Orion S.A. — Second Quarter 2026 Earnings Summary

Financial Performance

• Net sales for the quarter ended June 30, 2026, were $500.9 million, a 7% increase from $466.4 million in the prior year period.
• Consolidated net income was $1.8 million, down from $9.0 million in the prior year quarter.
• Adjusted EBITDA was $58.2 million, a 26% sequential improvement from the first quarter, compared to $68.8 million in the prior year quarter.
• Operating cash flow was $27 million, and free cash flow was $2 million for the quarter.
• Net debt was $960.7 million at quarter end, resulting in a net debt-to-trailing twelve-month Adjusted EBITDA ratio of 4.4x.
• Liquidity ended the quarter at $178 million.
• For the six months ended June 30, 2026, net sales were $960.4 million (up from $944.1 million), and net loss was $8.1 million (compared to net income of $18.1 million).
• Adjusted EBITDA for the six months ended June 30, 2026, was $104.3 million (down from $135.0 million).

Guidance and Future Outlook

• Reaffirmed 2026 Adjusted EBITDA guidance range of $170 million to $210 million.
• Increased full-year free cash flow guidance range to a free cash outflow of $10 million to a positive free cash flow of $20 million, representing a $43 million midpoint improvement over prior guidance.
• On track for full-year capital expenditures of $90 million.
• On track for full-year cost saving initiatives delivering $20 million in benefits.
• Management expects easing of global oil prices in the second half of the year.

Business Segments and Product Lines

• Specialty Carbon Black: Net sales increased 17% year-over-year to $184.8 million, driven by 8% higher pricing, 4% favorable product mix, 3% higher volumes, and 2% favorable foreign exchange. Adjusted EBITDA increased 96% year-over-year to $39.0 million.
• Rubber Carbon Black: Net sales increased 3% year-over-year to $316.1 million, driven by 5% higher pricing (including 9% benefit from oil price pass-through), partially offset by 3% lower volumes and 3% lower customer mix. Adjusted EBITDA decreased 61% year-over-year to $19.2 million due to lower contractual pricing, unfavorable customer mix, and an intentional inventory draw.
• Specialty segment earnings were led by the EMEA region, while demand softened in Asia due to curtailed restocking activity.
• Rubber segment demand reflected softer tire end-market build rates, impacted by elevated imports, residual surplus channel inventories, and modest sell-through trends.

Market and Competitive Landscape

• Demand trends strengthened late in the first quarter and continued throughout the second quarter, particularly in higher-margin Western regions.
• The company notes that recently implemented duties in the EU and 232 tariffs in the U.S. are expected to support local tire manufacturing rates in key western regions.
• Formulaic pass-through mechanisms are performing effectively to offset higher oil-derived feedstock costs.

Risks and Challenges

• Volatile geopolitical macro environment, including the Middle East conflict, Russia-Ukraine war, and tensions between China and Taiwan.
• Disruptions in supply and volatility in pricing of carbon black oil feedstock and natural gas.
• Elevated imports, residual surplus channel inventories, and modest tire end-market sell-through trends impacting the Rubber segment.
• Lower contractual pricing agreements for 2026 in the Rubber segment.
• Risks related to foreign currency translation, trade barriers, and regulatory changes.

Management Commentary and Tone

• CEO Corning Painter stated that the Q2 Adjusted EBITDA reflects the inherent resilience of the business and that the company remains on track to achieve full-year earnings expectations.
• Management highlighted the team's responsiveness, agility, and dedication to execution amidst a dynamic backdrop.
• CFO Jon Puckett emphasized that working capital initiatives were the key driver of cash flow performance, offsetting headwinds from higher oil prices.
• Management indicated that positive cash flow generation for debt reduction remains the most important financial priority.

Other Key Points

• Exceptional year-to-date global safety performance.
• Robust Specialty segment earnings led by the EMEA region.
• Working capital initiatives contributed $4 million to cash flow in the quarter.
• Capital expenditures for the quarter were $25 million, $11 million less than the prior quarter.
• The company maintains a localized supply chain to respond to customer needs.
• Conference call scheduled for August 6, 2026, at 8:30 a.m. EST.