Orion Engineered Carbons(US:OEC)2025-11-04 22:03Financial Performance - For the three months ended September 30, 2025, net sales decreased by $12.5 million, or 2.7%, year over year to $450.9 million, primarily due to lower oil prices and unfavorable product mix [108]. - Gross profit for the three months ended September 30, 2025 was $85.6 million, a decrease of $21.9 million, or 20.4%, compared to $107.5 million in the same period of 2024 [104]. - Adjusted EBITDA for the three months ended September 30, 2025 was $57.7 million, a decrease of $22.4 million, or 28.0%, compared to $80.1 million in the same period of 2024 [107]. - Net income (loss) for the three months ended September 30, 2025 was $(67.1) million, compared to $(20.2) million in the same period of 2024, representing a decline of $46.9 million [107]. - Comprehensive loss for Q3 2025 increased by $47.3 million year over year to $67.4 million, with net loss decreasing by $46.9 million [122]. - Adjusted EBITDA for the nine months ended September 30, 2025 decreased by $47.8 million, or 19.9%, year over year to $192.7 million, mainly due to lower volume in the Specialty Carbon Black segment [140]. - Gross profit for the nine months ended September 30, 2025 decreased by $57.4 million, or 16.9%, year over year to $282.1 million, driven by unfavorable product mix and raw material cost timing [130]. Expenses and Costs - Selling, general and administrative expenses for the three months ended September 30, 2025 were $57.5 million, a decrease of $0.4 million, or 0.7%, compared to $57.9 million in the same period of 2024 [104]. - Cost of sales for Q3 2025 increased by $9.4 million, or 2.6%, year over year to $365.3 million, driven by higher volume and fixed costs [110]. - Selling, general and administrative expenses for Q3 2025 decreased by $0.4 million, or 0.7%, year over year to $57.5 million, mainly due to lower distribution costs [112]. - Interest and other financial expense, net for the three months ended September 30, 2025 was $14.4 million, a decrease of $1.5 million, or 9.4%, compared to $15.9 million in the same period of 2024 [107]. - Research and development costs for the three months ended September 30, 2025 were $6.9 million, slightly down from $7.0 million in the same period of 2024 [104]. Impairments and Losses - Goodwill impairment for the three months ended September 30, 2025 was $80.8 million, with no comparable amount in the same period of 2024 [104]. - The company reported a loss due to misappropriation of assets of $(7.3) million for the three months ended September 30, 2025, compared to a recovery of $60.7 million in the same period of 2024, representing a decline of $68.0 million [104]. - A non-cash goodwill impairment charge of $80.8 million was recognized in Q3 2025 due to decreased trading prices and demand impacts from low-value tire imports [118][135]. Sales and Volume - Volume for the three months ended September 30, 2025 increased by 12.3 kmt, year over year, to 237.5 kmt, primarily due to higher shipments in both segments [108]. - Net sales for the nine months ended September 30, 2025 decreased by $48.3 million, or 3.3%, year over year to $1,395.0 million, primarily due to lower oil prices [128]. - Net sales for the nine months ended September 30, 2025 decreased by $28.2 million, or 3.0%, year over year to $916.2 million, mainly due to the pass-through of lower oil prices [152]. Cash Flow and Liquidity - Net cash provided by operating activities for the nine months ended September 30, 2025 was $122.9 million, reflecting significant changes in working capital [158]. - Net cash used in investing activities for the nine months ended September 30, 2025 amounted to $112.3 million, primarily for safety, maintenance, and growth investments [159]. - As of September 30, 2025, total liquidity was $249.2 million, including cash and equivalents of $51.3 million and $165.8 million availability under the revolving credit facility [169]. - The company plans to finance capital expenditures with cash generated from operating activities and existing debt capacity, with no material commitments outside ordinary business [175]. - The company had a stock buyback of $24.8 million during the nine months ended September 30, 2025, partially offsetting outflows from scheduled debt repayments and dividend distributions [163]. - The company anticipates that future operating cash flows and existing credit facilities will be sufficient to finance planned capital expenditures and address working capital needs [168]. Risks and Legal Proceedings - The company is involved in various legal proceedings, including product liability and employment-related claims, which may materially affect operating results and cash flow in specific periods [187]. - There have been no material changes to the risk factors associated with the business as previously disclosed in the Annual Report for the year ended December 31, 2024 [189]. - The company faces risks related to financial leverage, including the restrictive effects of covenants in debt instruments and potential downgrades by credit rating agencies [186]. - The company is subject to fluctuations in foreign currency exchange rates and interest rates, which may impact financial performance [186]. - The company must manage the adequacy of its insurance coverage and potential impairments or write-offs of certain assets [186]. - The ability to pay dividends on common stock at historical rates is uncertain due to various financial risks [186]. - The company is exposed to risks associated with recruiting and retaining key management and personnel, which could affect operational stability [186]. - The company must navigate changes in international and local economic conditions, including inflation or deflation, which may disrupt operations [186]. - The company is subject to changes in European Union regulations that could impact its ability to market and sell products [186]. - The company has ongoing challenges related to protecting its intellectual property rights and managing tax obligations [186].