Orion S.a. · NYSE:OEC
Orion — Q1 2023 Earnings Presentation
25 slides from Orion's earnings presentation, May 5, 2023
Slide 1: 1Q 2023 Earnings Conference Call
1Q 2023 Earnings Conference Call May 5, 2023
Slide 2: Forward-Looking Statements
Forward-Looking Statements Forward-Looking Statements This presentation 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 t
Slide 3: Accomplishments
Record 1Q Adjusted EBITDA and Adjusted EPS - Revenue $501 million - Adjusted EBITDA $101 million, up ~21% - Adjusted diluted EPS $0.74, up ~30% Strong 1Q cash flow – Debt ratio below 2.5x $50 million stock buy-back to be completed in Q2 2023 Accomplishments Completed Borger, Texas air emissions proj
Slide 4: Strong Foundation
Total Sales Adjusted EBITDA ($ in millions) $2,000 - ($ in millions) $350- $2,150 $380 $2,031 $312 $1,547 $267 $268 $1,476 $1,136 $200 Strong 2019 2020 2021 2022 2023F Foundation 2019 2020 2021 2022 2023F Return on Capital Employed Accelerating profitability with focus 18% 17% on return on capital 1
Slide 5: 1Q Performance
1Q Performance ($ in millions) Metric (1) 1Q23 1Q22 Y/Y 4Q22 Seq Key Drivers Volume (kmt) 233.5 253.2 (7.8)% 215.1 8.6% Revenue $500.7 $484.5 3.3% $462.1 8.4% • Gross Profit per ton increased in both businesses due to pricing in Rubber and Gross Profit $136.4 $117.9 15.7% $96.7 41.1% favorable produ
Slide 6: Key Financial Metrics
Key Financial Adjusted EBITDA Metrics ($ in millions) ($2.2) $101.1 $10.7 1Q Key Performance Drivers $83.2 $22.4 • Price/mix improvement driven by ($13.0) contractual price improvements required to earn a return on capital in Rubber and improved mix in Specialty. • Costs reflect favorable timing imp
Slide 7: Specialty Business Results
Specialty Metric Volume (kmt) 1Q 23 53.0 1Q 22 65.6 Y/Y (19.2)% 4Q 22 46.7 Seq 13.5% Business Revenue $162.0 $177.6 (8.8)% $146.3 10.7% Results Gross Profit Gross Profit/ton (1) $52.1 $983.5 $57.6 $878.0 (9.5)% 12.0% $37.7 $807.3 38.2% 21.8% Adj. EBITDA $37.3 $42.5 (12.2)% $24.9 49.8% 1Q Key Perform
Slide 8: Specialty Business Results
Specialty Business Adjusted EBITDA - Specialty ($ in millions) Results $42.5 $37.3 ($1.6) 1Q Key Performance Drivers ($17.7) $9.6 • Weaker demand partially offset by $4.5 improved product mix. • Costs reflect favorable timing impacts. Q1 22 Volume Price/Mix Costs FX Q1 23 Orion Engineered Carbons 8
Slide 9: Rubber Business Results
Rubber Metric 1Q 23 1Q 22 Y/Y 4Q 22 Seq Business Volume (kmt) Revenue 180.5 187.6 (3.8)% 168.4 7.2% Results $338.7 $306.9 10.4% $315.8 7.3% Gross Profit $84.3 $60.3 39.8% $59.0 42.9% Gross Profit/ton (1) $467.0 $321.4 39.8% $350.4 33.3% 1Q Key Performance Drivers Adj. EBITDA $63.8 $40.7 56.8% $40.3
Slide 10: Rubber Business Results
Rubber Business Adjusted EBITDA - Rubber ($ in millions) Results $1.1 ($0.6) $63.8 1Q Key Performance Drivers $26.4 $40.7 • Price increases achieved in 2022 ($3.8) negotiations necessary to achieve a return on capital and product/mix optimization. Q1 22 Volume Price/Mix Costs FX Q1 23 Orion Engineer
Slide 11: Cash Generation
Sources & Uses YTD ($ in millions) Q1 HIGHLIGHTS Adjusted EBITDA $101 Change in NWC 43 Change in Provision -13 Operating Activities Interest Payments -10 • Strong Adjusted EBITDA y/y reflects improved pricing Cash Income Taxes -21 • NWC decrease primarily due to improved customer Other 8 payment ter
Slide 12: FY23 Financial Guidance and Select Assumptions
Guidance Adjusted EBITDA Total $350M-$380M Adjusted EPS $2.30 per share - $2.60 per share Capital Expenditures $230M - $240M Depreciation & Amortization $105M - $115M FY23 – Effective Tax Rate Cash Debt Service ~30% ~$40M Financial Estimated Basic Share Count at December 31, 2023* 58.7M Guidance and
Slide 13: Appendix
Appendix Orion Engineered Carbons 13
Slide 14: 2023 Capital Spending
Est 2023 Category Spend Comments ($ in millions) Maintenance* $90 Preventative, routine and upgrades 2023 Capital EPA $25 Final plant completed by Q4 2023 Growth* Spending – Debottlenecks, Expansion $35-45 High return investments (>25% ROIC) Commissioning Huaibei now. Kappa is a – Huaibei and Kappa
Slide 15: Full Year Cashflow/Usage Expectation
FY2023 ($ in millions) EBITDA $350 – 380 Interest and dividends* (45) Full Year Taxes (60) Cashflow/ WC improvement 70 - 80 Usage Maintenance capex EPA capex (90) (25) Expectation Discretionary Cash Flow $200 - 240 Growth capex (Huaibei/Kappa) (80) Profit enhancing capex (35-45) Free Cash Flow $75-1
Slide 16: Midcycle Cash Flow
Mid-Cycle Discretionary Cash Flow ($ in millions) $700 TO $800 $300 - $340 $200 - $240 (1) $235 - $275 $102 $55 $51 2020 2021 2022 2023F 2024F 2025F Midcycle Cash Mid-Cycle Free Cash Flow ($ in millions) Flow $400 TO $500 $200-$240 $135-$175 $75-$125(1) $14 ($8) $16 2020 2021 2022 2023F 2024F 2025F
Slide 17: North America Rubber Supply and Demand
North America 2,500 Supply and Demand (from 2000 to 2030) Rubber 2,000 2000-2030 1,500 1,000 Forecast Demand Now Outpacing Supply 500 0 CB Eff. Capacity 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 20
Slide 18: Historical Non-GAAP Metrics Reconciliation
Historical Non-GAAP Metrics Reconciliation ($ million unless otherwise stated) Three Months Ended Q1 2023 Q4 2022 Q1 2022 Net sales 501 462 485 Cost of Sales 365 365 367 Gross Profit 136 97 118 Historical Sales volume (in kmt) Gross Profit per Metric Ton 234 584 215 450 253 466 Non-GAAP Net Income 4
Slide 19: Reconciliation of FCF and Discretionary CF
Reconciliation of FCF and Discretionary CF ($million) Twelve Months Ended December 31, Historical Adjusted EBITDA 2022 $312 2021 $268 2020 $200 Non-GAAP Maintenance & EPA CAPEX Interest payments (152) (34) (156) (23) (116) (21) Metrics Cash paid for taxes Discretionary Cash Flow (24) $102 (38) $51 (
Slide 20: Historical Non-GAAP Metrics Reconciliation per Share
Historical Non-GAAP Metrics Reconciliation in $ per share Historical Adjusted diluted EPS Diluted EPS Q1 2023 $0.70 Three Months Ended Q4 2022 $0.20 Q1 2022 $0.53 Non-GAAP Long Term Incentive Plan Add back Environmental reserve 0.03 — 0.04 (0.01) 0.02 — Metrics Other Adjustments including restructur
Slide 21: Adjusted Net Income Reconciliation
Historical Non-GAAP Metrics Reconciliation ($million) Adjusted Net Income Three Months Ended Q1 2023 Q4 2022 Q1 2022 Historical Net income add back long-term incentive plan $ 42.3 $ 2.1 12.2 $ 2.6 32.5 1.5 Non-GAAP add back environmental reserve — (0.4) — Metrics 1.0 add back other adjustment items
Slide 22: Capital Employed and ROCE Reconciliation
Historical Non-GAAP Metrics Reconciliation ($ million unless otherwise stated) Capital Employed 2023 2022 2021 2020 2019 2018 Q1 2023 YTD Q1 2022 YTD Total Assets 1,888.8 1,768.6 1,888.7 1,631.0 1,389.8 1,257.4 1,273.0 LESS: Current Liabilities -530.8 -510.8 -552.8 -448.7 -324.7 -285.2 -320.3 Histor
Slide 23: Historical Net Debt and Debt ratio
Historical Non-GAAP Metrics Reconciliation ($million) Historical Net Debt and Debt ratio Current portion of long term debt and other financial liabilities $ March 31, 2023 230.2 Non-GAAP Long-term debt, net Total debt as per Consolidated Balance Sheets 664.6 894.8 Metrics Add: Deferred debt issuance
Slide 24: Non-GAAP Financial Measures
Non-GAAP Financial Measures Non-GAAP Financial Measures We present certain financial measures that are not prepared in accordance with GAAP or the accounting standards of any other jurisdiction and may not be comparable to other similarly titled measures of other companies. For a reconciliation of t
Slide 25: Investor Relations Contact Details
Investor Relations Contact Details Wendy Wilson wendy.wilson@orioncarbons.com Orion Engineered Carbons 25
Orion S.A. Common Shares — Q1 2023 Earnings Presentation on 6ix