Orion S.a. · NYSE:OEC
Orion — Q2 2024 Earnings Presentation
29 slides from Orion's earnings presentation, Aug 2, 2024
Slide 1: 2Q 2024 Earnings Conference Call
OfIOR s.. 2024 2Q Earnings Conference Call August 2, 2024
Slide 2: Forward-Looking Statements
Forward-Looking Statements Forward-Looki ment: 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 the Secu
Slide 3: Highlights
20 Highlights Solid Performance Despite Soft Market Second Quarter Results * Adjusted EBITDA $75 million * Adjusted EPS $0.41 * Total volumes up nearly 3% YoY; Rubber down 2%, weakened mid quarter; Specialty up 17% on broad recovery Revised 2024 Guidance * Adjusted EBITDA expectations now $315M-$330
Slide 4: Revised 2024 Guidance
Revised 2024 Guidance —ar * Adjusted EBITDA expectations now $315M-$330M ody * Midpoint of range is $322.5M; compares to: | aaQ - $§350M initial guide for 2024 - §332M actual in 2023 Updated 2024 Guidance Drivers Key Factors, Relative to Initial 2024 Guidance * Rubber volume expectations: ($20-§25M)
Slide 5: Capital Spending
Capital Spending Priorities Targeted High Return Opportunities New Kappa Plant Maintenance Cap Ex to Enhance Returns Reliability and Productivity Safety and Long-Term Solutions (1) EPAspend completed in 2023 (2) Greenfield project for acetylene in La Porte, Texas Capital Spending Outlook ($ in milli
Slide 6: High Level View on 2024
High Level View on 2024 Another Year of Solid Adj. EBITDA Specialty Outperforming; Rubber Demand Soft; Rubber Profitability Durable Headwinds: o Consumers trading down; Higher tire imports o Truck replacement & OE, Ag tire markets soft o Co-gen contribution lower than expected Maintenance Investment
Slide 7: Strategic Context: Looking to 2025
Strategic Context: Looking to 2025 + Contract Negotiations Started - — Industry Utilization Potentially Tight ° ° ° ° ° ° Multiple positive leading indicators Tire builds have lagged sell-though Freight recovering Full year of Russian ban Specialty recovery - reactor capacity reallocation opportunit
Slide 8: Volume, Revenue, Gross Profit and Adjusted EBITDA
Volume (kmt) • Revenue Gross Profit • Gross Profit/ton Adj. EBITDA Adj. EBITDA Margin • Adjusted Net Income Adjusted Diluted EPS
Slide 9: Key Financial Metrics: Adjusted EBITDA
Key Fi re ncial Adjusted EBITDA Metrics ($ in millions) 2Q 2024 Key Performance Drivers ed Hl One-offs/ Cogen Forward Sale 873 Cogen * Volume improvement reflects end- 126 market recovery in Specialty, and lowerRubberdemandvs.expectations =! 75.1 —= 0.7 * Price/mix was boosted by contractual agreeme
Slide 10: Rubber Business Results
Rubber Business Results 2Q Key Performance Drivers * Underlying demand was soft in all markets * Volumes increased in Europe and decreased in North America based on annual negotiations. China volumes were weak reflecting market conditions * Consumer trade down; Higher imports negatively impacted cus
Slide 11: Rubber Business Results: Adjusted EBITDA
Ru b ber Adjusted EBITDA - Rubber Business . Res U Its DISS LS oepatiesun Sale 41 Cogen 2Q Key Performance Drivers * Similar to 1Q, improved contract pricing was more than offset by higher costs * Cost variance reflects timing effects related to raw material cost passthroughs from prior year, higher
Slide 12: Specialty Business Results
Specialty Business Results 2Q Key Performance Drivers * Volume recovery continued, across nearly all regions, and polymers & coatings markets in particular * Gross profit metrics versus year-ago period reflect timing effects related to raw material cost passthroughs and non-repeating items from prio
Slide 13: Specialty Business Results: Adjusted EBITDA
Specialty Business Results 2Q Key Performance Drivers * Volume strength, polymer & coatings markets in particular * Higher costs primarily reflect timing effects from prior year and current year Adjusted EBITDA - Specialty (S in millions) 8.4 Hl One-offs/ Cogen Forward Sale 10.7 Cogen 29.9 28.0 MR “
Slide 14: Change in Net Debt
Change in Net Debt Sources & Uses ($ in millions) Adjusted EBITDA Change in NWC Change in Provision Cash Paid for Interest Cash Income Tax Other Operating Cash Flow Capital Expenditures Share Based Comp/Dividends Other: FX/Financing on Balance Sheet Debt (Increase)/Decrease in Net Debt * Net Debt to
Slide 15: Updated Guidance
Updated Guidance Adjusted EBITDA Total: $315M-$330M Adjusted EPS $1.75 per share - $1.95 per share Capital Expenditures $200M Depreciation & Amortization $115M - $125M F Y2 4 _ Effective Tax Rate ~30-32% Free Cash Flow ~$0-$25M Financial Guidance Adjusted EBITDA Total $340M-$360M Adjusted EPS $2.05
Slide 16: 2024 Free Cash Flow
2024 Free Cash Flow Key Considerations * Adjustment to FCF expectations affected by higher cash taxes ° Despite 2024 FCF generation, 2025-26 expectations better on demand and operational improvements, and lower capex FY2024 ($ in millions) Adjusted EBITDA Interest Taxes Maintenance capex Discretiona
Slide 17: Concluding Remarks
Concluding Remarks
Slide 18: Appendix
Appendix
Slide 19: FY24 Financial Sensitivities
FY24 - Financial Sensitivities elect Assumptions and Sens‘ ies * — $10/bbI change in average feedstock price changes NWC over 3- to 4- Working Capita" month period by ~$25M FX * 1% change in EUR/USD amounts to ~$2M EBITDA FY impact + $1/bbl change in avg. feedstock cost over 12-month period amounts
Slide 20: Mid-Cycle Capacity Assumptions
Mid-Cycle Capacity Assumptions rt . iS) ° 8S At mid-cycle, we would expect economic indicators in the markets we serve to be at pre-COVID levels. We would also expect pricing required to maintain our margins At mid-cycle capacity, expect our consolidated plant utilization to return to the upper 80 p
Slide 21: Historical Non-GAAP Metrics Reconciliation
Historical Non-GAAP Metrics Reconciliation (S million unless otherwise stated) Three Months Ended ‘Six Months Ended June 30, 22024 Q12024 22023 2024 2023 2022 Oe . ow A _ Cost of Sales . _ a _ oo 367 - 381 748 706 | 788 GrossProfit nn en) 22 sk Sales volume (in kmt) 233 248 482 461 505 Gross rofitpe
Slide 22: Reconciliation of FCF and Discretionary CF
Reconciliation of FCF and Discretionary CF ($million) Historical See 2023 2022 2021 Non-GAAP ae a Maintenance & EPA CAPEX (152) (156) Metrics Reconciliation 22
Slide 23: Historical Non-GAAP Metrics Reconciliation
Historical i $ per share Three Months Ended Six Months Ended June 30, Non-GAAP a Other Adjustments including restructuring Metrics oe Reconciliation = =exe<e
Slide 24: Historical Non-GAAP Metrics Reconciliation: Adjusted Net Income
Historical Non-GAAP Metrics Reconciliation Adjusted Net Income Three Months Ended ‘Six Months Ended June 30, Q2 2024 12024 Q2 2023 2024 (2023 s $ 301 § na 26 _ - 4 = = 6) ‘add back reclassification of actuarial gains from AOC = = 23 = add back intangible assets amortization 18 18 18 36 36 add back f
Slide 25: Historical Non-GAAP Metrics Reconciliation: Capital Employed
Historical Non-GAAP Metrics Reconciliation Capital Employed 2024 2023 2022 2021 2020 2019 Q22024YTD Q22023YTD —____ we = LESS: Current Liabilities 5528 4487 “3247 -285.2 1,335.9 1,182.3 1,065.1 972.2 Average of: (Q2.2024& Q2 2023 202382022 20228&2021 202182020 2020&2019 Average Capital Employed 1,39
Slide 26: Historical Non-GAAP Metrics Reconciliation: Net Debt
Historical Non-GAAP Metrics Reconciliation Historical Non-GAAP Metrics Reconciliation ($million) Net Debt and Debt ratio June 30, 2024 Current portion of long term debt and other financial liabilities 173.6 Total debt as per Consolidated Balance Sheets 8343 ‘Add: Deferred debt issuance costs-Termloa
Slide 27: Historical Non-GAAP Metrics Reconciliation
Historical Non- GAAP Metrics Reconciliation 3 2021 4 2021 Q1 2022 2 2022 03 2022 4 2022 Q1 2023 2.2023 03 2023 4 2023 Q1 2024 2.2024 Historical Non-GAAP Metrics Reconci Rubb Spec Sales Quarterly Sales Quarterly “fans _tinmilions) proton “Caml Gnmilions) prot ffon 172.9 4nd 63.9 163.3 35.7, 598 39.6
Slide 28: 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 these non-GAAP financial meas
Slide 29: Investor Relations Contact Details
Investor Relations Contact Details Christopher Kapsch christopher.kapsch@orioncarbons.com
Orion S.A. Common Shares — Q2 2024 Earnings Presentation on 6ix