Kurt Bitting: Dan, so the business is — obviously, again, the service is a very diverse set of end uses. So if you look at the portfolio, I’ll point to regeneration, those are very long-term agreements that are indexed, that are renegotiated at long intervals. So we don’t expect, given the refinery — the state of the refinery utilization and the utilization in that industry, we feel good about the pricing going forward on that, just based on the long-term nature of the agreements. Virgin acid, similar story, right, where — that can tend to be one of the more areas that can be susceptible to these short-term destocking. But again, more of a longer-term agreement situation because a lot of those customers require our specific sulfuric acid, whether it’s due to the high purity nature of it or the strength or our geographic locations.
And then moving over to the catalyst oriented areas. Hydrocracking, those orders are done with — based on really performance, it’s really — is driving the value there, as well as, I’d say, the polyethylene, right? Both of those segments are very sticky with their customers and the product is being sold on a performance basis. And it only generally makes up a very small percentage of the refineries or the pet chem plants [ph] overall cost. So we generally don’t see the pricing pressure associated with that. So I think pricing can’t change, obviously, as one — some of the things are indexed to raw materials while some of those things move around but you know, the adjustments are made accordingly.
Operator: Our next question comes from David Silver, CL King.
David Silver: Yes. I’ll apologize in advance, I did have to step out at 1 or 2 points here. So if I — apologies if I make you repeat yourself. Regarding the Dominguez outage, was — did you — was there a discussion of the economic impact of that on the third quarter results? So in other words, there were some repairs and maintenance, I’m guessing, there was some lost volume. I don’t know if any of that was insurable. But any way to kind of think about the economic impact of the Dominguez outage on your third quarter results?
Kurt Bitting: Yes. I would put — the Dominguez outage, we took the plant down again at the end of July to fix what was a production restriction and made that correction and it’s been running since that. So if you had to look at that impact in July, it was probably in the $4 million range and that’s between the cost to repair the plant and the downtime and associated networking costs as we had to move product around our production network to service those customers.
David Silver: And then somewhat similarly but you are advancing the timing of a turnaround. And I’m sorry, I don’t recall this but some companies accrue for turnaround costs throughout — quarterly or throughout the year. Other companies concentrate the costs of the turnaround in the period when the work is done. Can you just remind me how I should think about that? In other words, is this pulling costs directly out of fiscal year ’24 and putting them all in the fourth quarter? Or have some of the costs already been recognized? I mean, if you could just kind of discuss that, that would be helpful.
Michael Feehan: Yes, David. So the turnaround costs, really, when we do turnarounds, there’s really two components to it. There’s first, generally a capital component, right? And so as we start the turnaround costs, certain costs are capitalized as part of extending the useful life of it. But at the same time, when we bring units down for these turnarounds, we also incur additional expenses. So what we’re referring to here are the additional expenses that we would put through into the fourth quarter by pulling that turnaround forward into Q4.
David Silver: Okay. Yes, I should clarify also capitalizing costs versus expensing. Last question. You did repurchase some shares this quarter. And I mean, if I’m just looking back from a couple of year perspective, I mean, you hadn’t really repurchased any shares outside of the secondary offerings by your large shareholders. And one of those large shareholders, I think, still holding, I think, 9 million shares or something. So was the share buyback activity this quarter maybe due to a desire to offset the options issuance? Or is it purely opportunistic? I mean, how should we think about that and in particular, kind of moving forward?
Kurt Bitting: Yes. So I’ll just start, really. Our long term — Ecovyst’s long-term goal, right, is to get our leverage into that 2 to 2.5 range, right? And so our capital allocation strategy is going to be highly focused on that goal. That being said, that the capital allocation strategy is balanced and flexible. So opportunistically, we will come in and repurchase shares when we feel that the share price has fallen to a low — a very low level or it doesn’t quite reflect the value of the company. And we did have repurchase in 2022 where we did kind of a similar thing. So this repurchase here, just to put it in perspective, it’s obviously, it was around $5 million of cost which really is not going to materially move the needle in terms of our ability to reach that 2.5x to 2x leverage goal.
Operator: We have no further questions in the queue at this time. This does conclude the Ecovyst third quarter 2023 earnings call and webcast. Thank you for your participation and you may disconnect at any time.
