Core Insights - Orion S.A. (OEC) plans to rationalize its carbon black production lines at three to five facilities in the Americas and EMEA by the end of 2025 to focus on higher-performing production lines [1][7] - The company has entered a long-term supply agreement with Contec S.A. to utilize tire pyrolysis oil (TPO) for producing circular carbon black, establishing itself as the only company using 100% TPO as feedstock [2] - The closure of underperforming assets aims to enhance operational efficiency and regain market share amid U.S. tariffs, EU anti-dumping investigations, and increased tire sector investments [3][7] Financial Performance - For Q2, OEC expects adjusted EBITDA between $270 million and $310 million, with adjusted EPS projected to be in the range of $1.20 to $1.70 [3] - The Zacks Consensus Estimate for OEC's 2025 earnings is $1.33, indicating a year-over-year decline of 24% [4] - Free cash flow guidance for the year is set at $40 million to $70 million [4] Stock Performance - OEC's stock has decreased by 47.1% over the past year, contrasting with a 3.4% rise in the industry [4] - OEC currently holds a Zacks Rank of 5 (Strong Sell) [6]

Financial Data and Key Metrics Changes - The company reported a challenging start to the year, with Q1 results not indicative of stronger underlying performance, suggesting an underlying EBITDA potential in the mid-seventy million dollars range [6][8] - Free cash flow guidance for the year has been reaffirmed despite lower EBITDA expectations, with a focus on improving cash flow conversion [7][29] - The company experienced a $10 million impact on earnings due to unplanned plant outages and adverse timing effects related to raw material costs [8][31] Business Line Data and Key Metrics Changes - Rubber segment volumes improved by 2.5% year-over-year and 13% sequentially, benefiting from contractual mandates and operational improvements in China [32] - Specialty segment volumes improved 3% sequentially but declined 2% year-over-year, indicating choppy demand particularly in the automotive coatings market [35][36] Market Data and Key Metrics Changes - U.S. tire production was down low double-digit percentages in the first two months of the quarter, remaining significantly below pre-COVID levels [9] - The company noted that elevated tire imports into key markets continue to be a headwind for local tire manufacturing [33] Company Strategy and Development Direction - The company is positioned to benefit from the changing global trade paradigm, with tariffs expected to positively impact demand for domestic manufacturing [12][17] - A focus on operational reliability and efficiency improvements is underway, with plans to enhance maintenance and reduce equipment failures [27][28] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the increased likelihood of an economic recession but noted no pronounced weakening in order books at this time [7][20] - The company expects demand to improve in the second half of 2025 as tire imports are anticipated to slow and channel inventories are drawn down [15][52] Other Important Information - The company has reduced its 2025 CapEx spending expectations by $10 million, down to $150 million, reflecting a significant decrease from 2024 levels [30][39] - The company has repurchased $16 million worth of stock in Q1 and a total of $105 million since the inception of its buyback program [40] Q&A Session Summary Question: Impact of outages in Q1 - Management indicated that the $13 million impact from outages was primarily contained in Q1, with some costs related to fixed cost absorption and timing [44][48] Question: Expectations for Q2 earnings - Management expects a step-up in earnings in Q2, with the impact of lower oil prices and inventory revaluation being factored into guidance [50][52] Question: Timing of tariff benefits - Management anticipates seeing benefits from tariffs in the second half of 2025, contingent on demand recovery and inventory adjustments [56][58] Question: Specialty Black business inventory trends - Management noted that while there has been some cautious behavior from distributors, demand remains choppy rather than clear [61][62]

Financial Data and Key Metrics Changes - The company experienced a challenging start to the year, with Q1 results not reflecting the stronger underlying performance and potential of the business [7] - Unplanned plant outages impacted productivity and absorption levels, masking at least $10 million of greater earnings power in Q1, suggesting an underlying EBITDA closer to the mid-$70 million range [10][11] - Overall volumes improved by 1% year-over-year and 10% sequentially, with the most significant improvements coming from low-margin regions [34] Business Line Data and Key Metrics Changes - The Rubber segment saw a 2.5% volume improvement year-over-year and a 13% sequential improvement, benefiting from contractual mandates and operational improvements in China [35] - The Specialty segment characterized demand as choppy, with volumes improving 3% sequentially but declining 2% year-over-year [38] Market Data and Key Metrics Changes - Rubber demand was off to a slow start, with U.S. tire production down low double-digit percentages in the first two months of the quarter, remaining below pre-COVID levels [11] - Elevated tire imports into key markets continued to be a headwind for local tire manufacturing in the U.S. and Europe [36] Company Strategy and Development Direction - The company is taking protective measures to manage costs and bolster free cash flow in light of potential economic recession [8] - The changing global trade paradigm, including tariffs, is expected to benefit the carbon black industry and the company specifically [14][20] - The company is focused on improving operational reliability and efficiency, with plans to enhance maintenance and process yields [30][31] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the increased likelihood of an economic recession but noted no pronounced weakening in order books at this time [8] - The company expects demand inflection starting in the second half of 2025 as tire imports are anticipated to slow [18] - Management remains committed to delivering free cash flow and has reaffirmed guidance despite lower EBITDA expectations [32][43] Other Important Information - The company has reduced its 2025 CapEx spending expectations by $10 million, down to $150 million [33] - The company has repurchased $16 million worth of stock in Q1 and $105 million since the inception of the buyback program [42] Q&A Session Summary Question: Impact of outages in Q1 - Management indicated that the $13 million impact from outages was primarily contained in Q1, with some costs related to fixed cost absorption and timing [47][50] Question: Expectations for Q2 earnings - Management expects a step-up in earnings in Q2, with the impact of lower oil prices and inventory revaluation incorporated into guidance [51][55] Question: Timing of tariff benefits - Management anticipates seeing benefits from tariffs in the second half of 2025, with tire companies considering building more capacity in the U.S. [58][62] Question: Specialty Black business inventory drawdown - Management noted that distributors have slowed down a bit, indicating cautious behavior, but demand remains choppy [64] Question: Headwind from timing of input costs - Management mentioned that natural gas prices were a significant factor in Q1, but they do not expect this to be a recurring headline issue [71]

Financial Data and Key Metrics Changes - The company reported a challenging start to the year, with Q1 results not indicative of stronger underlying performance, masking at least $10 million of greater earnings power [7][8] - Overall plant operations have improved sequentially, contributing favorably moving forward [9] - Free cash flow guidance for the year has been reaffirmed despite lower EBITDA guidance [30][41] Business Line Data and Key Metrics Changes - Rubber segment volumes improved by 2.5% year over year and 13% sequentially, benefiting from contractual mandates and operational improvements in China [33] - Specialty segment volumes improved 3% sequentially but declined 2% year over year, with demand characterized as choppy [36] Market Data and Key Metrics Changes - U.S. tire production was down low double-digit percentages in the first two months of the quarter, remaining dramatically below pre-COVID levels [10] - The company expects a demand inflection starting in the second half of 2025 as tire imports are anticipated to slow [16][20] Company Strategy and Development Direction - The company is taking protective measures to manage costs and bolster free cash flow in light of potential economic recession [7] - The ongoing shift in global trade policies is expected to benefit the carbon black industry and the company specifically [12][14] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the increased likelihood of an economic recession but does not see a pronounced weakening in order books at this time [7] - The company is optimistic about the structural benefits from the changing trade paradigm, which should positively affect demand for manufacturing in the U.S. and Europe [14][41] Other Important Information - The company has reduced its 2025 CapEx spending expectations by $10 million, down to $150 million [30] - The company has initiated programs to improve cash flow conversion, expecting working capital to be a source of cash in 2025 [30] Q&A Session Summary Question: Impact of outages in Q1 - Management indicated that the $13 million impact from outages was primarily contained in Q1, with some costs related to fixed cost absorption and timing [46][48] Question: Expectations for Q2 earnings - Management expects a step-up in earnings in Q2, despite a negative inventory adjustment due to lower oil prices [50][54] Question: Timing of tariff benefits - Management anticipates seeing benefits from tariffs in the second half of 2025, as tire companies are expected to shift capacity to the U.S. [61][66] Question: Specialty Black business inventory drawdown - Management noted that while there is some cautiousness from distributors, demand remains choppy, with no clear trends yet [66]

Financial Performance - Orion reported quarterly earnings of $0.22 per share, missing the Zacks Consensus Estimate of $0.53 per share, and down from $0.52 per share a year ago, representing an earnings surprise of -58.49% [1] - The company posted revenues of $477.7 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 1.69%, and down from $502.9 million year-over-year [2] - Over the last four quarters, Orion has surpassed consensus EPS estimates only once and has not beaten consensus revenue estimates during the same period [2] Stock Performance - Orion shares have declined approximately 27.4% since the beginning of the year, compared to a decline of -4.7% for the S&P 500 [3] - The current Zacks Rank for Orion is 4 (Sell), indicating expectations for the stock to underperform the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.43 on revenues of $477.53 million, and for the current fiscal year, it is $1.60 on revenues of $1.86 billion [7] - The trend for estimate revisions ahead of the earnings release was unfavorable, which may impact future stock performance [6] Industry Context - The Chemical - Specialty industry, to which Orion belongs, is currently ranked in the bottom 44% of over 250 Zacks industries, suggesting potential challenges for stock performance [8] - Another company in the same industry, CSW Industrials, is expected to report quarterly earnings of $2.23 per share, reflecting a year-over-year change of +9.3% [9]

1Q 2025 Financial Performance - Volume increased by 13% year-over-year to 2517 kmt, but net sales decreased by 50% to $4777 million [24] - Adjusted EBITDA decreased by 224% year-over-year to $662 million, with a margin of 139% [24] - Adjusted net income decreased by 584% year-over-year to $128 million, and adjusted diluted EPS decreased to $022 [24] Rubber Business Results - Rubber volume increased by 25% year-over-year to 1898 kmt, but net sales decreased by 45% to $3170 million [29] - Rubber adjusted EBITDA decreased by 289% year-over-year to $408 million, with a margin of 129% [29] - Gross profit per ton decreased by 296% year-over-year to $3061 [29] Specialty Business Results - Specialty volume decreased by 22% year-over-year to 619 kmt, and net sales decreased by 60% to $1607 million [34] - Specialty adjusted EBITDA decreased by 90% year-over-year to $254 million, with a margin of 158% [34] - Gross profit per ton decreased by 19% year-over-year to $6462 [34] 2025 Guidance - Adjusted EBITDA guidance revised to $270 million - $310 million [40] - Adjusted EPS guidance revised to $120 - $170 per share [40] - Free cash flow guidance reaffirmed at $40 million - $70 million [40]

[PART I - Financial Information](index=3&type=section&id=PART%20I%20-%20Financial%20Information) [Financial Statements and Supplementary Data (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20and%20Supplementary%20Data%20(Unaudited)) Orion S.A. reported a significant Q1 2025 profitability decline, with net sales down **5.0%** and net income dropping **65.9%** [Condensed Consolidated Statements of Operations](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q1 2025 net sales decreased to **$477.7 million**, gross profit fell **20%**, and net income declined substantially Q1 2025 vs Q1 2024 Statement of Operations (in millions, except per share data) | Metric | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net sales | $477.7 | $502.9 | -5.0% | | Gross profit | $98.1 | $122.2 | -19.7% | | Income from operations | $31.2 | $52.8 | -40.9% | | Net income | $9.1 | $26.7 | -65.9% | | Diluted EPS | $0.16 | $0.45 | -64.4% | [Condensed Consolidated Statements of Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Q1 2025 comprehensive income decreased to **$10.1 million**, primarily due to lower net income Q1 2025 vs Q1 2024 Comprehensive Income (in millions) | Component | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income | $9.1 | $26.7 | | Foreign currency translation adjustments | $2.6 | $(6.4) | | Net losses on derivatives | $(1.5) | $(0.5) | | **Comprehensive income** | **$10.1** | **$19.9** | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$1,968.2 million**, liabilities to **$1,502.1 million**, and stockholders' equity slightly decreased Balance Sheet Summary (in millions) | Account | March 31, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total current assets | $688.6 | $613.3 | | Total assets | $1,968.2 | $1,857.3 | | Total current liabilities | $601.9 | $516.7 | | Total liabilities | $1,502.1 | $1,382.4 | | Total stockholders' equity | $466.1 | $474.9 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities plummeted to **$0.4 million** in Q1 2025, with investing and financing activities impacting overall cash Q1 2025 vs Q1 2024 Cash Flows (in millions) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $0.4 | $32.4 | | Net cash used in investing activities | $(29.2) | $(33.1) | | Net cash provided by financing activities | $21.8 | $7.0 | | **(Decrease) in cash** | **$(7.0)** | **$6.3** | [Notes to the Condensed Consolidated Financial Statements (Unaudited)](index=8&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) Notes detail increased total debt to **$972.5 million**, weak segment performance, and subsequent interest rate swap agreements - Total debt increased from **$905.8 million** at year-end 2024 to **$972.5 million** as of March 31, 2025, primarily due to a rise in other short-term debt and obligations[37](index=37&type=chunk) - The company's effective tax rate increased to **50.9%** in Q1 2025 from **33.7%** in Q1 2024, attributed to changes in the projected pre-tax income mix across different tax jurisdictions[71](index=71&type=chunk) - Subsequent to the quarter end, on April 25, 2025, the company entered into two interest rate swaps totaling **€200.0 million** to hedge its variable interest rate Euro-denominated term loan[84](index=84&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Q1 2025 net sales decreased **5.0%**, gross profit fell **19.7%**, and Adjusted EBITDA decreased **22.4%** to **$66.2 million** Q1 2025 vs Q1 2024 Key Performance Metrics (in millions) | Metric | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net sales | $477.7 | $502.9 | -5.0% | | Gross profit | $98.1 | $122.2 | -19.7% | | Net income | $9.1 | $26.7 | -65.9% | | Adjusted EBITDA | $66.2 | $85.3 | -22.4% | - The decrease in gross profit was primarily driven by unplanned downtime, unfavorable timing from the pass-through of raw material costs, and unfavorable foreign exchange rate impact[103](index=103&type=chunk) - As of March 31, 2025, the company had total liquidity of **$166.2 million**, comprising **$37.5 million** in cash, **$104.8 million** in revolving credit facility availability, and **$23.9 million** in other credit lines[132](index=132&type=chunk) [Segment Discussion](index=21&type=section&id=Segment%20Discussion) Both segments saw profitability decline, with Rubber Carbon Black Adjusted EBITDA down **28.9%** and Specialty Carbon Black down **9.0%** Segment Adjusted EBITDA (in millions) | Segment | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Specialty Carbon Black | $25.4 | $27.9 | -9.0% | | Rubber Carbon Black | $40.8 | $57.4 | -28.9% | - Specialty Carbon Black volume decreased by **2.2%** due to lower demand in the Americas, leading to a **9.0%** drop in Adjusted EBITDA[115](index=115&type=chunk)[116](index=116&type=chunk) - Rubber Carbon Black volume increased by **2.5%**, but Adjusted EBITDA fell **28.9%** due to unplanned downtime, unfavorable timing from raw material cost pass-through, and customer/regional mix[117](index=117&type=chunk)[119](index=119&type=chunk) [Liquidity and Capital Resources](index=22&type=section&id=Liquidity%20and%20Capital%20Resources) Q1 2025 operating cash flow plummeted to **$0.4 million**, and net working capital increased to **$391.0 million** Net Working Capital Components (in millions) | Component | March 31, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Accounts receivable, net | $274.0 | $211.9 | | Inventories, net | $297.0 | $290.4 | | Accounts payable | $(180.0) | $(156.2) | | **Net working capital** | **$391.0** | **$346.1** | - The increase in Net Working Capital was driven by higher sales increasing accounts receivable and increased production boosting inventory levels[138](index=138&type=chunk)[141](index=141&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=25&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes occurred in market risk disclosures compared to the 2024 Annual Report on Form 10-K - Information about market risks for the period ended March 31, 2025 does not differ materially from the disclosures in the 2024 Annual Report on Form 10-K[147](index=147&type=chunk) [Controls and Procedures](index=25&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal controls - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[148](index=148&type=chunk) - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[149](index=149&type=chunk) [PART II - Other Information](index=26&type=section&id=PART%20II%20-%20Other%20Information) [Legal Proceedings](index=26&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various ordinary course legal proceedings, with management believing no material adverse effect on financial condition - The company is subject to various lawsuits and claims in the ordinary course of business but does not believe the ultimate outcome will have a material adverse effect on its financial condition[72](index=72&type=chunk)[151](index=151&type=chunk) [Risk Factors](index=26&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors have occurred since the 2024 Annual Report on Form 10-K filing - No material changes to risk factors have occurred since the filing of the 2024 Annual Report on Form 10-K[153](index=153&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=26&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q1 2025, the company repurchased **1,111,332** shares of common stock under its publicly announced program Q1 2025 Share Repurchases | Period | Total Shares Purchased | | :--- | :--- | | January 2025 | 424,122 | | February 2025 | 395,819 | | March 2025 | 291,391 | | **Q1 2025 Total** | **1,111,332** | [Exhibits](index=27&type=section&id=Item%206.%20Exhibits) The report lists various exhibits filed with the SEC, including officer certifications and Inline XBRL data files - Exhibits filed include CEO and CFO certifications required by the Exchange Act and Section 1350, as well as Inline XBRL documents[156](index=156&type=chunk)

[Financial Performance Overview](index=1&type=section&id=Financial%20Performance%20Overview) Orion S.A. reported a year-over-year decline in key financial metrics for the first quarter of 2025 [Q1 2025 Financial Highlights](index=1&type=section&id=Q1%202025%20Financial%20Highlights) Orion S.A. reported a year-over-year decline in key financial metrics for the first quarter of 2025, including significant drops in net sales, net income, and EPS Q1 2025 Key Financial Metrics (Y/Y) | Metric | Q1 2025 | Change (Y/Y) | | :--- | :--- | :--- | | Net Sales | $477.7 million | -$25.2 million | | Net Income | $9.1 million | -$17.6 million | | Diluted EPS | $0.16 | -$0.29 | | Adjusted EBITDA | $66.2 million | -22% | | Adjusted Diluted EPS | $0.22 | -$0.30 | [Management Commentary](index=1&type=section&id=Management%20Commentary) Management attributed weaker Q1 results to unplanned plant downtime and raw material pass-through timing, expecting a sequentially better Q2 and reaffirming free cash flow guidance - CEO Corning Painter stated that Q1 results were impacted by unplanned plant downtime and raw material pass-through timing, but expects a sequentially better Q2 due to operational improvements[3](index=3&type=chunk) - The company anticipates a net benefit from auto sector tariffs on imported replacement tires but acknowledges risks if broader tariffs lead to a global economic slowdown[4](index=4&type=chunk) - CFO Jeff Glajch expressed confidence in achieving free cash flow goals, reaffirming guidance due to reduced capex spending and viewing 2025-2026 as inflection years for this metric[5](index=5&type=chunk) [Consolidated Financial Results](index=2&type=section&id=Consolidated%20Financial%20Results) For Q1 2025, Orion's sales volume slightly increased, but net sales, gross profit, and income from operations significantly declined due to lower oil prices, FX rates, and operational issues Q1 2025 Consolidated Financial Performance (Y/Y) | (In millions, except volume and EPS data) | Q1 2025 | Q1 2024 | Y/Y Change in % | | :--- | :--- | :--- | :--- | | Volume (kmt) | 251.7 | 248.4 | 1.3% | | Net sales | $477.7 | $502.9 | (5.0)% | | Gross profit | $98.1 | $122.2 | (19.7)% | | Income from operations | $31.2 | $52.8 | (40.9)% | | Net income | $9.1 | $26.7 | (65.9)% | | Adjusted EBITDA | $66.2 | $85.3 | (22.4)% | | Adjusted Diluted EPS | $0.22 | $0.52 | (57.7)% | - The decrease in net sales was primarily driven by lower oil prices and unfavorable foreign exchange impact, partially offset by higher volume in the Rubber Carbon Black segment[7](index=7&type=chunk) - The decline in gross profit and Adjusted EBITDA was mainly caused by unplanned downtime and unfavorable timing from the pass-through of raw material costs[7](index=7&type=chunk)[8](index=8&type=chunk) [Business Segment Performance](index=3&type=section&id=Business%20Segment%20Performance) Orion's business segments experienced mixed performance in Q1 2025, with Specialty Carbon Black declining and Rubber Carbon Black facing significant EBITDA reduction despite volume growth [Specialty Carbon Black](index=3&type=section&id=Specialty%20Carbon%20Black) The Specialty Carbon Black segment experienced a downturn in Q1 2025, with volume declining 2.2% and Adjusted EBITDA decreasing by 9.0% due to lower demand Specialty Carbon Black Q1 Performance (Y/Y) | (In millions, except volume) | Q1 2025 | Q1 2024 | Y/Y Change in % | | :--- | :--- | :--- | :--- | | Volume (kmt) | 61.9 | 63.3 | (2.2)% | | Net sales | $160.7 | $170.9 | (6.0)% | | Gross profit | $40.0 | $41.7 | (4.1)% | | Adjusted EBITDA | $25.4 | $27.9 | (9.0)% | - The volume decline was primarily due to lower demand in the Americas region[12](index=12&type=chunk) [Rubber Carbon Black](index=3&type=section&id=Rubber%20Carbon%20Black) The Rubber Carbon Black segment saw volume increase by 2.5% in Q1 2025, but Adjusted EBITDA fell sharply by 28.9% due to operational issues and unfavorable mix Rubber Carbon Black Q1 Performance (Y/Y) | (In millions, except volume) | Q1 2025 | Q1 2024 | Y/Y Change in % | | :--- | :--- | :--- | :--- | | Volume (kmt) | 189.8 | 185.1 | 2.5% | | Net sales | $317.0 | $332.0 | (4.5)% | | Gross profit | $58.1 | $80.5 | (27.8)% | | Adjusted EBITDA | $40.8 | $57.4 | (28.9)% | - Volume increased due to higher demand in the Americas and Asia Pacific regions[14](index=14&type=chunk) - Adjusted EBITDA decline was driven by unplanned downtime, unfavorable timing from raw material cost pass-throughs, and customer/regional mix[14](index=14&type=chunk) [Outlook and Forward-Looking Statements](index=3&type=section&id=Outlook%20and%20Forward-Looking%20Statements) Orion has adjusted its full-year 2025 guidance for Adjusted EBITDA and EPS while reaffirming free cash flow targets, acknowledging inherent risks in forward-looking statements [2025 Full Year Outlook](index=3&type=section&id=2025%20Full%20Year%20Outlook) Orion has slightly adjusted its full-year 2025 guidance for Adjusted EBITDA and EPS, while reaffirming its free cash flow guidance Revised 2025 Full Year Guidance | Metric | Guidance Range | | :--- | :--- | | Adjusted EBITDA | $270 million – $310 million | | Adjusted EPS | $1.20 – $1.70 | | Free Cash Flow | $40 million – $70 million (Reaffirmed) | [Forward-Looking Statements & Risk Factors](index=4&type=section&id=Forward-Looking%20Statements%20%26%20Risk%20Factors) The report includes forward-looking statements based on current management expectations, subject to various known and unknown risks including economic conditions and geopolitical changes - The report contains forward-looking statements concerning financial condition, results, and business outlook, which are based on current expectations and assumptions and involve significant risks and uncertainties[19](index=19&type=chunk) - Key risk factors include: negative economic conditions, industry volatility, operational disruptions, dependence on major customers/suppliers, geopolitical changes (tariffs), and feedstock price fluctuations[20](index=20&type=chunk) [Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Orion's unaudited condensed consolidated financial statements for Q1 2025 show a significant decline in net income and operating cash flow, alongside increases in total assets and liabilities [Statements of Operations](index=8&type=section&id=Statements%20of%20Operations) The unaudited condensed consolidated statement of operations for Q1 2025 shows a sharp decrease in net income to $9.1 million from $26.7 million in Q1 2024 Condensed Consolidated Statements of Operations (Unaudited) | (In millions, except per share data) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net sales | $477.7 | $502.9 | | Gross profit | $98.1 | $122.2 | | Income from operations | $31.2 | $52.8 | | Net income | $9.1 | $26.7 | | Diluted EPS | $0.16 | $0.45 | [Statements of Financial Position](index=9&type=section&id=Statements%20of%20Financial%20Position) As of March 31, 2025, Orion's total assets increased to $1,968.2 million, primarily due to higher accounts receivable, while total liabilities also rose to $1,502.1 million Condensed Consolidated Statements of Financial Position (Unaudited) | (In millions) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $688.6 | $613.3 | | **Total assets** | **$1,968.2** | **$1,857.3** | | Total current liabilities | $601.9 | $516.7 | | **Total liabilities** | $1,502.1 | $1,382.4 | | **Total stockholders' equity** | **$466.1** | **$474.9** | [Statements of Cash Flows](index=10&type=section&id=Statements%20of%20Cash%20Flows) For Q1 2025, net cash provided by operating activities significantly dropped to $0.4 million, leading to a net decrease in cash of $7.0 million for the period Condensed Consolidated Statements of Cash Flows (Unaudited) | (In millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $0.4 | $32.4 | | Net cash used in investing activities | ($29.2) | ($33.1) | | Net cash provided by financing activities | $21.8 | $7.0 | | **Increase (decrease) in cash** | **($7.0)** | **$6.3** | [Reconciliation of Non-GAAP to GAAP Financial Measures](index=6&type=section&id=Reconciliation%20of%20Non-GAAP%20to%20GAAP%20Financial%20Measures) Orion provides non-GAAP financial measures like Adjusted EBITDA and Adjusted Diluted EPS to offer a clearer view of underlying operational performance by excluding certain items [Explanation of Non-GAAP Measures](index=6&type=section&id=Explanation%20of%20Non-GAAP%20Measures) Orion presents non-GAAP financial measures such as Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted EPS to evaluate operating performance and facilitate comparisons - Adjusted EBITDA is defined as Income from operations before depreciation and amortization, stock-based compensation, and non-recurring items, plus earnings in affiliated companies[25](index=25&type=chunk) - Management uses Adjusted EBITDA to evaluate operating performance and allocate capital, as it excludes items with less bearing on the core business, facilitating performance comparisons[26](index=26&type=chunk) - The company cannot reconcile forward-looking non-GAAP measures like Adjusted EBITDA to GAAP measures without unreasonable effort due to the unpredictability of significant items such as legal settlements and restructuring costs[30](index=30&type=chunk) [Reconciliation Tables](index=11&type=section&id=Reconciliation%20Tables) In Q1 2025, GAAP Net Income of $9.1 million was reconciled to an Adjusted EBITDA of $66.2 million and an Adjusted Diluted EPS of $0.22 through specific adjustments Reconciliation of Net Income to Adjusted EBITDA (Q1 2025) | (In millions) | Q1 2025 | | :--- | :--- | | Net income | $9.1 | | Add back Income tax expense | $8.9 | | Add back Interest and other financial expense, net | $13.7 | | Income from operations | $31.2 | | Add back Depreciation and amortization | $31.5 | | Other adjustments (LTIP, etc.) | $3.5 | | **Adjusted EBITDA** | **$66.2** | Reconciliation of Net Income to Adjusted Diluted EPS (Q1 2025) | (In millions, except per share data) | Q1 2025 | | :--- | :--- | | Net income | $9.1 | | Total add back items (LTIP, amortization, etc.) | $3.7 | | **Adjusted net income** | **$12.8** | | Diluted Earnings per share | $0.16 | | **Adjusted Diluted EPS** | **$0.22** |

2024 Performance - Adjusted EBITDA reached $302.2 million in 2024 [27], exceeding $300 million for the third consecutive year [6, 25] - Adjusted diluted EPS was $1.76 [27], compared to $1.92 in the previous year, a decrease of 8.3% [27] - Net sales amounted to $1,877.5 million [27], a slight decrease of 0.9% year-over-year [27] - Aggregate volumes remained relatively flat at 934.8 kmt [27], a slight increase of 0.3% year-over-year [27] Q4 2024 Results - Adjusted EBITDA for Q4 2024 was $61.7 million [25, 29], a decrease of approximately 7% year-over-year [25, 29] - Adjusted diluted EPS for Q4 2024 increased significantly to $0.35 [25, 29], up 106% year-over-year [25, 29], benefiting from discrete tax items [25] - Rubber volumes experienced a decline of approximately 2% [29], offset by a 9% increase in Specialty gains [29] - Net sales for Q4 2024 were $434.2 million [29], a decrease of 7.3% year-over-year [29] 2025 Guidance - The company anticipates an adjusted EBITDA between $290 million and $330 million for the full year 2025 [20] - Adjusted EPS is projected to be between $1.45 and $1.90 per share [20] - Capital expenditures are estimated to be approximately $160 million [20] - Free cash flow is expected to be in the range of $40 million to $70 million [20] Capital Allocation - Capital spending is expected to decline over the next two years [16] - The company has ample buyback capacity [14]

Financial Data and Key Metrics Changes - The company achieved an EBITDA of $302 million in 2024, which is 14% above pre-COVID earnings levels despite a softer global industrial backdrop [10][12][35] - Adjusted EPS for the fourth quarter was more than double the prior year's EPS, although EBITDA was down about 7% year-over-year [35][36] - The company expects 2025 adjusted EBITDA midpoint to be $310 million, representing about 7% to 8% constant currency growth [33][34] Business Line Data and Key Metrics Changes - The rubber segment experienced a late Q4 demand weakness, resulting in a 2% lower volume year-over-year [45][46] - The specialty segment exhibited a strong volume recovery in 2024, with full-year volumes advancing 11% [22][48] - The specialty segment's fourth quarter volume growth was 9% year-over-year, although the mix was skewed towards lower value products [22][48] Market Data and Key Metrics Changes - Domestic tire production in the U.S. was 15% lower than year-ago levels in December, despite tire shipments being slightly higher year-over-year [18] - Elevated tire imports continued to pressure local production, particularly in North America and Europe [10][19] - The freight industry's indicators remain subdued, with tender volumes slightly lower year-over-year [18] Company Strategy and Development Direction - The company aims to navigate dynamic market conditions by focusing on operational excellence and enhancing plan reliability [28][31] - A commercial strategy was enacted to diversify away from premium Tier one tire customers, which were most affected by elevated tire imports [38][24] - The company is focusing on sustainability and innovation in the carbon black space, achieving EcoVadis's platinum rating [15][16] Management's Comments on Operating Environment and Future Outlook - Management noted that the economic backdrop is uncertain, with several headwinds, particularly in the rubber segment due to soft demand [12][13] - The company anticipates a free cash flow inflection in 2025, with expectations for sharply improving cash flow in the coming years [31][51] - Management expressed optimism about potential improvements in the shipping industry fundamentals and the benefits of tariffs [19][20] Other Important Information - The company has reinitiated share repurchase activity, buying back nearly $20 million worth of stock in 2024 [31][40] - The company expects free cash flow in the range of $40 million to $70 million for 2025, with potential to exceed $100 million in 2026 [34][52] Q&A Session Summary Question: Guidance for 2025 and macro assumptions - Management expects rubber volume increases in the mid-single digit range and additional volume growth in specialty [60][61] Question: Supply addition and competitive behavior in specialty blacks - Management highlighted conductivity as a significant change in specialty markets, particularly in EV batteries and energy storage systems [72][73] Question: Operating rates in Russia, China, and India - Management indicated that peace could lead to some normalization in supply but emphasized that local supply remains preferred [80][81] Question: Rubber volume decline and retail tire volumes - Management noted that tire imports are significantly impacting rubber carbon black demand, with U.S. tire production down [84] Question: Free cash flow allocation for share buybacks - Management stated that share buybacks will be opportunistic, depending on business cash requirements and share price [90] Question: Update on La Porte plant and earnings contribution - Management expects early quarters of 2026 to be a drag on EBITDA due to operating costs and labor costs [108] Question: Pressure from import markets - Management confirmed that there has been no let-up in import pressures impacting customers [101]