Ecovyst, Inc. Annual report [Section 13 and 15(d), not S-K Item 405]

Annual report [Section 13 and 15(d), not S-K Item 405]

Divestitures

Divestitures

12 Months Ended

Dec. 31, 2025

Discontinued Operations and Disposal Groups [Abstract]

Divestitures

4. Divestitures:

Advanced Materials & Catalysts

On September 10, 2025, the Company entered into a definitive agreement to sell its Advanced Materials & Catalysts business, which includes the Zeolyst Joint Venture, to Technip Energies N.V. (the “Buyer”) for a purchase price of $556,000 subject to certain adjustments including indebtedness, cash, working capital and transaction expenses, as set forth in the definitive agreement (the “Advanced Materials & Catalysts Sale”). The Company completed the sale of its Advanced Materials & Catalysts business effective on December 31, 2025. The net cash proceeds to the Company from the sale were $568,427 after certain customary adjustments for indebtedness, working capital and cash at the closing of the transaction. The Company classified the proceeds within net cash provided by (used in) investing activities, continuing operations in the consolidated statements of cash flows and used a portion of the net proceeds from the sale to pay down debt.

In the third quarter of 2025, the Advanced Materials & Catalysts business met the criteria set forth in Accounting Standards Codification 205-20, Presentation of Financial Statements – Discontinued Operations (“ASC 205-20”), as the sale represents a strategic shift that will have a major effect on the Company’s operations and financial results. As a result, the Company’s consolidated financial statements for all periods presented reflect the Advanced Materials & Catalysts business as a discontinued operation. The Advanced Materials & Catalysts business historically represented a reportable segment of the Company.

As a result of the Advanced Materials & Catalysts business meeting held for sale criteria in the third quarter of 2025, the Company was required to measure the disposal group at the lower of its carrying value or fair value less costs to sell. As such, the Company performed an impairment analysis using a fair value estimate based on the agreed upon arm's length sales price resulting in the recognition of an impairment charge for assets classified as held for sale of $83,898 during the quarter ended September 30, 2025. This impairment charge consisted of a $49,636 impairment charge to goodwill along with a $34,262 valuation allowance for the estimated loss on sale.

The Company recognized a disposal loss of $32,967 during the year ended December 31, 2025, which was comprised of the $34,262 estimated loss recognized during the quarter ended September 30, 2025, and a gain of $1,295 recognized upon the closing of the transaction (see below), which was included in net (loss) income from discontinued operations, net of tax on the consolidated statements of (loss) income for the respective periods.

During the year ended December 31, 2025, the Company incurred transaction costs of $18,105 which is included in net (loss) income from discontinued operations, net of tax. Transaction costs consist of $5,906 incurred prior to meeting held for sale classification and included in other operating expense, net and $12,199 included in loss on sale, before taxes during the year ended December 31, 2025.

In connection with the sale of the Advanced Materials & Catalysts business and the related loss, as noted above, the Company has recognized tax expense of $15,868 within net (loss) income from discontinued operations, net of tax on the consolidated statements of (loss) income. The calculation of the tax gain on the sale is inherently based on estimates which might ultimately be challenged by the taxing authorities.

The following is a reconciliation of the loss recorded on the sale:


Sale price	$	556,000
Less: Cash transferred	(12,073)
Add: Working capital and other customary closing adjustments	24,500
Proceeds from sale, net of cash transferred and net working capital and customary closing adjustments	568,427
Less: Estimated future net working capital and customary closing and other adjustments(1)	(5,081)
Proceeds from sale, net of cash transferred and estimated net working capital and customary closing adjustments	563,346

Less:
Carrying value of net assets divested, net of cash	577,039
Direct costs to sell	12,199
Accumulated other comprehensive loss reclassification adjustment, foreign currency translation	7,075
Loss on sale, before taxes	$	(32,967)

(1) Certain working capital and other adjustments are to be finalized over a defined period from the close of sale. Any resulting revisions will be settled in cash, with an offsetting impact recognized in loss on sale.

The following table summarizes the results of discontinued operations for the years ended December 31, 2025, 2024 and 2023:


	Years ended December 31,
	2025		2024		2023
Sales	$	96,890	$	106,198	$	106,273
Cost of goods sold	61,997		68,060		74,757
Gross profit	34,893		38,138		31,516
Selling, general and administrative expenses	18,828		18,485		18,680
Goodwill impairment charge (1)	49,636		—		—
Other operating expense, net (2)	8,311		6,692		5,737
Loss on sale, before taxes	32,967		—		—
Operating (loss) income	(74,849)		12,961		7,099
Equity in net (income) from affiliated companies	(19,381)		(15,112)		(30,624)
Impairment of investment of affiliated companies (3)	—		65,000		—
Interest expense, net (4)	10,595		12,938		13,033
Other expense (income), net	466		362		(300)
(Loss) income from discontinued operations before income taxes	(66,529)		(50,227)		24,990
Provision for income taxes	10,885		1,929		2,059
Net (loss) income from discontinued operations, net of tax	$	(77,414)	$	(52,156)	$	22,931

(1) As a result of the Advanced Materials & Catalysts business meeting held for sale criteria in the third quarter of 2025, the Company was required to measure the disposal group at the lower of its carrying values or fair values less costs to sell. As such, the Company performed an impairment analysis using a fair value estimate based on the agreed upon arm's length sales price resulting in the recognition of a goodwill impairment charge of 49,636 in the third quarter of 2025 related to the Advanced Materials & Catalysts business.

(2) As part of the annual goodwill impairment test in 2024, the Company recognized an impairment charge of $3,900 within this line item related to the Advanced Materials & Catalysts in-process research and development intangible asset upon the conclusion that the associated project could no longer support the valuation due to extended time to commercialization and reductions in associated forecasted revenues.

(3) The disposal group’s investments in affiliated companies balance as of December 31, 2025 and 2024 includes net purchase accounting fair value adjustments of $153,444 and $155,138, respectively, related to a historical business combination consisting primarily of goodwill and intangible assets such as customer relationships, technical know-how and trade names. Equity in net income from affiliates is net of $1,694, $3,761 and $6,403 of amortization expense related to purchase accounting fair value adjustments for the years ended December 31, 2025, 2024 and 2023, respectively. During the year ended December 31, 2024, the Company recognized a $65,000 other than temporary impairment charge on its investment in the Zeolyst Joint Venture to reduce the carrying value of the Company’s investment to its estimated fair value. This impairment was an adjustment to the goodwill and trade name components of the purchase accounting fair value adjustments recorded as a result of the historical business combination.

(4) The closing of the transaction triggered the Company’s obligation to provide partial repayment under its Term Loan Credit Agreement, dated January 30, 2025 (the “2025 Term Loan Facility”). As such, interest expense has been allocated to discontinued operations on the basis of the Company’s mandatory partial repayment of $161,500 of the 2025 Term Loan Facility due June 12, 2031.

The following table summarizes the assets and liabilities of discontinued operations as of December 31, 2024:


	December 31, 2024
ASSETS
Cash and cash equivalents	$	14,623
Accounts receivables, net	24,733
Inventories, net	39,153
Prepaid and other current assets	5,175
Current assets held for sale	$	83,684

Investments in affiliated companies	$	349,308
Property, plant and equipment, net	110,591
Goodwill	77,513
Other intangible assets, net	30,713
Right-of-use lease assets	476
Other long-term assets	6,609

Long-term assets held for sale	$	575,210

LIABILITIES

Accounts payable	$	10,992
Operating lease liabilities—current	214
Accrued liabilities	13,376
Current liabilities held for sale	$	24,582



Operating lease liabilities—noncurrent	$	262
Other long-term liabilities	1,906
Long-term liabilities held for sale	$	2,168

Upon the close of the transaction, the Company entered into a Transition Services Agreement with the buyer pursuant to which the buyer is receiving 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 include information technology, accounting, tax, financial services, human resources and other administrative support services. These services are being provided at cost for a period of 10 months, with the ability to extend the initial term up to two extensions, the first of which shall not exceed two months and the second shall not exceed one month. The Company did not bill any amount under the Transition Services Agreement to the buyer during the year ended December 31, 2025.

Investments in affiliated companies

The disposal group includes the Company’s investment in the Zeolyst Joint Venture, each of which are 50/50 joint ventures with CRI Zeolites Inc. (a wholly-owned subsidiary of Royal Dutch Shell). The Zeolyst Joint Venture was historically accounted for under the equity method. As of December 31, 2025, the Company’s consolidated balance sheet does not include any investments related to the Zeolyst Joint Venture. The following table provides summarized financial information of the combined investments in affiliated companies that were included within the divested business unit:


	December 31, 2024
Current assets	$	254,541
Noncurrent assets	166,999
Current liabilities	27,226
Noncurrent liabilities	5,649


	Years ended December 31,
	2025		2024		2023
Sales	$	312,629	$	286,283	$	345,002
Gross profit	78,535		78,043		107,865
Operating income	40,562		37,230		70,783
Net income	41,739		37,746		74,053

Related party transactions

The Company entered into a joint venture agreement (the “ZI Partnership Agreement”) in 1988 with Shell Catalysts & Technologies, an affiliate of Royal Dutch Shell plc, to form Zeolyst International, a 50/50 joint venture partnership (the “Partnership”). Under the terms of the ZI Partnership Agreement, the Partnership leases certain land used in its Kansas City production facilities from Advanced Materials & Catalysts. This lease, which has been recorded as an operating lease and with evergreen terms as long as the ZI Partnership Agreement is in place, provided for rental payments to Advanced Materials & Catalysts of $310 during the years ended December 31, 2025, 2024 and 2023. These rental payments were included in Advanced Materials & Catalysts’ cost of goods sold within net (loss) income from discontinued operations, net of tax. The Partnership had no sales to Advanced Materials & Catalysts for the years ended December 31, 2025 and 2024, and sales of $236 to Advanced Materials & Catalysts for the year ended December 31, 2023.

The Partnership purchases certain raw materials from Advanced Materials & Catalysts and was charged for various manufacturing costs incurred at Advanced Materials & Catalysts’ Kansas City production facility. The amount of these costs charged to the Partnership were $19,553, $17,315 and $20,594 for the years ended December 31, 2025, 2024 and 2023, respectively. Of these charges, $4,842, $2,110 and $2,457 were included in Advanced Materials & Catalysts’ sales within net (loss) income from discontinued operations, net of tax, and $14,711, $15,205 and $18,137 were included in Advanced Materials & Catalysts’ cost of goods sold within net (loss) income from discontinued operations, net of tax for the years ended December 31, 2025, 2024 and 2023, respectively. In addition, the Partnership was charged certain product demonstration costs of $1,058, $1,029 and $1,819 during the years ended December 31, 2025, 2024 and 2023, respectively, which were also included in Advanced Materials & Catalysts’ cost of goods sold within net (loss) income from discontinued operations, net of tax.

Certain administrative services were provided to the affiliated company by the Company. The Company charged $2,304, $2,749 and $2,134 for the years ended December 31, 2025, 2024 and 2023, respectively, which were included in selling, general and administrative expenses in the consolidated statements of (loss) income.

Certain administrative, marketing, engineering, management-related and research and development services are provided to the Partnership by Advanced Materials & Catalysts. The Partnership was charged $14,528, $14,454 and $12,624 for the years ended December 31, 2025, 2024 and 2023, respectively and were included in Advanced Materials

& Catalysts’ selling, general and administrative expenses within net (loss) income from discontinued operations, net of tax.

Advanced Materials & Catalysts had an accounts receivable from the Partnership of $2,794 as of December 31, 2024, which was included in Advanced Materials & Catalysts’ prepaid and other current assets within current assets held for sale in the consolidated balance sheets. Advanced Materials & Catalysts had no accounts payable with the Partnership as of December 31, 2024.

Other Divestitures

During the year ended December 31, 2025, the Company recorded an adjustment related to a historical divestiture in the amount of of $2,409 which is included in net (loss) income from discontinued operations, net of tax.