Financial Performance - Second quarter EBITDA was approximately $69 million, a sequential increase despite a roughly 5% decrease in volume[5] - Rubber segment volume increased by 3% year-over-year, driving overall portfolio resilience[23] - Specialty Carbon Black adjusted EBITDA decreased by 28.9% year-over-year to $19.9 million[29] - Adjusted net income was $18.2 million, with adjusted diluted EPS at $0.32[21] Market Trends and Outlook - Tariffs of 25% on Southeast Asian tires remain in effect, impacting replacement tires which constitute over half of the company's Rubber segment volume[13] - North American tire production capacity is expected to grow by approximately 53 million tires per year from 2025 to 2030, representing a 3.3% compound annual growth rate[16] - The company anticipates some benefit from tariffs later in 2025[43] Strategic Initiatives - The company is rationalizing 3-5 production lines to improve asset performance and reliability[19] - Capital expenditures are projected to be around $150 million[34] - Free cash flow guidance is reaffirmed at $40-$70 million for 2025[34]

Core Insights - Orion reported Q2 2025 GAAP revenue of $466.4 million, exceeding analyst expectations by $1.07 million, but Non-GAAP EPS of $0.32 fell short of the $0.33 estimate [1][2] - Adjusted EBITDA decreased by 8.4% year-over-year, reflecting ongoing demand pressures in the specialty business and challenges in high-margin segments [1][2][6] - Management lowered the full-year 2025 Adjusted EBITDA and Adjusted EPS outlook due to persistent demand softness in key end markets [1][9] Financial Performance - Q2 2025 Non-GAAP EPS was $0.32, down 22.0% from $0.41 in Q2 2024 [2] - GAAP revenue of $466.4 million represented a 2.2% decline from $477.0 million in Q2 2024 [2] - Adjusted EBITDA for Q2 2025 was $68.8 million, down from $75.1 million in Q2 2024 [2] - Net income (GAAP) fell to $9.0 million, a 56.1% decrease from $20.5 million in Q2 2024 [2][6] Business Overview - Orion is a leading global producer of carbon black, primarily used in rubber products, with a diversified product lineup serving various industries [3][4] - The company operates 14 manufacturing plants globally and has a significant R&D center in Germany [3] Strategic Focus - Orion's strategy emphasizes market leadership, innovation, and a balanced product mix between Rubber and Specialty Carbon Black segments [4] - The Rubber Carbon Black segment showed a 6.9% year-over-year volume gain, while the Specialty segment faced a 7.8% volume drop [5][6] Operational Changes - Orion plans to discontinue three to five older carbon black production lines to enhance efficiency and align production with market demand [8] - The company maintained its free cash flow target of $40–70 million for 2025, despite a net debt of $982.4 million [8] Outlook and Guidance - Management revised the 2025 Adjusted EBITDA guidance to a range of $270–290 million, down from $280–300 million [9] - Adjusted EPS is now expected to be between $1.20 and $1.45 for 2025, reflecting ongoing market challenges [9][10] - The company anticipates no significant recovery in end markets for the remainder of 2025 [9][10]

Financial Performance - Orion reported quarterly earnings of $0.32 per share, missing the Zacks Consensus Estimate of $0.36 per share, and down from $0.41 per share a year ago, representing an earnings surprise of -11.11% [1] - The company posted revenues of $466.4 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 1.25%, but down from $477 million year-over-year [2] Earnings Outlook - The current consensus EPS estimate for the coming quarter is $0.49 on revenues of $459.78 million, and for the current fiscal year, it is $1.33 on revenues of $1.82 billion [7] - The estimate revisions trend for Orion was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Chemical - Specialty industry, to which Orion belongs, is currently in the bottom 35% of over 250 Zacks industries, suggesting potential challenges for stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact investor sentiment [5]

PART I [Item 1. Financial Statements and Supplementary Data (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20and%20Supplementary%20Data%20(Unaudited)) This section presents Orion S.A.'s unaudited condensed consolidated financial statements, including statements of operations, comprehensive income, balance sheets, cash flows, and changes in stockholders' equity, along with detailed notes providing context on accounting policies, financial instruments, debt, segment information, and other financial disclosures [Condensed Consolidated Statements of Operations](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) | Metric (In millions, except per share) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------------------- | :--------------------------: | :--------------------------: | :--------------------------: | :--------------------------: | | Net sales | $466.4 | $477.0 | $944.1 | $979.9 | | Gross profit | $98.4 | $109.8 | $196.5 | $232.0 | | Income from operations | $32.1 | $41.6 | $63.3 | $94.4 | | Interest and other financial expense, net | $19.1 | $12.2 | $32.8 | $24.9 | | Net income | $9.0 | $20.5 | $18.1 | $47.2 | | Basic EPS | $0.16 | $0.35 | $0.32 | $0.81 | | Diluted EPS | $0.16 | $0.35 | $0.32 | $0.80 | [Condensed Consolidated Statements of Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) | Metric (In millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------- | :--------------------------: | :--------------------------: | :--------------------------: | :--------------------------: | | Net income | $9.0 | $20.5 | $18.1 | $47.2 | | Foreign currency translation adjustments | $(2.6) | $(8.3) | $— | $(14.7) | | Net losses on derivatives | $(2.0) | $(1.2) | $(3.5) | $(1.7) | | Other comprehensive loss | $(4.7) | $(9.4) | $(3.7) | $(16.2) | | Comprehensive income | $4.3 | $11.1 | $14.4 | $31.0 | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) | Metric (In millions) | June 30, 2025 | December 31, 2024 | | :------------------- | :-----------: | :---------------: | | Total current assets | $682.5 | $613.3 | | Total non-current assets | $1,342.4 | $1,244.0 | | Total assets | $2,024.9 | $1,857.3 | | Total current liabilities | $620.8 | $516.7 | | Total non-current liabilities | $937.6 | $865.7 | | Total liabilities and stockholders' equity | $2,024.9 | $1,857.3 | | Total stockholders' equity | $466.5 | $474.9 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | Metric (In millions) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------- | :--------------------------: | :--------------------------: | | Net cash provided by operating activities | $54.1 | $61.7 | | Net cash used in investing activities | $(71.4) | $(87.8) | | Net cash provided by financing activities | $14.0 | $23.5 | | Decrease in cash, cash equivalents and restricted cash | $(3.3) | $(2.6) | | Cash and cash equivalents at the end of the period | $42.6 | $34.2 | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) | Metric (In millions) | Balance at January 1, 2025 | Balance at June 30, 2025 | Balance at January 1, 2024 | Balance at June 30, 2024 | | :------------------- | :------------------------: | :----------------------: | :------------------------: | :----------------------: | | Total Stockholders' Equity | $474.9 | $466.5 | $478.5 | $503.9 | | Net income (6 months) | $18.1 | $18.1 | $47.2 | $47.2 | | Repurchases of Common stock (6 months) | $(24.8) | $(24.8) | $(6.8) | $(6.8) | | Dividends paid (6 months) | $(3.5) | $(3.5) | $(3.6) | $(3.6) | [Notes to the Condensed Consolidated Financial Statements (Unaudited)](index=8&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section provides detailed disclosures on the company's accounting policies, financial instruments, debt, employee benefits, income taxes, commitments, contingencies, and segment information, offering context to the condensed financial statements [Note A. Organization, Description of the Business and Summary of Significant Accounting Policies](index=9&type=section&id=Note%20A.%20Organization%2C%20Description%20of%20the%20Business%20and%20Summary%20of%20Significant%20Accounting%20Policies) - Orion S.A.'s unaudited Condensed Consolidated Financial Statements are prepared in accordance with U.S. GAAP and Article 10 of Regulation S-X, and should be read in conjunction with the Annual Report on Form 10-K for the year ended December 31, 2024[27](index=27&type=chunk) - The company adopted ASU No. **2023-09**, Income Taxes (Topic 740) Improvements to Income Tax Disclosures, on **January 1, 2025**, which did not materially impact the Consolidated Financial Statements but will require additional disclosures in the **2025** Annual Report on Form 10-K[29](index=29&type=chunk)[30](index=30&type=chunk) - The company is evaluating ASU **2024-03** and ASU **2025-01**, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures, effective for fiscal years beginning after **December 15, 2026**, which will require additional disclosures but are not expected to materially impact the Consolidated Financial Statements[31](index=31&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk) [Note B. Accounts Receivable](index=9&type=section&id=Note%20B.%20Accounts%20Receivable) | Metric (In millions) | June 30, 2025 | December 31, 2024 | | :------------------- | :-----------: | :---------------: | | Accounts receivable, net | $270.0 | $211.9 | | Expected credit losses | $(1.3) | $(1.2) | - Gross receivables sold through factoring facilities were **$125.7 million** for the three months ended June 30, 2025 (vs. **$110.8 million** in 2024) and **$228.2 million** for the six months ended June 30, 2025 (vs. **$218.4 million** in 2024) Losses on receivables sold were approximately **$1.4 million** and **$2.6 million** for the three and six months ended June 30, 2025, respectively[34](index=34&type=chunk)[35](index=35&type=chunk) [Note C. Inventories](index=10&type=section&id=Note%20C.%20Inventories) | Metric (In millions) | June 30, 2025 | December 31, 2024 | | :------------------- | :-----------: | :---------------: | | Raw materials, consumables and supplies, net | $103.8 | $103.8 | | Work in process | $— | $0.1 | | Finished goods, net | $181.9 | $186.5 | | Inventories, net | $285.7 | $290.4 | [Note D. Debt and Other Obligations](index=10&type=section&id=Note%20D.%20Debt%20and%20Other%20Obligations) | Metric (In millions) | June 30, 2025 | December 31, 2024 | | :------------------- | :-----------: | :---------------: | | Current portion of long-term debt and other financial liabilities | $342.

[Executive Summary and Business Highlights](index=1&type=section&id=Executive%20Summary%20and%20Business%20Highlights) [Second Quarter 2025 Key Highlights](index=1&type=section&id=Second%20Quarter%202025%20Key%20Highlights) Orion S.A. reported a decline in net sales, net income, and EPS for Q2 2025 compared to the prior year, with Adjusted EBITDA also decreasing. The results were in line with expectations, supported by improved sequential plant performance Q2 2025 Key Financial Metrics | Metric | Q2 2025 | Change YoY | | | :--- | :--- | :--- | :--- | | Net sales | $466.4 million | Down $10.6 million | | Net income | $9.0 million | Down $11.5 million | | Diluted EPS | $0.16 | Down $0.19 | | Adjusted EBITDA | $68.8 million | Down 8% | | Adjusted Diluted EPS | $0.32 | Down $0.09 | [Six Months 2025 Key Highlights](index=1&type=section&id=Six%20Months%202025%20Key%20Highlights) For the first six months of 2025, Orion S.A. experienced a year-over-year decrease across key financial metrics including net sales, net income, and Adjusted EBITDA, reflecting persistent market challenges 6M 2025 Key Financial Metrics | Metric | 6M 2025 | Change YoY | | | :--- | :--- | :--- | :--- | | Net sales | $944.1 million | Down $35.8 million | | Net income | $18.1 million | Down $29.1 million | | Diluted EPS | $0.32 | Down $0.48 | | Adjusted EBITDA | $135.0 million | Down 16% | | Adjusted Diluted EPS | $0.55 | Down $0.38 | [Other Strategic Highlights](index=1&type=section&id=Other%20Strategic%20Highlights) The company reported improved plant performance sequentially and announced plans to discontinue production at several carbon black lines. Free Cash Flow expectations for 2025 are being maintained - Improved plant performance sequentially[5](index=5&type=chunk) - Announced plan to discontinue, in aggregate, production of three to five carbon black lines at multiple facilities[5](index=5&type=chunk) - Maintaining Free Cash Flow expectations for 2025[5](index=5&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) CEO Corning Painter noted that Q2 results met expectations despite persistent demand headwinds from elevated tire imports and broader macro uncertainty. CFO Jeff Glajch emphasized the focus on cash flow improvement, expecting to achieve the 2025 free cash flow goal despite macro headwinds - CEO Corning Painter stated Q2 results were in line with expectations, aided by improved sequential plant performance[4](index=4&type=chunk) - Persistent demand headwinds from elevated tire imports and macro uncertainty continue to pressure key tire customers[5](index=5&type=chunk) - CFO Jeff Glajch highlighted a resolute focus on improving cash flow and expects to reach the previously stated goal of **more than $50 million** in free cash flow for 2025[7](index=7&type=chunk) [Detailed Financial Performance](index=2&type=section&id=Detailed%20Financial%20Performance) [Second Quarter 2025 Performance Overview](index=2&type=section&id=Second%20Quarter%202025%20Performance%20Overview) Orion S.A.'s second quarter 2025 results showed a mixed performance with volume growth driven by Rubber Carbon Black, but overall net sales and profitability declined due to lower oil prices, reduced Specialty Carbon Black volume, and unfavorable raw material pass-through timing [Consolidated Financial Results (Q2 2025)](index=2&type=section&id=Consolidated%20Financial%20Results%20(Q2%202025)) Q2 2025 Consolidated Financials (YoY Change) | Metric | 2025 (Millions) | 2024 (Millions) | Delta (Millions) | YoY Change | | :--- | :--- | :--- | :--- | :--- | | Volume (kmt) | 240.0 | 233.1 | 6.9 | 3.0% | | Net sales | $466.4 | $477.0 | ($10.6) | (2.2)% | | Gross profit | $98.4 | $109.8 | ($11.4) | (10.4)% | | Income from operations | $32.1 | $41.6 | ($9.5) | (22.8)% | | Net income | $9.0 | $20.5 | ($11.5) | (56.1)% | | Adjusted EBITDA | $68.8 | $75.1 | ($6.3) | (8.4)% | | Diluted EPS | $0.16 | $0.35 | ($0.19) | (54.3)% | - Net sales decreased by **$10.6 million (2.2%)** year over year, primarily due to lower oil prices, partially offset by higher Rubber Carbon Black segment volume, favorable foreign exchange, and higher cogeneration[7](index=7&type=chunk) - Gross profit decreased by **$11.4 million (10.4%)** year over year, mainly due to lower volume in the Specialty Carbon Black segment, unfavorable timing from raw material cost pass-through, and unfavorable customer/regional mix in Rubber Carbon Black[7](index=7&type=chunk) - Adjusted EBITDA decreased by **$6.3 million (8.4%)** year over year, driven by lower Specialty Carbon Black volume, unfavorable price, and raw material pass-through timing, partially offset by higher cogeneration[8](index=8&type=chunk) [Specialty Carbon Black Segment (Q2 2025)](index=3&type=section&id=Specialty%20Carbon%20Black%20Segment%20(Q2%202025)) Q2 2025 Specialty Carbon Black Segment (YoY Change) | Metric | 2025 (Millions) | 2024 (Millions) | Delta (Millions) | YoY Change | | :--- | :--- | :--- | :--- | :--- | | Volume (kmt) | 58.0 | 62.9 | (4.9) | (7.8)% | | Net sales | $158.1 | $165.5 | ($7.4) | (4.5)% | | Gross profit | $32.6 | $39.5 | ($6.9) | (17.5)% | | Adjusted EBITDA | $19.9 | $28.0 | ($8.1) | (28.9)% | - Volume declined by **7.8%** year over year, primarily due to lower demand in Europe, Middle East, Africa, and the Americas[11](index=11&type=chunk) - Adjusted EBITDA decreased by **28.9%** year over year, mainly due to lower volume and unfavorable price and product mix[11](index=11&type=chunk) [Rubber Carbon Black Segment (Q2 2025)](index=3&type=section&id=Rubber%20Carbon%20Black%20Segment%20(Q2%202025)) Q2 2025 Rubber Carbon Black Segment (YoY Change) | Metric | 2025 (Millions) | 2024 (Millions) | Delta (Millions) | YoY Change | | :--- | :--- | :--- | :--- | :--- | | Volume (kmt) | 182.0 | 170.2 | 11.8 | 6.9% | | Net sales | $308.3 | $311.5 | ($3.2) | (1.0)% | | Gross profit | $65.8 | $70.3 | ($4.5) | (6.4)% | | Adjusted EBITDA | $48.9 | $47.1 | $1.8 | 3.8% | - Volume increased by **6.9%** year over year, driven by higher demand in the Asia Pacific and Americas regions[12](index=12&type=chunk) - Adjusted EBITDA increased by **3.8%** year over year, primarily due to lower fixed costs and higher cogeneration, partially offset by unfavorable timing from raw material cost pass-through[12](index=12&type=chunk) [Six Months 2025 Performance Overview](index=3&type=section&id=Six%20Months%202025%20Performance%20Overview) For the first six months of 2025, Orion S.A. experienced a decline in consolidated net sales and profitability, primarily due to lower oil prices and reduced Specialty Carbon Black volume, despite volume growth in the Rubber Carbon Black segment [Consolidated Financial Results (6M 2025)](index=3&type=section&id=Consolidated%20Financial%20Results%20(6M%202025)) 6M 2025 Consolidated Financials (YoY Change) | Metric | 2025 (Millions) | 2024 (Millions) | Delta (Millions) | YoY Change | | :--- | :--- | :--- | :--- | :--- | | Volume (kmt) | 491.7 | 481.5 | 10.2 | 2.1% | | Net sales | $944.1 | $979.9 | ($35.8) | (3.7)% | | Gross profit | $196.5 | $232.0 | ($35.5) | (15.3)% | | Income from operations | $63.3 | $94.4 | ($31.1) | (32.9)% | | Net income | $18.1 | $47.2 | ($29.1) | (61.7)% | | Adjusted EBITDA | $135.0 | $160.4 | ($25.4) | (15.8)% | | Diluted EPS | $0.32 | $0.80 | ($0.48) | (60.0)% | - Net sales decreased by **$35.8 million (3.7%)** year over year, primarily due to the pass-through of lower oil prices and lower Specialty Carbon Black segment volume, partially offset by higher Rubber Carbon Black volume and cogeneration[13](index=13&type=chunk)[15](index=15&type=chunk) - Adjusted EBITDA decreased by **$25.4 million (15.8%)** year over year, mainly due to lower Specialty Carbon Black volume, unfavorable timing from raw material cost pass-through, and unfavorable customer/regional mix in Rubber Carbon Black, partially offset by higher cogeneration[16](index=16&type=chunk) [Specialty Carbon Black Segment (6M 2025)](index=4&type=section&id=Specialty%20Carbon%20Black%20Segment%20(6M%202025)) 6M 2025 Specialty Carbon Black Segment (YoY Change) | Metric | 2025 (Millions) | 2024 (Millions) | Delta (Millions) | YoY Change | | :--- | :--- | :--- | :--- | :--- | | Volume (kmt) | 119.9 | 126.2 | (6.3) | (5.0)% | | Net sales | $318.8 | $336.4 | ($17.6) | (5.2)% | | Gross profit | $72.6 | $81.2 | ($8.6) | (10.6)% | | Adjusted EBITDA | $45.3 | $55.9 | ($10.6) | (19.0)% | - Volume decreased by **5.0%** year over year, primarily due to lower demand in Europe, Middle East, Africa, and the Americas[17](index=17&type=chunk) - Adjusted EBITDA decreased by **19.0%** year over year, mainly due to lower volume and unfavorable price and product mix[17](index=17&type=chunk) [Rubber Carbon Black Segment (6M 2025)](index=4&type=section&id=Rubber%20Carbon%20Black%20Segment%20(6M%202025)) 6M 2025 Rubber Carbon Black Segment (YoY Change) | Metric | 2025 (Millions) | 2024 (Millions) | Delta (Millions) | YoY Change | | :--- | :--- | :--- | :--- | :--- | | Volume (kmt) | 371.8 | 355.3 | 16.5 | 4.6% | | Net sales | $625.3 | $643.5 | ($18.2) | (2.8)% | | Gross profit | $123.9 | $150.8 | ($26.9) | (17.8)% | | Adjusted EBITDA | $89.7 | $104.5 | ($14.8) | (14.2)% | - Volume increased by **4.6%** year over year, primarily due to higher demand in the Asia Pacific and Americas regions[18](index=18&type=chunk) - Adjusted EBITDA decreased by **14.2%** year over year, mainly driven by unfavorable timing from raw material cost pass-through and unfavorable customer and regional mix[18](index=18&type=chunk) [Outlook and Guidance](index=5&type=section&id=Outlook%20and%20Guidance) [2025 Financial Guidance](index=5&type=section&id=2025%20Financial%20Guidance) Orion S.A. narrowed its 2025 guidance ranges for Adjusted EBITDA and Adjusted EPS, citing a surge in North American tire imports and revised macro assumptions for the second half of the year. The company reaffirmed its Free Cash Flow guidance - Revised 2025 Adjusted EBITDA guidance range: **$270 million – $290 million**[21](index=21&type=chunk) - Corresponding Adjusted EPS guidance range: **$1.20 – $1.45**[21](index=21&type=chunk) - Reaffirmed Free Cash Flow guidance range: **$40 million – $70 million**[21](index=21&type=chunk) - Guidance adjustments factor in a surge of tire imports into North America during Q2 and revised macro assumptions for H2 2025[21](index=21&type=chunk) [Corporate Information and Disclosures](index=5&type=section&id=Corporate%20Information%20and%20Disclosures) [About Orion S.A.](index=5&type=section&id=About%20Orion%20S.A.) Orion S.A. is a leading global specialty chemical company specializing in carbon black, used in various high-performance applications like tires, coatings, and batteries. With a history spanning over 160 years, Orion operates 14 plants worldwide and focuses on sustainable solutions - Orion S.A. (NYSE: OEC) is a leading global supplier of carbon black, a solid form of carbon produced as powder or pellets[24](index=24&type=chunk) - Carbon black is used for tires, coatings, ink, batteries, plastics, and other specialty applications, providing tint, color, reinforcement, electrical conductivity, durability, and UV protection[24](index=24&type=chunk) - The company has innovation centers on three continents and produces carbon black at **14 plants worldwide**, with a corporate lineage over **160 years** old[24](index=24&type=chunk) [Cautionary Statement Regarding Forward-Looking Statements](index=5&type=section&id=Cautionary%20Statement%20Regarding%20Forward-Looking%20Statements) This section outlines the inherent uncertainties and risks associated with forward-looking statements made in the report, emphasizing that actual results may differ materially due to various factors including economic conditions, operational risks, market demand, raw material costs, and geopolitical developments. Investors are cautioned against undue reliance on these statements - The document contains forward-looking statements regarding financial condition, results of operations, and business, subject to known and unknown risks and uncertainties[25](index=25&type=chunk) - Key factors that could cause actual results to differ include negative economic conditions, operational risks in chemical manufacturing, dependence on major customers/suppliers, geopolitical changes, raw material volatility, and regulatory compliance[27](index=27&type=chunk) - The company undertakes no obligation to publicly update or revise any forward-looking statement, except as required by applicable law[28](index=28&type=chunk) [Non-GAAP Financial Measures Explanation](index=7&type=section&id=Non-GAAP%20Financial%20Measures%20Explanation) Orion S.A. presents several non-GAAP financial measures, including Adjusted Net Income, Adjusted EBITDA, Adjusted Diluted EPS, Free Cash Flow, and Net Debt, to provide additional insights into operational performance and facilitate period-to-period comparisons. These measures are used by management for evaluating performance and capital allocation, but are not substitutes for GAAP measures - Non-GAAP measures presented include Adjusted Net Income, Adjusted EBITDA, Adjusted Diluted EPS, Free Cash Flow, and Net Debt[31](index=31&type=chunk) - Adjusted EBITDA is used by the Chief Operating Decision Maker (CODM) to evaluate operating performance and make capital allocation decisions, as it excludes items less bearing on core business performance[33](index=33&type=chunk) - These non-GAAP measures are considered useful additions to GAAP measures for facilitating operating performance comparisons and clarifying business trends, but should not be considered in isolation or as substitutes for GAAP indicators[34](index=34&type=chunk)[35](index=35&type=chunk) - Reconciliation of forward-looking non-GAAP measures (Adjusted EBITDA and Adjusted Diluted EPS outlook for 2025) to GAAP is not provided due to the inability to predict certain significant items without unreasonable efforts[36](index=36&type=chunk) [Condensed Consolidated Financial Statements (Unaudited)](index=9&type=section&id=Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) [Condensed Consolidated Statements of Operations](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The unaudited Condensed Consolidated Statements of Operations provide a detailed breakdown of revenues, costs, and profits for the three and six months ended June 30, 2025, compared to the same periods in 2024, showing significant declines in net income and EPS Condensed Consolidated Statements of Operations (Unaudited) | (In millions, except share and per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net sales | $466.4 | $477.0 | $944.1 | $979.9 | | Cost of sales | 368.0 | 367.2 | 747.6 | 747.9 | | Gross profit | 98.4 | 109.8 | 196.5 | 232.0 | | Income from operations | 32.1 | 41.6 | 63.3 | 94.4 | | Net income | $9.0 | $20.5 | $18.1 | $47.2 | | Diluted EPS | $0.16 | $0.35 | $0.32 | $0.80 | [Condensed Consolidated Balance Sheets](index=10&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The unaudited Condensed Consolidated Balance Sheets present the company's financial position as of June 30, 2025, compared to December 31, 2024, indicating an increase in total assets and liabilities, with a slight decrease in total stockholders' equity Condensed Consolidated Balance Sheets (Unaudited) | (In millions, except share amounts) | June 30, 2025 | December 31, 2024 | | :---------------------------------- | :------------ | :---------------- | | Total current assets | $682.5 | $613.3 | | Total non-current assets | $1,342.4 | $1,244.0 | | **Total assets** | **$2,024.9** | **$1,857.3** | | Total current liabilities | $620.8 | $516.7 | | Total non-current liabilities | $937.6 | $865.7 | | **Total liabilities** | **$1,558.4** | **$1,382.4** | | Total stockholders' equity | $466.5 | $474.9 | | **Total liabilities and stockholders' equity** | **$2,024.9** | **$1,857.3** | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2025, show a decrease in net cash provided by operating activities and net cash used in investing activities, alongside a decrease in net cash provided by financing activities compared to the prior year Condensed Consolidated Statements of Cash Flows (Unaudited) | (In millions) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $54.1 | $61.7 | | Net cash used in investing activities | ($71.4) | ($87.8) | | Net cash provided by financing activities | $14.0 | $23.5 | | Decrease in cash, cash equivalents and restricted cash | ($3.3) | ($2.6) | | Cash and cash equivalents at the end of the period | $42.6 | $34.2 | [Reconciliation of Non-GAAP to GAAP Financial Measures](index=12&type=section&id=Reconciliation%20of%20Non-GAAP%20to%20GAAP%20Financial%20Measures) [Reconciliation of Net Income to Adjusted EBITDA](index=12&type=section&id=Reconciliation%20of%20Net%20Income%20to%20Adjusted%20EBITDA) This section provides a reconciliation of Net Income to Adjusted EBITDA for the three and six months ended June 30, 2025 and 2024, detailing the adjustments made for income tax expense, interest, depreciation, amortization, and other non-recurring items Reconciliation of Net Income to Adjusted EBITDA (Unaudited) | (In millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------------------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net income | $9.0 | $20.5 | $18.1 | $47.2 | | Add back Income tax expense | 4.6 | 9.1 | 13.5 | 22.6 | | Add back Interest and other financial expense, net | 19.1 | 12.2 | 32.8 | 24.9 | | Add back Depreciation of property, plant and equipment and amortization of intangible assets and right of use assets | 32.0 | 30.3 | 63.5 | 59.2 | | **Adjusted EBITDA** | **$68.8** | **$75.1** | **$135.0** | **$160.4** | [Reconciliation of Total Debt to Net Debt](index=12&type=section&id=Reconciliation%20of%20Total%20Debt%20to%20Net%20Debt) This reconciliation details the calculation of Net Debt as of June 30, 2025, by adjusting total debt from the consolidated balance sheet for deferred debt issuance costs and subtracting cash and cash equivalents Reconciliation of Total Debt to Net Debt (Unaudited) | (In millions) | June 30, 2025 | | :------------------------------------------ | :------------ | | Current portion of long term debt and other financial liabilities | $342.0 | | Long-term debt, net | $680.2 | | Total debt as per Consolidated Balance Sheets | $1,022.2 | | Add: Deferred debt issuance costs - Term loans | $2.8 | | Less: Cash and cash equivalents | $42.6 | | **Net debt** | **$982.4** | [Reconciliation of Net Income to Adjusted Net Income and Diluted EPS to Adjusted Diluted EPS](index=12&type=section&id=Reconciliation%20of%20Net%20Income%20to%20Adjusted%20Net%20Income%20and%20Diluted%20EPS%20to%20Adjusted%20Diluted%20EPS) This reconciliation provides a detailed breakdown of adjustments from Net Income to Adjusted Net Income and Diluted EPS to Adjusted Diluted EPS for the three and six months ended June 30, 2025 and 2024, including items like long-term incentive plans, intangible asset amortization, and foreign exchange rate impacts Reconciliation of Net Income to Adjusted Net Income and Diluted EPS to Adjusted Diluted EPS (Unaudited) | (In millions, except share and per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net income | $9.0 | $20.5 | $18.1 | $47.2 | | add back long-term incentive plan | 3.6 | 3.0 | 6.3 | 6.5 | | add back intangible assets amortization | 1.9 | 1.8 | 3.7 | 3.6 | | add back foreign exchange rate impacts | 6.7 | 0.4 | 6.8 | 0.7 | | Tax effect on add back items at estimated tax rate | (3.9) | (1.6) | (5.5) | (3.5) | | **Adjusted net income** | **$18.2** | **$24.5** | **$31.0** | **$55.3** | | Diluted Earnings per share | $0.16 | $0.35 | $0.32 | $0.80 | | **Adjusted Diluted EPS** | **$0.32** | **$0.41** | **$0.55** | **$0.93** |

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]