Orion S.A. — Third Quarter 2026 Earnings Summary

Financial Performance

• Net sales reached $473 million for the quarter, a 5% increase year-over-year, driven by a 13% favorable pass-through effect from higher oil prices, partially offset by 5% lower volumes and 2% lower pricing.
• Consolidated net loss was $3 million compared to a $67.1 million net loss in the prior year quarter; year-to-date net loss was $11.2 million versus $49.0 million in 2025.
• Adjusted EBITDA was $67 million for the quarter, an increase from $57.7 million in the prior year; year-to-date Adjusted EBITDA reached $171 million.
• Third quarter Adjusted EBITDA included an approximate $17 million net benefit from the timing of European emission allowances.
• Operating cash flow was $58 million and free cash flow was $46 million for the quarter, despite higher average feedstock costs.
• Net debt stood at $918 million, resulting in a net debt-to-trailing twelve month Adjusted EBITDA ratio of 4.1x, up from 3.7x at year-end 2025.
• Quarter-end liquidity was $193 million.

Guidance and Future Outlook

• Tightened 2026 Adjusted EBITDA guidance range to $190 million to $200 million, raising the midpoint to reflect strong year-to-date results and above-normal seasonal softness.
• Anticipates generating positive free cash flow for the full year 2026 despite higher feedstock costs.
• Expects to deliver improved Adjusted EBITDA in 2027, coupled with an approximate $20 million capital expenditure reduction, to drive positive free cash flow again.
• Plans to reduce full-year capital expenditures by $70 million.
• Management anticipates delivering improved Adjusted EBITDA in 2027, though global oil prices have not moderated as anticipated.

Business Segments and Product Lines

• Specialty Carbon Black: Net sales increased 4% year-over-year to $166.4 million; Adjusted EBITDA rose 18% to $25.4 million. Sales growth was driven by a 6% favorable pass-through from oil prices and improved mix, offset by a 7% volume decline in EMEA and Americas due to destocking.
• Rubber Carbon Black: Net sales increased 5% year-over-year to $306.4 million; Adjusted EBITDA rose 15% to $41.4 million. Growth was driven by a 16% favorable pass-through from oil prices, partially offset by 4% lower volumes, 4% lower pricing from annual contracts, and adverse regional mix.
• Formulaic pass-through mechanisms continue to perform well, mitigating feedstock volatility.
• Fixed cost performance is strong, with the company on track to exceed full-year gross cost savings expectations.
• Management is evaluating the overall production network with a focus on underperforming assets.

Market and Competitive Landscape

• Trends in Western regions moderated during the third quarter, particularly within the polymers end market where customers exhibited destocking behavior.
• Moderating tire imports have not yet led to a tangible recovery in local tire manufacturing in key North American and European regions.
• The company operates 14 plants worldwide with innovation centers on three continents.

Risks and Challenges

• Risks include negative or uncertain worldwide economic conditions, geopolitical tensions (including conflicts in the Middle East, Russia-Ukraine, and China-Taiwan), and supply disruptions.
• Volatility in carbon black oil feedstock and natural gas pricing could adversely affect production volumes, margins, and results of operations.
• Operational risks inherent in chemical manufacturing, including technical difficulties, severe weather, and natural disasters.
• Dependence on major customers and suppliers, and potential impacts from regulatory changes regarding emissions and environmental laws.
• Risks associated with financial leverage, debt covenants, and the ability to service debt.

Management Commentary and Tone

• CEO Corning Painter stated that third-quarter results were "particularly encouraging" given the macro backdrop and feedstock volatility, citing the organization's tenacity and business resilience.
• Painter noted that robust free cash flow underscores success in driving improved financial metrics during trough-like industry conditions.
• CFO Jon Puckett emphasized that positive cash flow generation for debt reduction is the highest financial priority and expressed confidence in generating free cash flow in 2026 despite higher feedstock costs.
• Management remains confident in delivering on full-year earnings expectations despite moderating tire imports.

Other Key Points

• The company maintained a strong year-to-date global safety performance with no lost time accidents.
• Structural working capital improvements contributed $28 million of cash in the quarter.
• Capital expenditures were $12 million in the third quarter, a $14 million sequential reduction.
• The company has a history of paying dividends, with $3.5 million paid in the nine months ended September 30, 2026.
• The company repurchased $0.8 million of common stock in the nine months ended September 30, 2026.
• A conference call was held on November 5, 2026, with a replay available on November 19, 2026.