Orion S.A.

Previous wording

The following discussion and analysis summarizes the significant factors affecting our results of operations and financial condition during the three and nine months ended September 30, 2024 and 2023 and should be read in conjunction with the information included under Item 1. Financial Statements and Supplementary Data (Unaudited) elsewhere in this report. We prepare our financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”).

Current wording

The following discussion and analysis summarizes the significant factors affecting our results of operations and financial condition during the three months ended March 31, 2025 and 2024 and should be read in conjunction with the information included under Item 1. Financial Statements and Supplementary Data (Unaudited) elsewhere in this report. We prepare our financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”).

Previous wording

Adjusted EBITDA is used by our chief operating decision maker (“CODM”) to evaluate our operating performance and to make decisions regarding allocation of capital, because it excludes the effects of items that have less bearing on the performance of our underlying core business. We use this measure, together with other measures of performance under GAAP, to compare the relative performance of operations in planning, budgeting and reviewing our business. We believe these measures are useful measures of financial performance in addition to Net income, Income from operations and other profitability measures under GAAP, because they facilitate operating performance comparisons from period to period. By eliminating potential differences in results of operations between periods caused by factors such as depreciation and amortization, historic cost and age of assets, financing and capital structures and taxation positions or regimes, we believe that Adjusted EBITDA provides a useful additional basis for evaluating and comparing the current performance of the underlying operations. In addition, we believe these non-GAAP measures aid investors by providing additional insight into our operational performance and help clarify trends affecting our business.

Current wording

Our operations are managed by senior executives who report to our Chief Executive Officer (“CEO”), the chief operating decision maker (“CODM”). Adjusted EBITDA is used by our CODM to evaluate our operating performance and to make decisions regarding allocation of capital, because it excludes the effects of items that have less bearing on the performance of our underlying core business. We use this measure, together with other measures of performance under GAAP, to compare the relative performance of operations in planning, budgeting and reviewing our business. We believe these measures are useful measures of financial performance in addition to Net income, Income from operations and other profitability measures under GAAP, because they facilitate operating performance comparisons from period to period. By eliminating potential differences in results of operations between periods caused by factors such as depreciation and amortization, historic cost and age of assets, financing and capital structures and taxation positions or regimes, we believe that Adjusted EBITDA provides a useful additional basis for evaluating and comparing the current performance of the underlying operations. In addition, we believe these non-GAAP measures aid investors by providing additional insight into our operational performance and help clarify trends affecting our business.

Previous wording

The following table presents reconciliation of Net income (loss) to Adjusted EBITDA:

Current wording

The following table presents reconciliation of Net income to Adjusted EBITDA:

Previous wording

Net sales for the three months ended September 30, 2024 decreased by $2.8 million, or 0.6%, to $463.4 million, year over year, primarily driven by lower volume, partially offset by the favorable pass-through effect of oil prices.

Current wording

Net sales for the three months ended March 31, 2025 decreased by $25.2 million, or 5.0%, to $477.7 million, year over year, primarily due to lower oil price and unfavorable foreign exchange rate impact. Those were partially offset by higher volume in Rubber Carbon Black segment.

Previous wording

Cost of sales for the three months ended September 30, 2024 decreased by$0.1 million year over year.

Current wording

Cost of sales for the three months ended March 31, 2025 decreased marginally by$1.1 million, or 0.3%, to$379.6 million, year over year.

Previous wording

Gross profit for the three months ended September 30, 2024 decreased by $2.7 million, or 2.5%, to $107.5 million, year over year. The decrease was driven primarily by higher fixed costs.

Current wording

Gross profit for the three months ended March 31, 2025 decreased by $24.1 million, or 19.7%, to $98.1 million, year over year. The decrease was driven primarily by unplanned downtime, unfavorable timing from the pass-through of raw material costs and unfavorable foreign exchange rate impact.

Previous wording

For the three months ended September 30, 2024, the Company recognized Loss before earnings in affiliated companies and income taxes of $31.2 million, compared to Income before earnings in affiliated companies and income taxes of $35.0 million for the three months ended September 30, 2023.

Current wording

For the three months ended March 31, 2025, the Company recognized Income before earnings in affiliated companies and income taxes of $17.5 million, compared to Income before earnings in affiliated companies and income taxes of $40.1 million for the three months ended March 31, 2024.

Previous wording

The income tax benefit for the three months ended September 30, 2024 was $10.8 million compared to income tax expense of $8.9 million for the three months ended September 30, 2023.

Current wording

The income tax expense for the three months ended March 31, 2025 was $8.9 million compared to income tax expense of $13.5 million for the three months ended March 31, 2024.

Previous wording

The effective tax rate for the three months ended September 30, 2024, and 2023 was 34.6% and 25.4%, respectively. The increase in effective tax rate for three months ended September 30, 2024, as compared to the three months ended September 30, 2023, was primarily attributable to changes in projected pre-tax income mix in countries with varying statutory tax rates.

Current wording

The effective tax rate for the three months ended March 31, 2025, and 2024 was 50.9% and 33.7%, respectively. The increase in effective tax rate for three months ended March 31, 2025, as compared to the three months ended March 31, 2024, was primarily attributable to changes in projected pre-tax income mix in countries with varying statutory tax rates.

Previous wording

Comprehensive income (loss) decreased in the third quarter of 2024 by $45.8 million to $20.1 million, year over year. The components of Comprehensive income (loss) are discussed below:

Current wording

Comprehensive income (loss) decreased in the first quarter of 2025 by $9.8 million to $10.1 million, year over year. The components of Comprehensive income (loss) are discussed below:

Previous wording

•$3.0 million of net favorable impact due to change in foreign currency translation adjustments and

Current wording

•$9.0 million of net favorable impact due to change in foreign currency translation adjustments due to weakening of the U.S. dollar versus euro.

Previous wording

•$4.1 million of net unfavorable impact related to financial derivative instruments primarily driven by net periodic changes in cross currency swaps.

Current wording

•$1.0 million of net unfavorable impact related to financial derivative instruments primarily driven by net periodic changes in cross currency swaps.

Previous wording

Volume decreased by 19.8 kmt, or 10.7%, year over year, to 165.5 kmt, and decreased by 18.7 kmt, or 3.5%, year over year, to 520.8 kmt, for the three and nine months ended September 30, 2024, respectively, primarily due to lower demand in the Americas and APAC regions.

Current wording

Volume decreased by 1.4 kmt, or 2.2%, year over year, to 61.9 kmt for the three months ended March 31, 2025, primarily due to lower demand in the Americas region.

Previous wording

Adjusted EBITDA increased by $1.7 million, or 3.3%, year over year, to $52.9 million for the three months ended September 30, 2024, driven primarily by favorable price, partially offset by lower volume.

Current wording

Gross profit decreased by $1.7 million, or 4.1%, year over year, to $40.0 million for the three months ended March 31, 2025, primarily driven by lower volume.

Previous wording

Adjusted EBITDA for the nine months ended September 30, 2024 decreased by $10.2 million, or 10.9%, year over year, to $83.1 million. The decrease was primarily due to higher fixed costs and lower cogeneration. Those were partially offset by higher volume.

Current wording

Adjusted EBITDA for the three months ended March 31, 2025 decreased by $2.5 million, or 9.0%, year over year, to $25.4 million. The decrease was primarily due to lower volume.

Previous wording

Volume for the three months ended September 30, 2024 decreased in aggregate by 20.0 kmt to 225.2 kmt, year over year, due to lower volume in the Americas and Asia Pacific (“APAC”) regions, those were partially offset by higher volumes in Europe, the Middle East, and African region.

Current wording

Volume increased by 4.7 kmt, or 2.5%, year over year, to 189.8 kmt for the three months ended March 31, 2025, primarily due to higher demand in the Americas and Asia Pacific regions.

Previous wording

Net cash provided by operating activities during the nine months ended September 30, 2024 was $30.8 million. The cash provided by operating activities primarily reflects changes in working capital, $59.2 million Loss due to misappropriation of assets, net and professional fees of $1.5 million. Change in working capital includes $323.1 million sale of certain accounts receivables, discussed in Note B. Accounts Receivableto the Condensed Consolidated Financial Statements.

Current wording

Net cash provided by operating activities during the three months ended March 31, 2025 was $0.4 million. The cash provided by operating activities primarily reflects changes in working capital. Change in working capital includes $102.5 million sale of certain accounts receivables, discussed in Note B. Accounts Receivableto the Condensed Consolidated Financial Statements.

Previous wording

Net cash used in investing activities in the nine months ended September 30, 2024 amounted to $135.7 million. The expenditures were primarily related to safety, maintenance and growth investments.

Current wording

Net cash used in investing activities in the three months ended March 31, 2025 amounted to $29.2 million. The expenditures were primarily related to safety, maintenance and growth investments.

Previous wording

Net cash provided by financing activities during the nine months ended September 30, 2024 amounted to $119.3 million. These inflows primarily consisted of $68.7 million related to other short-term debt borrowings and $75.1 million, net borrowings under our ancillary credit facilities. Those were partially offset by scheduled debt repayments, dividend distributions and stock buybacks.

Current wording

Net cash provided by financing activities during the three months ended March 31, 2025 amounted to $21.8 million. These inflows primarily consisted of $24.5 million related to other short-term debt borrowings and $19.1 million, net borrowings under our ancillary credit facilities. Those were partially offset by scheduled debt repayments, dividend distributions and stock buybacks.

Previous wording

Net cash provided by operating activities for the nine months ended September 30, 2023, amounted to $273.7 million. The cash provided by operating activities primarily reflects changes in working capital and higher Net income. Change in working capital includes $300.4 million sale of certain accounts receivables, discussed in Note B. Accounts Receivableto the Condensed Consolidated Financial Statements.

Current wording

Net cash provided by operating activities for the three months ended March 31, 2024, amounted to $32.4 million. The cash provided by operating activities primarily reflects changes in working capital. Change in working capital includes $107.6 million sale of certain accounts receivables, discussed in Note B. Accounts Receivableto the Condensed Consolidated Financial Statements.

Previous wording

Net cash used in investing activities for the nine months ended September 30, 2023, amounted to $111.0 million. These expenditures were composed of a combination of safety, maintenance-related and growth investments, as well as $26.5 million ofexpenditures associated with our, now completed, installation of emissions reduction technology to meet EPA requirements in the U.S.

Current wording

Net cash used in investing activities for the three months ended March 31, 2024, amounted to $33.1 million. These expenditures were composed of a combination of safety and maintenance-related.

Previous wording

Net cash used in financing activities for the nine months ended September 30, 2023, amounted to $164.9 million. These outflows primarily consisted of $88.7 million related to the reduction of other short-term debt, $58.9 million for repurchase of common stock under the Stock Repurchase Program and $23.7 million, net related to repayment of our ancillary credit facilities.

Current wording

Net cash provided by financing activities for the three months ended March 31, 2024, amounted to $7.0 million. These inflows primarily consisted of $37.5 million related to other short-term debt borrowings, partially offset by $28.4 million, net related to repayment of our ancillary credit facilities.

Previous wording

As of September 30, 2024, the company had total liquidity of $209.4 million, including cash and equivalents of $53.2 million, $116.6 million availability under our revolving credit facility, including ancillary lines, and $39.6 million of capacity under other available credit lines.

Current wording

As of March 31, 2025, the company had total liquidity of $166.2 million, including cash and equivalents of $37.5 million, $104.8 million availability under our revolving credit facility, including ancillary lines, and $23.9 million of capacity under other available credit lines.

Previous wording

Our Net working capital increased from $344.4 million as of December 31, 2023, to $399.9 million as of September 30, 2024. The primary working capital change drivers, year over year, were as follows:

Current wording

Our Net working capital increased from $346.1 million as of December 31, 2024, to $391.0 million as of March 31, 2025. The primary working capital change drivers, year over year, were as follows:

Previous wording

•Accounts payable—Decrease in accounts payable was primarily due to timing of payments, partially offset by higher production.

Current wording

•Accounts payable—Increase in accounts payable was primarily due to timing of payments, partially offset by higher production compared to year end.

Previous wording

We define Capital expenditures as cash paid for the acquisition of property, plant and equipment. We plan to finance our Capital expenditures with cash generated by our operating activities and/or by utilizing existing debt capacity. We currently do not have any material commitments to make Capital expenditures and do not plan to make Capital expenditures outside the ordinary course of our business.

Current wording

We plan to finance our Capital expenditures with cash generated by our operating activities and/or by utilizing existing debt capacity. We currently do not have any material commitments to make Capital expenditures, except for the under-construction facility at La Porte, Texas. We do not plan to make material Capital expenditures outside the ordinary course of our business.

Previous wording

This report contains and refers to certain forward-looking statements with respect to our financial condition, results of operations and business. These statements constitute forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are statements of future expectations that are based on management’s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among others, statements concerning the potential exposure to market risks, statements expressing management’s expectations, beliefs, estimates, forecasts, projections and assumptions and statements that are not limited to statements of historical or present facts or conditions.

Current wording

This report contains and refers to certain forward-looking statements with respect to our financial condition, results of operations and business. These statements constitute forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are statements of future expectations that are based on management’s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among others, statements concerning our potential exposure to market risks, macroeconomic conditions including tariffs, expected plant uptime, market conditions, anticipated customer demand, expected impacts of operational improvements and foreign exchange, expectations regarding capital expenditures, working capital and free cash flow, our outlook for 2025, and other statements expressing management’s expectations, beliefs, estimates, forecasts, projections and assumptions and statements that are not limited to statements of historical or present facts or conditions.

Previous wording

•the sufficiency of our cash on hand, cash provided by operating activities and borrowings to pay our operating expenses, satisfy our debt obligations and fund capital expenditures;

Current wording

•the sufficiency of our cash on hand, cash provided by operating activities and borrowings to pay our operating expenses, satisfy our debt obligations and fund capital expenditures; and

Previous wording

•the operational risks inherent in chemicals manufacturing, including disruptions due to technical facilities, severe weather conditions or natural disasters;

Current wording

•the operational risks inherent in chemicals manufacturing, including but not limited to disruptions due to technical difficulties, severe weather conditions or natural disasters;

Previous wording

•our ability to implement our business strategies;

Current wording

•our ability to effectively implement our business strategies;

Previous wording

•our ability to realize benefits from planned plant capacity expansions and planned and current site development projects, including our conductive additives facility at La Porte, Texas, and the impacts of potential delays to such expansions and development projects;

Current wording

•our ability to realize benefits from planned plant capacity expansions and planned and current site development projects;

Previous wording

•any possible future investigations and enforcement actions by governmental, supranational agencies or other organizations;

Current wording

•our ability to comply with complex environmental, health and safety laws and regulations, and current and any possible future investigations and enforcement actions by governmental, supranational agencies or other organizations;

Previous wording

•any market and regulatory changes that may affect our ability to sell or otherwise benefit from co-generated energy;

Current wording

•any market or regulatory changes that may affect our ability to sell or otherwise benefit from co-generated energy;

Previous wording

•any fluctuations in foreign currency exchange and interest rates;

Current wording

•any fluctuations in foreign currency exchange or interest rates;

Previous wording

•the potential difficulty in obtaining or enforcing judgments or bringing legal actions against Orion S.A. (a Luxembourg incorporated entity) in the U.S. or elsewhere outside Luxembourg; and

Current wording

•the potential difficulty in obtaining or enforcing judgments or bringing legal actions against Orion S.A. (a Luxembourg incorporated entity) in the U.S. or elsewhere outside Luxembourg;

Previous wording

•any changes in international and local economic conditions, dislocations in credit and capital markets and inflation or deflation;

Current wording

•any disruptive changes in international and local economic conditions, dislocations in credit and capital markets and inflation or deflation; and