Orion Engineered Carbons(US:OEC)2024-05-02 20:47Financial Performance - Net sales for Q1 2024 increased by $2.2 million, or 0.4%, to $502.9 million compared to Q1 2023, driven by higher volume in both segments [83]. - Gross profit for Q1 2024 decreased by $14.2 million, or 10.4%, to $122.2 million year over year, primarily due to higher fixed costs and lower cogeneration pricing in Europe [86]. - Adjusted EBITDA for Q1 2024 decreased by $15.8 million, or 15.6%, to $85.3 million compared to Q1 2023, influenced by higher fixed costs and lower cogeneration pricing [92]. - Gross profit per metric ton decreased by 15.8% to $491.9 in Q1 2024, driven by lower margins in both segments [86]. - Net income for Q1 2024 decreased by $15.6 million, or 36.9%, to $26.7 million compared to Q1 2023 [82]. - Specialty Carbon Black segment net sales increased by $8.9 million, or 5.5%, to $170.9 million in Q1 2024 [94]. - Rubber Carbon Black segment net sales decreased by $6.7 million, or 2.0%, to $332.0 million in Q1 2024 [94]. Volume and Sales Growth - Volume for Q1 2024 increased by 14.9 kmt to 248.4 kmt year over year, primarily due to higher volume in both segments [84]. - Net sales for the three months ended March 31, 2024, increased by $8.9 million, or 5.5%, year over year, to $170.9 million, driven by higher volume [96]. - Volume for the same period increased by 10.3 kmt, or 19.4%, year over year, to 63.3 kmt, due to recovery across all regions and end markets [96]. Operating Expenses and Cash Flow - Selling, general and administrative expenses increased by $3.8 million, or 6.6%, to $61.5 million in Q1 2024 due to higher personnel costs [87]. - Net cash provided by operating activities was $32.4 million for the three months ended March 31, 2024, down from $108.1 million in the same period of 2023 [105][106]. - Net cash used in investing activities amounted to $33.1 million for the three months ended March 31, 2024, primarily for safety and maintenance investments [107]. Liquidity and Debt - Total liquidity as of March 31, 2024, was $261.7 million, including cash and equivalents of $43.9 million [115]. - Net working capital increased from $344.4 million as of December 31, 2023, to $363.4 million as of March 31, 2024, driven by higher accounts receivable [118][120]. - Net debt as of March 31, 2024, was $773.1 million, with a net leverage ratio of 2.44x [115]. Stock Repurchase and Legal Matters - The company has approved a new stock repurchase program allowing the purchase of up to approximately 6.9 million shares through June 2027, supplementing an existing program authorizing $50 million in stock repurchases [132]. - No shares of common stock were repurchased during the three months ended March 31, 2024 [134]. - The company is involved in various legal proceedings, but believes the aggregate results will not materially affect its financial condition [129]. Risk Factors - There have been no material changes to risk factors associated with the business as previously disclosed in the Annual Report for the year ended December 31, 2023 [131]. - The company faces risks from geopolitical events, including the Russia-Ukraine war and the Hamas-Israel conflict, which may impact energy costs and raw material availability [21]. - The company is exposed to fluctuations in foreign currency exchange and interest rates, which could affect its financial performance [21]. - The company is subject to environmental, health, and safety laws, which may incur compliance costs and liabilities [21]. - The company has not reported any defaults upon senior securities [135]. - The company is committed to maintaining adequate insurance coverage to mitigate potential risks [21].