (5,792)
Total equity778,184 740,737 
Total liabilities and equity$1,967,785 $1,931,219 
See accompanying notes to condensed consolidated financial statements.
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ECOVYST INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)
(unaudited)


Common
stock
Additional
paid-in
capital
(Accumulated deficit)Treasury
stock, at
cost 
Accumulated
other
comprehensive
income (loss)
Non-
controlling
interest
Total
Balance, December 31, 2021$1,378 $1,073,409 $(315,707)$(12,551)$(5,792)$ $740,737 
Net income— — 7,875 — —  7,875 
Other comprehensive income— — — — 11,378  11,378 
Tax withholdings on equity award vesting— — — (332)— — (332)
Stock compensation expense — 5,946 — — — — 5,946 
Shares issued under equity incentive plan, net of forfeitures18 9 — — — — 27 
Balance, March 31, 2022$1,396 $1,079,364 $(307,832)$(12,883)$5,586 $ $765,631 
Net income— — 19,245 — —  19,245 
Other comprehensive loss— — — — (3,276) (3,276)
Repurchases of common shares— — — (8,842)— — (8,842)
Stock compensation expense — 5,409 — — — — 5,409 
Shares issued under equity incentive plan, net of forfeitures 17 — — — — 17 
Balance, June 30, 2022$1,396 $1,084,790 $(288,587)$(21,725)$2,310 $ $778,184 
Common
stock
Additional
paid-in
capital
(Accumulated deficit)Treasury
stock, at
cost 
Accumulated
other
comprehensive
loss
Non-
controlling
interest 
Total 
Balance, December 31, 2020$1,371 $1,477,859 $(175,758)$(11,081)$(15,265)$53 $1,277,179 
Net (loss) income— — (92,635)— — 117 (92,518)
Other comprehensive loss— — — — (2,745)(394)(3,139)
Tax withholdings on equity award vesting— — — (1,470)— — (1,470)
Distributions to noncontrolling interests— — — — — (516)(516)
Stock compensation expense — 6,877 — — — — 6,877 
Shares issued under equity incentive plan, net of forfeitures7 63 — — — — 70 
Balance, March 31, 2021$1,378 $1,484,799 $(268,393)$(12,551)$(18,010)$(740)$1,186,483 
Net (loss) income— — (1,490)— — 140 (1,350)
Other comprehensive income— — — — 12,081 453 12,534 
Distributions to noncontrolling interests— — — — — (593)(593)
Stock compensation expense— 7,499 — — — — 7,499 
Shares issued under equity incentive plan, net of forfeitures 36 — — — — 36 
Balance, June 30, 2021$1,378 $1,492,334 $(269,883)$(12,551)$(5,929)$(740)$1,204,609 
See accompanying notes to condensed consolidated financial statements.
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Six months ended
June 30,
20222021
Cash flows from operating activities:
Net income (loss)$27,120 $(93,868)
Net loss from discontinued operations 83,250 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation32,153 33,533 
Amortization7,051 5,952 
Amortization of deferred financing costs and original issue discount1,002 730 
Debt extinguishment costs 5,981 
Foreign currency exchange loss1,148 3,882 
Pension and postretirement healthcare benefit(1,106)(1,190)
Deferred income tax provision11,285 4,279 
Net loss on asset disposals706 2,379 
Stock compensation12,679 12,644 
Equity in net income from affiliated companies(14,253)(11,965)
Dividends received from affiliated companies30,000 10,000 
Other, net(3,258)(3,270)
Working capital changes that provided (used) cash, excluding the effect of acquisitions and dispositions:
Receivables(33,152)(18,376)
Inventories(3,091)5,501 
Prepaids and other current assets(47)(1,756)
Accounts payable9,671 2,619 
Accrued liabilities(25,053)(3,104)
Net cash provided by operating activities, continuing operations52,855 37,221 
Net cash provided by operating activities, discontinued operations 12,077 
Net cash provided by operating activities52,855 49,298 
Cash flows from investing activities:
Purchases of property, plant and equipment(25,835)(28,039)
Payments for business divestiture(3,744) 
Business combinations, net of cash acquired (41,994)
Other, net81  
Net cash used in investing activities, continuing operations(29,498)(70,033)
Net cash used in investing activities, discontinued operations (32,010)
Net cash used in investing activities(29,498)(102,043)
Cash flows from financing activities:
Issuance of long-term debt, net of discount 897,750 
Debt issuance costs (1,293)
Repayments of long-term debt(4,500)(900,000)
Repurchases of common shares(7,127) 
Tax withholdings on equity award vesting(332)(1,470)
Other, net45 6 
Net cash used in financing activities, continuing operations(11,914)(5,007)
Net cash used in financing activities, discontinued operations (1,117)
Net cash used in financing activities(11,914)(6,124)
Effect of exchange rate changes on cash, cash equivalents and restricted cash(1,104)(3,339)
Net change in cash, cash equivalents and restricted cash10,339 (62,208)
Cash, cash equivalents and restricted cash at beginning of period140,889 137,219 
Cash, cash equivalents and restricted cash at end of period$151,228 $75,011 
Less: cash, cash equivalents, and restricted cash of discontinued operations (17,603)
Cash, cash equivalents and restricted cash at end of period of continuing operations$151,228 $57,408 
For supplemental cash flow disclosures, see Note 21.
See accompanying notes to condensed consolidated financial statements.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share and per share amounts)
(unaudited)


1. Background and Basis of Presentation:
Description of Business
Ecovyst Inc. and subsidiaries (the “Company” or “Ecovyst”) is a leading integrated and innovative global provider of specialty catalysts and services. The Company supports customers globally through its strategically located network of manufacturing facilities. The Company believes that its products, which are predominantly inorganic, and services contribute to improving the sustainability of the environment.
On December 14, 2020, the Company completed the sale of its Performance Materials business for $650,000, and on August 1, 2021, the Company completed the sale of its Performance Chemicals business. The financial results of these businesses are presented as discontinued operations in the condensed consolidated financial statements for the 2021 period presented. See Note 3 for more information on these transactions.
The Company has two uniquely positioned specialty businesses: Ecoservices provides sulfuric acid recycling to the North American refining industry for the production of alkylate and provides on-purpose virgin sulfuric acid for water treatment, mining and industrial applications; and Catalyst Technologies provides finished silica catalysts and catalyst supports necessary to produce high strength and high stiffness plastics and, through the Zeolyst Joint Venture, supplies zeolites used for catalysts that help produce renewable fuels, remove nitrogen oxides from diesel engine emissions as well as sulfur from fuels during the refining process.
The Company’s regeneration services product group, which is a part of the Company’s Ecoservices segment, typically experiences seasonal fluctuations as a result of higher demand for gasoline products in the summer months and lower demand in the winter months. These demand fluctuations result in higher sales and working capital requirements in the second and third quarters.
The notes to the condensed consolidated financial statements, unless otherwise indicated, are on a continuing operations basis.
Basis of Presentation
The condensed consolidated financial statements included herein are unaudited. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted pursuant to such rules and regulations for interim reporting. In the opinion of management, all adjustments of a normal and recurring nature necessary to state fairly the financial position and results of operations have been included. The results of operations are not necessarily indicative of the expected results for the full year. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.
2. New Accounting Standards:
Recently Adopted Accounting Standards
In November 2021, the FASB issued guidance that requires entities to provide certain disclosures when they (1) have received government assistance and (2) use a grant or contribution accounting model by analogy to other accounting guidance. Previously, there was no guidance under GAAP on recognizing or measuring government grants to business entities. The new guidance does not provide any additional guidance on this topic; rather, it only provides guidance on required disclosures for business entities that receive government assistance and apply another grant or contribution accounting framework by analogy. The new guidance is effective for fiscal years beginning after December 15, 2021 with the new disclosures required on an annual basis, and can be applied either prospectively or retrospectively. The Company adopted the new guidance on January 1, 2022 and will include the disclosures as required in its annual reporting with respect to any government assistance or grants subject to the scope of the guidance to the extent material.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share and per share amounts)
(unaudited)

Accounting Standards Not Yet Adopted
In October 2021, the FASB issued guidance that requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with revenue recognition guidance. Under current GAAP, contract assets and contract liabilities acquired in a business combination are recorded by the acquirer at fair value. The new guidance creates an exception to the general recognition and measurement principles related to business combinations, and is expected to result in the acquirer recognizing contract assets and liabilities at the same amounts recorded by the acquiree. The new guidance is effective for business combinations occurring during fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of the new guidance, which would only be applied prospectively to business combinations upon the adoption of the guidance.
In March 2020 and January 2021, the FASB issued guidance to address certain accounting consequences from the anticipated transition from the use of the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates. The new guidance contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance is optional and may be elected over time as reference rate reform activities occur. During the year ended December 31, 2020, the Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index of the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. During the year ended December 31, 2021, the FASB extended the guidance adoption date to June 30, 2023. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.
3. Divestitures:
Performance Materials Divestiture
Upon the close of the Performance Materials divestiture transaction on December 14, 2020, the Company entered into a Transition Services Agreement with the buyer pursuant to which the buyer received certain services to provide for the orderly transition of various functions and processes after the closing of the transaction. The services under the Transition Services Agreement included information technology, accounting, tax, financial services, human resources, facilities, and other administrative support services. These services were provided for a period of nine months, with three 30-day extensions available. The Company billed $1,401 and $3,061 under the Transition Services Agreement to the buyer during the three and six months ended June 30, 2021. Those billings were included in selling, general and administrative expenses on the condensed consolidated financial statements for the six months ended June 30, 2021.
During the three months ended June 30, 2021, the Company incurred transaction costs of $84 and stock-based compensation expense of $630, and an associated tax benefit of $192 related to the Performance Materials divestiture, which was included in loss from discontinued operations, net of tax. During the six months ended June 30, 2021, the Company incurred transaction costs of $1,530 and stock-based compensation expense of $1,283, and an associated tax benefit of $706 related to the Performance Materials divestiture, which was included in loss from discontinued operations, net of tax.
Performance Chemicals Divestiture
On February 28, 2021, the Company entered into a definitive agreement to sell its Performance Chemicals business to Sparta Aggregator L.P. (the “Buyer”), a partnership established by Koch Minerals & Trading, LLC and Cerberus Capital Management, L.P., for $1,100,000, subject to certain adjustments including indebtedness, cash, working capital and transaction expenses. The Company completed the sale of the Performance Chemicals business on August 1, 2021. During the year ended December 31, 2021, the net cash proceeds to the Company from the sale were $978,449 after certain customary adjustments for indebtedness, working capital and cash at the closing of the transaction. During the six months ended June 30, 2022, the Company made a payment to the buyer for $3,744, representing the final adjustments to the sale price. The Company classified the payment within net cash used in investing activities – continuing operations in the condensed consolidated statements of cash flows.
Prior to the close of the transaction, the disposal group was tested for recoverability at each of the balance sheet dates subsequent to meeting the discontinued operations criteria, and the Company recognized an estimated disposal loss of $13,990 and $109,584 during the three and six months ended June 30, 2021, respectively, which was included in net loss from discontinued operations, net of tax on the condensed consolidated statement of income. In the condensed consolidated balance sheet as of June 30, 2021, the Company recorded the disposal loss to goodwill and a valuation allowance of approximately $75,080 and $34,504, respectively, which was included in long-term assets held for sale.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share and per share amounts)
(unaudited)

The following table summarizes the results of discontinued operations related to the Performance Chemicals business for the three and six months ended June 30, 2021:
Three months ended
June 30, 2021
Six months ended
June 30, 2021
Sales$170,374 $334,897 
Cost of goods sold118,785 244,638 
Selling, general and administrative expenses11,490 23,206 
Goodwill impairment charge
 75,080 
Other operating expense, net11,850 29,330 
Loss on sale of the Performance Chemicals business13,990 34,504 
Operating income (loss)14,259 (71,861)
Equity in net (income) from affiliated companies(48)(86)
Interest expense, net (1)
5,599 8,814 
Other income, net(840)(6,363)
Income (loss) from discontinued operations before income tax9,548 (74,226)
Provision for income taxes2,507 6,918 
Income (loss) from discontinued operations, net of tax$7,041 $(81,144)
(1)Upon the close of the transaction, the Company used a portion of the net proceeds to repay a portion of its outstanding debt amounting to $526,363. Prior to the Company’s debt refinancing in June 2021, the Company’s outstanding term loan facilities had mandatory repayment provisions. As a result, interest expense has been allocated to discontinued operations on the basis of the Company’s total repayment of $526,363.
Net income attributable to the noncontrolling interest related to the Performance Chemicals business, net of tax was $140 and $257 for the three and six months ended June 30, 2021. Net income (loss) attributable to Ecovyst Inc., related to the Performance Chemicals business, net of tax was $6,901 and $(81,401) for the three and six months ended June 30, 2021.
4. Revenue from Contracts with Customers:
Disaggregated Revenue
The Company’s primary means of disaggregating revenues is by reportable segments, which can be found in Note 18 to these condensed consolidated financial statements.
The Company’s portfolio of products is integrated into a variety of end uses, which are described in the table below.
Key End UsesKey Products
Industrial & process chemicals• Sulfur derivatives for industrial production
• Treatment services
Fuels & emission control• Refining hydrocracking catalysts
• Emission control catalysts
• Regeneration services for alkylate production
Packaging & engineered plastics• Catalysts for high-density polyethylene and chemicals syntheses
• Antiblocks for film packaging
• Sulfur derivatives for nylon production
Natural resources• Sulfur derivatives for mining
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share and per share amounts)
(unaudited)

The following tables disaggregate the Company’s sales, by segment and end use, for the three and six months ended June 30, 2022 and 2021:
Three months ended June 30, 2022
Ecoservices
Catalyst Technologies(2)
Total
Industrial & process chemicals$42,141 $ $42,141 
Fuels & emission control(1)
83,178  83,178 
Packaging & engineered plastics33,615 32,204 65,819 
Natural resources34,034  34,034 
Total segment sales$192,968 $32,204 $225,172 
Three months ended June 30, 2021
Ecoservices
Catalyst Technologies(2)
Total
Industrial & process chemicals$18,341 $ $18,341 
Fuels & emission control(1)
68,794  68,794 
Packaging & engineered plastics14,979 26,215 41,194 
Natural resources18,627  18,627 
Total segment sales$120,741 $26,215 $146,956 
Eliminations(4) (4)
Total$120,737 $26,215 $146,952 
Six months ended June 30, 2022
Ecoservices
Catalyst Technologies(2)
Total
Industrial & process chemicals$74,995 $ $74,995 
Fuels & emission control(1)
154,836  154,836 
Packaging & engineered plastics58,093 57,858 115,951 
Natural resources59,104  59,104 
Total segment sales$347,028 $57,858 $404,886 
Six months ended June 30, 2021
Ecoservices
Catalyst Technologies(2)
Total
Industrial & process chemicals$35,288 $ $35,288 
Fuels & emission control(1)
123,987  123,987 
Packaging & engineered plastics25,600 52,617 78,217 
Natural resources36,088  36,088 
Total segment sales$220,963 $52,617 $273,580 
Eliminations(4) (4)
Total segment sales$220,959 $52,617 $273,576 
(1)As described in Note 1, the Company experiences seasonal sales fluctuations to customers in the fuels & emission control end use.
(2)Excludes the Company’s proportionate share of sales from the Zeolyst International and Zeolyst C.V. joint ventures (collectively, the “Zeolyst Joint Venture”) accounted for using the equity method (see Note 11 to these condensed consolidated financial statements for further information).
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share and per share amounts)
(unaudited)

5. Fair Value Measurements:
Fair values are based on quoted market prices when available. When market prices are not available, fair values are generally estimated using discounted cash flow analyses, incorporating current market inputs for similar financial instruments with comparable terms and credit quality. In instances where there is little or no market activity for the same or similar instruments, the Company estimates fair values using methods, models and assumptions that management believes a hypothetical market participant would use to determine a current transaction price. These valuation techniques involve some level of management estimation and judgment that becomes significant with increasingly complex instruments or pricing models. Where appropriate, adjustments are included to reflect the risk inherent in a particular methodology, model or input used.
The Company’s financial assets and liabilities carried at fair value have been classified based upon a fair value hierarchy. The hierarchy gives the highest ranking to fair values determined using unadjusted quoted prices in active markets for identical assets and liabilities (Level 1) and the lowest ranking to fair values determined using methodologies and models with unobservable inputs (Level 3). The classification of an asset or a liability is based on the lowest level input that is significant to its measurement. For example, a Level 3 fair value measurement may include inputs that are both observable (Levels 1 and 2) and unobservable (Level 3). The levels of the fair value hierarchy are as follows:
Level 1—Values are unadjusted quoted prices for identical assets and liabilities in active markets accessible at the measurement date. Active markets provide pricing data for trades occurring at least weekly and include exchanges and dealer markets.
Level 2—Inputs include quoted prices for similar assets or liabilities in active markets, quoted prices from those willing to trade in markets that are not active, or other inputs that are observable or can be corroborated by market data for the term of the instrument. Such inputs include market interest rates and volatilities, spreads and yield curves.
Level 3—Certain inputs are unobservable (supported by little or no market activity) and significant to the fair value measurement. Unobservable inputs reflect the Company’s best estimate of what hypothetical market participants would use to determine a transaction price for the asset or liability at the reporting date.
The following table presents information about the Company’s assets and liabilities that were measured at fair value on a recurring basis as of June 30, 2022 and December 31, 2021, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.

June 30,
2022
Quoted Prices in
Active Markets
(Level 1) 
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable Inputs
(Level 3)
Derivative assets:
Interest rate caps (Note 14)$23,849 $ $23,849 $ 
Derivative liabilities:
Interest rate caps (Note 14)$16 $ $16 $ 
December 31,
2021
Quoted Prices in
Active Markets
(Level 1) 
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable Inputs
(Level 3)
Derivative assets:
Interest rate caps (Note 14)$1,080 $ $