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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

OR

☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to _______________

Commission File Number: 001-36563

ORION S.A.

(Exact name of registrant as specified in its charter)

Grand Duchy of Luxembourg

00-0000000

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

1700 City Plaza Drive, Suite 300

Spring

Texas

77389

(Address of Principal Executive Offices)

(Zip Code)

(281) 318-2959

Registrant's telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:

Title of each class			Trading Symbol(s)			Name of each exchange on which registered
Common Shares, no par value			OEC			New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.                              Yes x    No o 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).                                            Yes x   No o 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, "smaller reporting company" and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer			x			Accelerated filer			☐
Non-accelerated filer			☐			Smaller reporting company			☐
						Emerging growth company			☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).     Yes ☐   No x

The registrant had 58,044,140 shares of common stock outstanding as of October 27, 2023.

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Orion S.A.

TABLE OF CONTENTS

PART I - Financial Information						1
Item 1. Financial Statements and Supplementary Data (Unaudited)						1
Condensed Consolidated Statements of Operations						1
Condensed Consolidated Statements of Comprehensive Income						2
Condensed Consolidated Balance Sheets						3
Condensed Consolidated Statements of Cash Flows						4
Condensed Consolidated Statements of Changes in Stockholders’ Equity						5
Notes to the Condensed Consolidated Financial Statements (Unaudited)						6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations						16
Item 3. Quantitative and Qualitative Disclosures About Market Risk						25
Item 4. Controls and Procedures						25
PART II - Other Information						26
Item 1. Legal Proceedings						26
Item 1A. Risk Factors						26
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds						27
Item 3. Defaults Upon Senior Securities						27
Item 4. Mine Safety Disclosures						27
Item 5. Other						27
Item 6. Exhibits						28
Signatures						29

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Orion S.A.

PART I - Financial Information

Item 1. Financial Statements and Supplementary Data (Unaudited)

Condensed Consolidated Statements of Operations

						Three Months Ended September 30,												Nine Months Ended September 30,
						2023						2022						2023						2022
						(In millions, except share and per share data)
Net sales						$	466.2					$	543.1					$	1,425.7					$	1,568.8
Cost of sales						356.0						428.7						1,062.0						1,216.7
Gross profit						110.2						114.4						363.7						352.1
Selling, general and administrative expenses						55.6						56.0						168.3						173.2
Research and development costs						6.2						4.5						18.3						15.9
Other expenses, net						2.7						0.3						(1.0)						1.9
Income from operations						45.7						53.6						178.1						161.1
Interest and other financial expense, net						12.9						10.2						41.6						29.1
Reclassification of actuarial gain from AOCI						(2.2)						—						(6.7)						—
Income before earnings in affiliated companies and income taxes						35.0						43.4						143.2						132.0
Income tax expense						8.9						11.7						45.0						38.3
Earnings in affiliated companies, net of tax						0.1						0.1						0.4						0.3
Net income						$	26.2					$	31.8					$	98.6					$	94.0
Weighted-average shares outstanding (in thousands):
Basic						58,572						60,936						59,284						60,899
Diluted						59,252						61,215						59,934						61,314
Earnings per share:
Basic						$	0.45					$	0.52					$	1.66					$	1.54
Diluted						$	0.44					$	0.52					$	1.65					$	1.53

See accompanying Notes to these Condensed Consolidated Financial Statements

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Condensed Consolidated Statements of Comprehensive Income

						Three Months Ended September 30,												Nine Months Ended September 30,
						2023						2022						2023						2022
						(In millions)
Net income						$	26.2					$	31.8					$	98.6					$	94.0
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments						0.3						(7.7)						(12.2)						(14.7)
Net gains (losses) on derivatives						0.9						10.6						(1.3)						32.1
Defined benefit plans, net						(1.7)						0.2						(4.6)						0.4
Other comprehensive income (loss)						(0.5)						3.1						(18.1)						17.8
Comprehensive income						$	25.7					$	34.9					$	80.5					$	111.8

See accompanying Notes to these Condensed Consolidated Financial Statements

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Condensed Consolidated Balance Sheets

												September 30, 2023						December 31, 2022
												(In millions, except share data)
ASSETS
Current assets
Cash and cash equivalents												$	59.1					$	60.8
Accounts receivable, net												267.3						367.8
Inventories, net												276.9						277.9
Income tax receivables												8.9						5.2
Prepaid expenses and other current assets												68.5						66.8
Total current assets												680.7						778.5
Property, plant and equipment, net												845.5						818.5
Right-of-use assets												110.3						97.6
Goodwill												72.9						73.4
Intangible assets, net												25.3						27.8
Investment in equity method affiliates												4.8						5.0
Deferred income tax assets												37.9						29.1
Other assets												56.3						58.8
Total non-current assets												1,153.0						1,110.2
Total assets												$	1,833.7					$	1,888.7
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable												$	170.9					$	184.1
Current portion of long-term debt and other financial liabilities												149.1						258.3
Accrued liabilities												44.3						44.7
Income taxes payable												36.6						31.3
Other current liabilities												48.4						34.4
Total current liabilities												449.3						552.8
Long-term debt, net												662.8						657.0
Employee benefit plan obligation												50.9						50.0
Deferred income tax liabilities												80.4						70.0
Other liabilities												107.4						99.5
Total non-current liabilities												901.5						876.5
Commitments and contingencies
Stockholders' equity
Common stock
Authorized: 65,035,579 and 65,035,579 shares with no par value
Issued – 60,992,259 and 60,992,259 shares with no par value
Outstanding – 58,208,136 and 60,571,556 shares												85.3						85.3
Treasury stock, at cost, 2,784,123 and 420,703												(63.4)						(8.8)
Additional paid-in capital												78.9						76.4
Retained earnings												412.7						319.0
Accumulated other comprehensive loss												(30.6)						(12.5)
Total stockholders' equity												482.9						459.4
Total liabilities and stockholders' equity												$	1,833.7					$	1,888.7

TY

See accompanying Notes to these Condensed Consolidated Financial Statements

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Condensed Consolidated Statements of Cash Flows

7

						Nine Months Ended September 30,
						2023						2022
						(In millions)
Cash flows from operating activities:
Net income						$	98.6					$	94.0
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation of property, plant and equipment and amortization of intangible assets and right of use assets						80.8						79.9
Amortization of debt issuance costs						2.0						1.4
Share-based compensation						8.3						5.0
Deferred tax provision						5.5						2.8
Foreign currency transactions						3.2						(13.8)
Reclassification of actuarial gain from AOCI						(6.7)						—
Other operating non-cash items, net						(0.7)						(0.7)
Changes in operating assets and liabilities, net:
Trade receivables						98.1						(149.2)
Inventories						(6.3)						(65.3)
Trade payables						(3.8)						20.0
Other provisions						0.2						(2.0)
Income tax liabilities						2.5						13.6
Other assets and liabilities, net						(8.0)						(2.4)
Net cash provided by (used in) operating activities						273.7						(16.7)
Cash flows from investing activities:
Acquisition of property, plant and equipment						(111.0)						(167.1)
Net cash used in investing activities						(111.0)						(167.1)
Cash flows from financing activities:
Proceeds from long-term debt borrowings						12.6						35.3
Repayments of long-term debt						(2.3)						(2.3)
Payments for debt issue costs						(0.2)						(1.5)
Cash inflows related to current financial liabilities						103.2						201.6
Cash outflows related to current financial liabilities						(215.6)						(61.7)
Dividends paid to shareholders						(3.7)						(3.8)
Repurchase of common stock under Stock Repurchase Program						(58.9)						(0.2)
Net cash provided by (used in) financing activities						(164.9)						167.4
Decrease in cash, cash equivalents and restricted cash						(2.2)						(16.4)
Cash, cash equivalents and restricted cash at the beginning of the period						63.4						68.5
Effect of exchange rate changes on cash						(0.6)						(5.5)
Cash, cash equivalents and restricted cash at the end of the period						60.6						46.6
Less restricted cash at the end of the period						1.5						3.5
Cash and cash equivalents at the end of the period						$	59.1					$	43.1

See accompanying Notes to these Condensed Consolidated Financial Statements

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Condensed Consolidated Statements of Changes in Stockholders’ Equity

												Common stock												Treasury shares						Additional paid-in capital						Retained earnings						Accumulated other comprehensive loss						Total
(In millions, except share and per share amounts)												Number						Amount
Balance at January 1, 2023												60,571,556						$	85.3					$	(8.8)					$	76.4					$	319.0					$	(12.5)					$	459.4
Net income												—						—						—						—						42.3						—						42.3
Other comprehensive loss, net of tax												—						—						—						—						—						(10.5)						(10.5)
Dividends			$0.02			per share						—						—						—						—						(1.3)						—						(1.3)
Repurchases of Common stock												(1,286,915)						—						(29.3)						—						—						—						(29.3)
Share based compensation												—						—						—						2.1						—						—						2.1
Issuance of stock under equity compensation plans												131,550						—						2.9						(4.6)						—						—						(1.7)
Balance at March 31, 2023												59,416,191						85.3						(35.2)						73.9						360.0						(23.0)						461.0
Net income												—						—						—						—						30.1						—						30.1
Other comprehensive loss, net of tax												—						—						—						—						—						(7.1)						(7.1)
Dividends			$0.04			per share						—						—						—						—						(2.4)						—						(2.4)
Repurchases of Common stock												(822,595)						—						(20.2)						—						—						—						(20.2)
Share based compensation												—						—						—						2.6						—						—						2.6
Issuance of stock under equity compensation plans												47,250						—						1.4						(1.2)						—						—						0.2
Balance at June 30, 2023												58,640,846						$	85.3					$	(54.0)					$	75.3					$	387.7					$	(30.1)					$	464.2
Net income												—						—						—						—						26.2						—						26.2
Other comprehensive loss, net of tax												—						—						—						—						—						(0.5)						(0.5)
Dividends			$0.02			per share						—						—						—						—						(1.2)						—						(1.2)
Repurchases of Common stock												(432,710)						—						(9.4)						—						—						—						(9.4)
Share based compensation												—						—						—						3.6						—						—						3.6
Balance at September 30, 2023												58,208,136						$	85.3					$	(63.4)					$	78.9					$	412.7					$	(30.6)					$	482.9

j

Balance at January 1, 2022												60,656,076						$	85.3					$	(6.3)					$	71.4					$	217.8					$	(48.5)					$	319.7
Net income												—						—						—						—						32.5						—						32.5
Other comprehensive income, net of tax												—						—						—						—						—						24.9						24.9
Dividends			$0.02			per share						—						—						—						—						(1.2)						—						(1.2)
Share based compensation												—						—						—						1.5						—						—						1.5
Balance at March 31, 2022												60,656,076						85.3						(6.3)						72.9						249.1						(23.6)						377.4
Net income												—						—						—						—						29.7						—						29.7
Other comprehensive loss, net of tax												—						—						—						—						—						(10.2)						(10.2)
Dividends			$0.04			per share						—						—						—						—						(2.5)						—						(2.5)
Share based compensation												—						—						—						1.6						—						—						1.6
Issuance of stock under equity compensation plans												93,189						—						1.6						(2.4)						—						—						(0.8)
Balance at June 30, 2022												60,749,265						$	85.3					$	(4.7)					$	72.1					$	276.3					$	(33.8)					$	395.2
Net income												—						—						—						—						31.8						—						31.8
Other comprehensive income, net of tax												—						—						—						—						—						3.1						3.1
Dividends			$0.02			per share						—						—						—						—						(1.3)						—						(1.3)
Share based compensation												—						—						—						1.9						—						—						1.9
Issuance of stock under equity compensation plans												66,323						—						—						—						—						—						—
Balance at September 30, 2022												60,815,588						$	85.3					$	(4.7)					$	74.0					$	306.8					$	(30.7)					$	430.7

See accompanying Notes to these Condensed Consolidated Financial Statements

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Notes to the Condensed Consolidated Financial Statement (Unaudited)

Table of Contents—Notes
Note A.			Organization, Description of the Business and Summary of Significant Accounting Policies			7
Note B.			Accounts Receivable			7
Note C.			Inventories			7
Note D.			Debt and Other Obligations			7
Note E.			Financial Instruments and Fair Value Measurement			9
Note F.			Employee Benefit Plans			11
Note G.			Accumulated Other Comprehensive Income (Loss)			12
Note H.			Earnings Per Share			13
Note I.			Income Taxes			13
Note J.			Commitments and Contingencies			13
Note K.			Financial Information by Segment			14

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Notes to the Condensed Consolidated Financial Statements—(continued)

Note A. Organization, Description of the Business and Summary of Significant Accounting Policies    

Orion S.A.’s (formerly, Orion Engineered Carbons S.A.) unaudited Condensed Consolidated Financial Statements include Orion S.A. and its subsidiaries (“Orion” or the “Company”). The unaudited Condensed Consolidated Financial Statements have been prepared in accordance with the United States (“U.S.”) Generally Accepted Accounting Principles (“GAAP”) and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for annual financial statements. These financial statements should be read in conjunction with the Consolidated Financial Statements included in our Annual Report in Form 10-K for the year ended December 31, 2022.

The accompanying unaudited Condensed Consolidated Financial Statements include all adjustments that are necessary for the fair presentation of our results for the interim periods presented. These statements contain some amounts that are based upon management estimates and judgments. Future actual results could differ from such current estimates. Results for interim periods are not necessarily indicative of results to be expected for the full year.

Note B. Accounts Receivable

Accounts receivable, net of allowance for credit losses, are as follows:

			September 30, 2023						December 31, 2022
			(In millions)
Accounts receivable			$	268.9					$	370.4
Expected credit losses			(1.6)						(2.6)
Accounts receivable, net			$	267.3					$	367.8

Note C. Inventories

Inventories, net of reserves, are as follows:

			September 30, 2023						December 31, 2022
			(In millions)
Raw materials, consumables and supplies, net			$	115.9					$	108.3
Work in process			0.1						—
Finished goods, net			160.9						169.6
Inventories, net			$	276.9					$	277.9

Note D. Debt and Other Obligations

Debt and other obligations are as follows:

			September 30, 2023						December 31, 2022
			(In millions)
Current
Current portion of Term-Loan			$	3.0					$	3.0
Deferred debt issuance costs - Term-Loan			(0.6)						(0.7)
Other short-term debt and obligations			146.7						256.0
Current portion of long-term debt and other financial liabilities			149.1						258.3
Non-current
Term-Loan			608.8						613.2
Deferred debt issuance costs - Term-Loan			(3.1)						(3.7)
China Term-Loan			57.1						47.5
Long-term debt, net			662.8						657.0
Total			$	811.9					$	915.3

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Notes to the Condensed Consolidated Financial Statements—(continued)

a.Term-Loan

The Term-Loan facility was allocated to one term loan facility denominated in U.S. dollars of $300 million and another denominated in Euros of €300 million with both having a maturity date of September 24, 2028. Interest is calculated based on three months EURIBOR (for the Euro-denominated loan) plus a margin of 2.50%, or three-month USD-LIBOR (for the USD-denominated loan) plus a margin of 2.25%.

Due to cessation of U.S. dollar LIBOR after June 30, 2023 (“LIBOR cessation date”), in May 2023, the Company entered into the Eleventh Amendment to the Credit Agreement (the “Term-Loan”) to update the referenced floating benchmark rate. The U.S. dollar loan, 3-M USD-Libor was replaced by USD Term SOFR 3M + CAS (Credit Adjustment Spread) effective for all interest rate periods after June 30, 2023.

In August 2023, we entered into the 12th amendment, which primarily approved the merger of two of our wholly owned subsidiaries.

Other provisions of the Credit Agreement relating to the Term Loan remained unchanged.

b.Revolving credit facility

In October 2023, Orion entered into the 13th Amendment, which amended and restated our revolving credit facility (“RCF”). We voluntarily reduced the borrowing capacity under our amended RCF from €350 million to €300 million. Interest is calculated based on EURIBOR plus a 1.65% - 3.30% margin (depending on leverage ratio). At current leverage ratio (between 2.25x and 2.75x), the margin is at 2.30%.

The amended RCF includes a sustainability-linked margin adjustment. The credit spread will increase or decrease up to 5 basis points depending on two key performance indicators: greenhouse gas intensity and environmental, social and governance rating from EcoVadis, a provider of corporate sustainability rating.

Covenant Compliance — There is one financial covenant under the amended RCF that will be tested when RCF utilization (including debt drawn under ancillary credit facility lines) exceeds 50%. Net Leverage, as defined in the Credit Agreement (the “Covenant Trigger”), is not permitted to exceed 4.0x.

Other provisions of the Credit Agreement relating to the RCF remained unchanged.

As of September 30, 2023, the capacity under our RCF was €350 million. Interest is calculated based on EURIBOR (for euro drawings), and USD Term SOFR + CAS (for U.S. Dollar drawings) plus a 1.65% - 2.70% margin (depending on leverage ratio).

There were no borrowings under the RCF as of September 30, 2023. As of December 31, 2022, borrowings under the RCF were $53.3 million.

As of September 30, 2023 and December 31, 2022, availability under the RCF was $234.4 million and $165.9 million, respectively.

Ancillary Credit Facilities—As part of the RCF, the Company may also establish ancillary credit facilities by converting the commitments of select lenders under the RCF into bilateral credit agreements. Borrowings under the ancillary credit facilities reduce RCF availability. For RCF financial covenant testing, borrowing under ancillary credit facilities are considered debt drawn under the RCF, as discussed elsewhere in this footnote.

As of September 30, 2023 and December 31, 2022, committed ancillary credit facilities totaled $284.2 million and $286.1 million, respectively.

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Notes to the Condensed Consolidated Financial Statements—(continued)

c.Other Short-Term borrowings and Obligations

Other short-term debt and obligations are as follows:

			September 30, 2023						December 31, 2022
			(In millions)
Revolving credit facility			$	—					$	53.3
Ancillary credit facilities
OEC GmbH outstanding borrowings			130.4						148.7
OEC LLC outstanding borrowings			—						5.4
Uncommitted local lines of credit:
Korea (capacity $39.0 million)			2.0						—
Brazil (capacity $3.2 million)			—						2.9
China working capital			4.1						1.5
Korea working capital loan			10.2						7.9
Repurchase agreement			—						36.3
Total of Other short-term debt and obligations			$	146.7					$	256.0
Supplemental information:
Total ancillary capacity - EUR			€	268.3					€	268.3
Total ancillary capacity - U.S. $			$	284.2					$	286.1

As of September 30, 2023, we are in compliance with our debt covenants.

Accounts Receivable Factoring Facilities―We entered into agreements with various third-party financial institutions for the sale of certain Accounts receivable. We have concluded that there would generally be no risk of loss to us from non-payment of the sold receivables because:

•The transferred financial assets have been isolated beyond the reach of our creditors, even in bankruptcy or other receivership;

•The party purchasing accounts receivables has the right to pledge and or exchange the transferred assets without restrictions; and

•We do not retain effective control over the transferred financial assets.

For the three and nine months ended September 30, 2023, the gross amount of receivables sold were as $106.2 million and $300.4 million, respectively. No sales were made in 2022.

In the Condensed Consolidated Statements of Operations, the loss on receivables sale is reflected in Other expenses, net. For the three and nine months ended September 30, 2023 the loss on receivables sale were $1.3 million and $3.1 million, respectively.

For additional information relating to our debt, see “Note J. Debt and Other Obligations”, included in our Annual Report in Form 10-K for the year ended December 31, 2022.

Note E. Financial Instruments and Fair Value Measurement

Risk management

We have policies governing the use of derivative instruments and do not enter into financial instruments for trading or speculative purposes.

By using derivative instruments, we are subject to credit and market risk. To minimize counterparty credit (or repayment) risk, we enter into transactions primarily with investment grade financial institutions. The market risk exposure is not hedged in a manner to completely eliminate the effects of changing market conditions on earnings or cash flow.

No significant concentration of credit risk existed as of September 30, 2023 or December 31, 2022.

Cash flow hedge

Due to LIBOR cessation, the Company in May 2023 amended its previously existing cross-currency swaps in the amount of $197 million to update the referenced floating benchmark rate. We transitioned from US dollar LIBOR 3M to US dollar Term SOFR 3M + CAS (Credit Adjustment Spread) on September 29, 2023. Other terms of the cross-currency swaps remained unchanged. The cross-currency swap will expire on September 30, 2028, in line with the maturity of the term loan.

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Notes to the Condensed Consolidated Financial Statements—(continued)

In 2021 we adopted Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 848, Reference Rate Reform (“ASC 848”). This guidance permits entities to elect certain optional expedients for contract modifications for debt, and leases related to reference rate reform as well as derivative contracts and for the continued application of hedge accounting to certain hedging relationships affected by reference rate reform activities.

We applied the practical expedients allowed under ASC 848 as follows:

•Accounted for the modification to our term loan facility as if the modification was not substantial in accordance with ASC 470-50, Modifications and Extinguishment and thus a continuation of the existing contract.

•The cross-currency swaps in cash-flow hedging relationships were not de-designated as a result of the modifications and continue to be highly effective and qualify for hedge accounting.

Fair value measurement

The following table summarizes outstanding financial instruments that are measured at fair value on a recurring basis:

			September 30, 2023												December 31, 2022												Balance Sheet Classification
			Notional Amount						Fair Value						Notional Amount						Fair Value
			(In millions)
Assets
Derivatives designated as hedges:
Cross currency swaps			$	197.0					$	47.4					$	197.0					$	46.6					Other financial assets (non-current)
Interest rate swaps			291.3						6.9						293.3						9.6						Other financial assets (non-current)
Total			$	488.3					$	54.3					$	490.3					$	56.2

All financial instruments in the table above are classified as Level 2. We present the gross assets and liabilities of our derivative financial instruments in the Condensed Consolidated Balance Sheets.

For financial assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization at the end of each reporting period. There were no transfers of assets measured at fair value between Level 1 and Level 2 and there were no Level 3 investments during 2023 or 2022.

The following table presents the carrying value and estimated fair value of our financial instruments that are not measured at fair value on a recurring basis for the periods presented. Short-term and Long-term debt are recorded at amortized cost in the Condensed Consolidated Balance Sheets.

			September 30, 2023												December 31, 2022
			Notional Amount						Fair Value						Notional Amount						Fair Value
			(In millions)
Non-derivatives:
Liabilities:
Term-Loan			$	611.8					$	605.8					$	616.2					$	596.8
China Term loan			57.1						55.0						47.5						42.9
Total			$	668.9					$	660.8					$	663.7					$	639.7

Term-Loan and China Term-Loan in the table above are classified as Level 2.

At both September 30, 2023 and December 31, 2022, the fair values of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, short term borrowings and variable rate debt approximated their carrying values due to the short-term nature of these instruments.

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Orion S.A

Notes to the Condensed Consolidated Financial Statements—(continued)

The following tables summarize the pre-tax effect of derivative and non-derivative instruments recorded in Accumulated other comprehensive income (loss) (“AOCI”), the gains (losses) reclassified from AOCI to earnings and additional gains (losses) recognized directly in earnings:

			Effect of Financial Instruments
			Three Months Ended Sep 30,
			Gain (Loss) Recognized in AOCI												Gain (Loss) Reclassified from AOCI to Income																		Income Statement Classification
			2023						2022						2023						2022
			(In millions)
Derivatives designated as hedges:
Cross currency swaps			$	3.0					$	9.2					$	0.4					$	0.4											Interest and other financial expense, net
Interest rate swaps			(1.7)						6.2						—						—												Interest and other financial expense, net
Total			$	1.3					$	15.4					$	0.4					$	0.4

			Effect of Financial Instruments
			Nine Months Ended September 30,
			Gain (Loss) Recognized in AOCI												Gain (Loss) Reclassified from AOCI to Income																		Income Statement Classification
			2023						2022						2023						2022
			(In millions)
Derivatives designated as hedges:
Cross currency swaps			$	—					$	30.1					$	1.2					$	1.3											Interest and other financial expense, net
Interest rate swaps			(2.6)						15.9						—						—												Interest and other financial expense, net
Total			$	(2.6)					$	46.0					$	1.2					$	1.3

Our cross currency swaps and interest rate swaps are designated as cash flow hedges of principal and interest payments related to our Term-Loan and mature in September 2028. The amount recognized in AOCI related to cash flow hedges that will be reclassified to the Condensed Consolidated Statement of Operations in the next twelve months is approximately $1.0 million.

See “Note K. Financial Instruments and Fair Value Measurement”, included in our Annual Report in Form 10-K for the year ended December 31, 2022, for additional information relating to our derivatives instruments.

Note F. Employee Benefit Plans

Provisions for pensions are established to cover benefit plans for retirement, disability and surviving dependents’ pensions. The benefit obligations vary depending on the legal, tax and economic circumstances in various countries in which the Company operates. Generally, the level of benefit depends on the length of service and the remuneration.

Net periodic defined benefit pension costs include the following:

			Three Months Ended September 30,												Nine Months Ended September 30,
			2023						2022						2023						2022
			(In millions)
Service cost			$	0.3					$	0.3					$	0.8					$	0.9
Interest cost			0.6						0.3						1.9						1.1
Amortization of actuarial (gain)			(2.2)						—						(6.7)						—
Net periodic pension cost			$	(1.3)					$	0.6					$	(4.0)					$	2.0

Service costs were recorded in Income from operations in Selling, general and administrative expenses, and interest costs were recorded in Interest and other financial expense, net.

The amortization of actuarial (gain) losses, associated with the pension obligations recorded in prior years, in Accumulated other comprehensive income exceeding 10% of the defined benefit obligation are recorded ratably in the Condensed Consolidated Statements of Operations.

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Orion S.A

Notes to the Condensed Consolidated Financial Statements—(continued)

Note G. Accumulated Other Comprehensive Income (Loss)

Changes in each component of AOCI, net of tax, are as follows:

			Currency Translation Adjustments						Hedging Activities Adjustments						Pension and Other Postretirement Benefit Liability Adjustment						Total
			(In millions)
Balance at January 1, 2023			$	(47.5)					$	24.4					$	10.6					$	(12.5)
Other comprehensive loss before reclassifications			(7.8)						(3.3)						—						(11.1)
Income tax effects before reclassifications			0.5						1.0						—						1.5
Amounts reclassified from AOCI			—						0.4						(2.2)						(1.8)
Income tax effects on reclassifications			—						(0.1)						0.7						0.6
Currency translation AOCI			—						0.2						0.1						0.3
Balance at March 31, 2023			(54.8)						22.6						9.2						(23.0)
Other comprehensive loss before reclassifications			(5.1)						(0.5)						—						(5.6)
Income tax effects before reclassifications			(0.1)						0.2						—						0.1
Amounts reclassified from AOCI			—						0.4						(2.3)						(1.9)
Income tax effects on reclassifications			—						(0.2)						0.7						0.5
Currency translation AOCI			—						(0.3)						0.1						(0.2)
Balance at June 30, 2023			(60.0)						22.2						7.7						(30.1)
Other comprehensive income before reclassifications			0.5						2.3						—						2.8
Income tax effects before reclassifications			(0.2)						(0.7)						—						(0.9)
Amounts reclassified from AOCI			—						0.4						(2.2)						(1.8)
Income tax effects on reclassifications			—						(0.1)						0.7						0.6
Currency translation AOCI			—						(1.0)						(0.2)						(1.2)
Balance at September 30, 2023			$	(59.7)					$	23.1					$	6.0					$	(30.6)

Balance at January 1, 2022			$	(34.1)					$	(10.8)					$	(3.6)					$	(48.5)
Other comprehensive income before reclassifications			11.2						18.7						—						29.9
Income tax effects before reclassifications			0.6						(6.0)						—						(5.4)
Currency translation AOCI			—						0.3						0.1						0.4
Balance at March 31, 2022			(22.3)						2.2						(3.5)						(23.6)
Other comprehensive income (loss) before reclassifications			(18.5)						12.5						—						(6.0)
Income tax effects before reclassifications			(0.3)						(4.0)						—						(4.3)
Currency translation AOCI			—						—						0.1						0.1
Balance at June 30, 2022			(41.1)						10.7						(3.4)						(33.8)
Other comprehensive income (loss) before reclassifications			(8.1)						16.5						—						8.4
Income tax effects before reclassifications			0.4						(5.2)						—						(4.8)
Currency translation AOCI			—						(0.7)						0.2						(0.5)
Balance at September 30, 2022			$	(48.8)					$	21.3					$	(3.2)					$	(30.7)

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Orion S.A

Notes to the Condensed Consolidated Financial Statements—(continued)

Note H. Earnings Per Share

Basic earnings per share (“EPS”) is computed by dividing Net income attributable to Orion by the weighted average number of common stock outstanding during the period. Diluted EPS equals Net income attributable to Orion divided by the weighted average number of common stock outstanding during the period, adjusted for the dilutive effect of our stock–based and other equity compensation awards.

The following table reflects the income and share data used in the basic and diluted EPS computations:

			Three Months Ended September 30,												Nine Months Ended September 30,
			2023						2022						2023						2022
			(In millions, except share and per share data)
Net income attributable to ordinary equity holders			$	26.2					$	31.8					$	98.6					$	94.0
Weighted average number of Common stock (in thousands)			58,572						60,936						59,284						60,899
Basic EPS			$	0.45					$	0.52					$	1.66					$	1.54
Dilutive effect of share based payments (in thousands)			680						279						650						415
Weighted average number of diluted Common stock (in thousands)			59,252						61,215						59,934						61,314
Diluted EPS			$	0.44					$	0.52					$	1.65					$	1.53

Note I. Income Taxes

The Company records its tax provision or benefit on an interim basis using an estimated annual effective tax rate. This rate is applied to the current period ordinary income to determine the income tax provision or benefit allocated to the interim period. Losses from jurisdictions for which no benefit can be recognized and the income tax effects of unusual and infrequent items are excluded from the estimated annual effective tax rate and are recognized in the impacted interim period as discrete items. Valuation allowances are provided against any future tax benefits that arise from losses in jurisdictions for which no benefit can be recognized. The estimated annual effective tax rate may be significantly impacted by nondeductible expenses and by the Company’s projected earnings mix by tax jurisdiction. Adjustments to the estimated annual effective income tax rate are recognized in the period when such estimates are revised.

Income tax expense for the three months ended September 30, 2023 and 2022 were $8.9 million and $11.7 million, respectively.

Income tax expense for the nine months ended September 30, 2023 and 2022 were $45.0 million and $38.3 million, respectively.

Our effective income tax rates were as follows:

			Three Months Ended September 30,												Nine Months Ended September 30,
			2023						2022						2023						2022
Effective income tax rates			25.4		%				27.0		%				31.4		%				29.0		%

The change in our effective tax rate for the three and nine months ended September 30, 2023 as compared to the three and nine months ended September 30, 2022 was primarily attributable to changes in projected pre-tax income mix in countries with varying statutory tax rates.

Note J. Commitments and Contingencies

Legal Proceedings—We are subject to various lawsuits and claims including, but not limited to, matters involving contract disputes, environmental damages, personal injury and property damage. We vigorously defend ourselves and prosecute these matters as appropriate. We regularly assess the adequacy of legal accruals based on our professional judgment, experience and the information available regarding our cases.

The outcome of legal proceedings is inherently uncertain, and we offer no assurances as to the outcome of any of these matters or their effect on the Company.

Based on a consideration of all relevant facts and circumstances, we do not believe the ultimate outcome of any currently pending lawsuit against us will have a material adverse effect upon our operations, financial condition or Condensed Consolidated Financial Statements.

EPA Action—Under the EPA CD, Orion LLC had to install certain pollution control technology in order to further reduce emissions at its four U.S. manufacturing facilities. In line therewith, Orion LLC completed installation of emissions control technology to remove SO2, NOx and dust particles from tail gases at its Borger (Texas) facility since the beginning of 2023, Ivanhoe (Louisiana) facility in 2021 and Orange (Texas) facility in 2020. The installation of pollution control technology at its fourth and last U.S. manufacturing facility in Belpre

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Orion S.A

Notes to the Condensed Consolidated Financial Statements—(continued)

(Ohio) is ongoing and is scheduled to be completed late 2023, in line with the EPA CD terms. The EPA CD also requires continuous monitoring of emissions reductions that Orion LLC will need to comply with over a number of years.

As of September 30, 2023, we have spent $303 million on capital expenditures related to the EPA CD of which approximately $80 million was received as an indemnity payment from Evonik.

For further discussion on EPA Action refer to “Note Q. Commitments and Contingencies”, included in our Annual Report in Form 10-K for the year ended December 31, 2022.

Pledges and guarantees

The Company has pledged the majority of its assets (amongst others shares in affiliates, bank accounts and receivables) within the different regions in which it operates excluding China as collateral under its debt agreements. As of September 30, 2023, the Company had guarantees totaling $25.2 million issued by various financial institutions.

Note K. Financial Information by Segment

Segment information

We disclose the results of each of our operating segments in accordance with ASC 280, Segment Reporting. We manage our business in two operating segments as follows:

•Rubber Carbon Black—Used in the reinforcement of rubber in tires and mechanical rubber goods, and

•Specialty Carbon Black—Used for protection, colorization and conductivity in coatings, polymers, batteries, printing and other special applications.

Corporate includes income and expenses that cannot be directly allocated to the business segments or that are managed at the corporate level. This includes finance income and expenses, taxes and items with less bearing on the underlying core business.

Discrete financial information is available for each of the segments, and the Chief Operating Decision Maker (“CODM”) uses operating results of each operating segment for performance evaluation and resource allocation.

Our CODM uses Adjusted EBITDA as the primary measure for reviewing our segment profitability. We define Adjusted EBITDA as Income from operations before depreciation and amortization, share-based compensation, and non-recurring items (such as restructuring expenses, consulting fees related to Company strategy, legal settlements gains, etc.) plus Earnings in affiliated companies, net of tax.

The CODM does not review reportable segment asset or liability information for purposes of assessing performance or allocating resources.

Segment operating results for the three months ended September 30, 2023 and 2022 are as follows:

			Rubber						Specialty						Corporate						Total
			(In millions)
2023
Net sales from external customers			$	315.8					$	150.4					$	—					$	466.2
Depreciation and amortization of intangible assets, right of use assets, and property, plant and equipment			17.3						10.6						—						27.9
Equity in earnings of affiliated companies, net of tax			0.1						—						—						0.1
Interest and other financial expense, net															(12.9)						(12.9)
Reclassification of actuarial gain from AOCI															2.2						2.2
Adjusted EBITDA			51.2						26.1						—						77.3
2022
Net sales from external customers			$	373.5					$	169.6					$	—					$	543.1
Depreciation and amortization of intangible assets, right of use assets, and property, plant and equipment			15.6						9.6						—						25.2
Equity in earnings of affiliated companies, net of tax			0.1						—						—						0.1
Interest and other financial expense, net															(10.2)						(10.2)
Adjusted EBITDA			49.4						31.1						—						80.5

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Notes to the Condensed Consolidated Financial Statements—(continued)

Segment operating results for the nine months ended September 30, 2023 and 2022:

			Rubber						Specialty						Corporate						Total
			(In millions)
2023
Net sales from external customers			$	963.8					$	461.9					$	—					$	1,425.7
Depreciation and amortization of intangible assets, right of use assets, and property, plant and equipment			51.0						29.8						—						80.8
Equity in earnings of affiliated companies, net of tax			0.4						—						—						0.4
Interest and other financial expense, net															(41.6)						(41.6)
Reclassification of actuarial gain from AOCI															6.7						6.7
Adjusted EBITDA			172.4						93.3						—						265.7
2022
Net sales from external customers			$	1,039.7					$	529.1					$	—					$	1,568.8
Depreciation and amortization of intangible assets, right of use assets, and property, plant and equipment			49.1						30.8						—						79.9
Excluding equity in earnings of affiliated companies, net of tax			0.3						—						—						0.3
Interest and other financial expense, net															(29.1)						(29.1)
Adjusted EBITDA			128.1						119.0						—						247.1

A reconciliation of Income before earnings in affiliated companies and income taxes to Adjusted EBITDA for each of the periods presented is as follows:

			Three Months Ended September 30,												Nine Months Ended September 30,
			2023						2022						2023						2022
			(In millions)
Income before earnings in affiliated companies and income taxes			$	35.0					$	43.4					$	143.2					$	132.0
Corporate charges			3.6						1.6						6.4						5.8
Depreciation and amortization of intangible assets, right of use assets, and property, plant and equipment			27.9						25.2						80.8						79.9
Equity in earnings of affiliated companies, net of tax			0.1						0.1						0.4						0.3
Interest and other financial expense, net			12.9						10.2						41.6						29.1
Reclassification of actuarial gain from AOCI			(2.2)						—						(6.7)						—
Adjusted EBITDA			$	77.3					$	80.5					$	265.7					$	247.1

Corporate charges include the following:

			Three Months Ended September 30,												Nine Months Ended September 30,
			2023						2022						2023						2022
			(In millions)
Long term incentive plan			$	3.6					$	1.9					$	8.3					$	5.0
Other non-operating			—						(0.3)						(1.9)						0.8
Corporate Charges			$	3.6					$	1.6					$	6.4					$	5.8

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Orion S.A.

Management’s Discussion and Analysis of Financial Condition and Results of Operation

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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, 2023 and 2022 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”).

PRESENTATION OF CERTAIN FINANCIAL AND OTHER INFORMATION

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 measures to their nearest comparable GAAP measures, see section Reconciliation of Non-GAAP Financial Measures below.

These non-GAAP measures include, but are not limited to, Gross profit per metric ton, Adjusted EBITDA, Net working capital, Capital expenditures, Segment Adjusted EBITDA margin (in percentage), Net debt and Net leverage.

We define:

•Gross profit per metric ton—Gross profit divided by volume measured in metric tons.

•Adjusted EBITDA—Income from operations before depreciation and amortization, share-based compensation, and non-recurring items (such as, restructuring expenses, consulting fees related to Company strategy, legal settlement gain, etc.) plus Earnings in affiliated companies, net of tax.

•Net working capital—Inventories, net, plus Accounts receivable, net, minus Accounts payable.

•Capital expenditures—Cash paid for the acquisition of property, plant and equipment.

•Segment Adjusted EBITDA margin (in percentage)—Segment Adjusted EBITDA divided by segment Revenue.

•Net debt—Current portion of long-term debt and other financial liabilities plus Long-term debt, net plus Deferred debt issuance costs less Cash and cash equivalents.

•Net leverage—Net debt divided by trailing twelve months Adjusted EBITDA.

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.

However, other companies and analysts may calculate non-GAAP financial measures differently, so making comparisons among companies on this basis should be done carefully. Non-GAAP measures are not performance measures under GAAP and should not be considered in isolation or construed as substitutes for Net sales, Net income, Income from operations, Gross profit and other GAAP measures as an indicator of our operations in accordance with GAAP.

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Management’s Discussion and Analysis of Financial Condition and Results of Operation

Reconciliation of Non-GAAP Financial Measures

The following tables present a reconciliation of each Non-GAAP measure to the most directly comparable GAAP measure:

Reconciliation of Gross profit per metric ton:

(In millions, except volume and per metric ton data)			Three Months Ended September 30,																								Nine Months Ended September 30,
			2023						2022						Delta												2023						2022						Delta
Net sales			$	466.2					$	543.1					$	(76.9)					(14.2)						$	1,425.7					$	1,568.8					$	(143.1)					(9.1)
Cost of sales			(356.0)						(428.7)						72.7						(17.0)						(1,062.0)						(1,216.7)						154.7						(12.7)
Gross profit			$	110.2					$	114.4					$	(4.2)					(3.7)						$	363.7					$	352.1					$	11.6					3.3
Volume (in kmt)			245.2						243.3						1.9						0.8						706.0						747.9						(41.9)						(5.6)
Gross profit per metric ton			$	449.4					$	470.2					$	(20.8)					(4.4)						$	515.2					$	470.8					$	44.4					9.4

Reconciliation of Net income to Adjusted EBITDA:

			Three Months Ended September 30,																								Nine Months Ended September 30,
			2023						2022						Delta												2023						2022						Delta
			(In millions)																		%						(In millions)																		%
Net income			$	26.2					$	31.8					$	(5.6)					(17.6)						$	98.6					$	94.0					$	4.6					4.9
Add back Income tax expense			8.9						11.7						(2.8)						(23.9)						45.0						38.3						6.7						17.5
Add back Equity in earnings of affiliated companies, net of tax			(0.1)						(0.1)						—						—						(0.4)						(0.3)						(0.1)						33.3
Income before earnings in affiliated companies and income taxes			35.0						43.4						(8.4)						(19.4)						143.2						132.0						11.2						8.5
Add back Interest and other financial expense, net			12.9						10.2						2.7						26.5						41.6						29.1						12.5						43.0
Add back Reclassification of actuarial gain from AOCI			(2.2)						—						(2.2)						—						(6.7)						—						(6.7)						—
Income from operations			45.7						53.6						(7.9)						(14.7)						178.1						161.1						17.0						10.6
Add back Depreciation of property, plant and equipment and amortization of intangible assets and right of use assets			27.9						25.2						2.7						10.7						80.8						79.9						0.9						1.1
EBITDA			73.6						78.8						(5.2)						(6.6)						258.9						241.0						17.9						7.4
Equity in earnings of affiliated companies, net of tax			0.1						0.1						—						—						0.4						0.3						0.1						33.3
Long term incentive plan			3.6						1.9						1.7						89.5						8.3						5.0						3.3						66.0
Other adjustments			—						(0.3)						0.3						(100.0)						(1.9)						0.8						(2.7)						(337.5)
Adjusted EBITDA			$	77.3					$	80.5					$	(3.2)					(4.0)						$	265.7					$	247.1					$	18.6					7.5
Adjusted EBITDA Specialty Carbon Black			$	26.1					$	31.1					$	(5.0)					(16.1)						$	93.3					$	119.0					$	(25.7)					(21.6)
Adjusted EBITDA Rubber Carbon Black			$	51.2					$	49.4					$	1.8					3.6						$	172.4					$	128.1					$	44.3					34.6

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Management’s Discussion and Analysis of Financial Condition and Results of Operation

Operating Results

The table below presents our historical results derived from our Condensed Consolidated Financial Statements for the periods indicated.

			Three Months Ended September 30,												Year-Over Year
			2023						2022						Delta
			(In millions)																		%
Net sales			$	466.2					$	543.1					$	(76.9)					(14.2)
Cost of sales			356.0						428.7						(72.7)						(17.0)
Gross profit			110.2						114.4						(4.2)						(3.7)
Selling, general and administrative expenses			55.6						56.0						(0.4)						(0.7)
Research and development costs			6.2						4.5						1.7						37.8
Other expenses, net			2.7						0.3						2.4						800.0
Income from operations			45.7						53.6						(7.9)						(14.7)
Interest and other financial expense, net			12.9						10.2						2.7						26.5
Reclassification of actuarial gain from AOCI			(2.2)						—						(2.2)						N/A
Income before earnings in affiliated companies and income taxes			35.0						43.4						(8.4)						(19.4)
Income tax expense			8.9						11.7						(2.8)						(23.9)
Earnings in affiliated companies, net of tax			0.1						0.1						—						—
Net income			26.2						31.8						(5.6)						(17.6)
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments			0.3						(7.7)						8.0						(103.9)
Net gains (losses) on derivatives			0.9						10.6						(9.7)						(91.5)
Defined benefit plans, net			(1.7)						0.2						(1.9)						(950.0)
Total other comprehensive (loss) income, net of tax			(0.5)						3.1						(3.6)						(116.1)
Comprehensive income			$	25.7					$	34.9					$	(9.2)					(26.4)

Net sales

Net sales decreased by $76.9 million, or 14.2%, in the third quarter of 2023 to $466.2 million, compared to the third quarter of 2022, primarily driven by the pass-through effect of declining oil prices in both segments. Those were partially offset by improved contractual pricing and favorable foreign exchange impact.

Volume increased in aggregate by 1.9 kmt in the third quarter of 2023 to 245.2 kmt, compared to the third quarter of 2022 due to higher volume in the Specialty Carbon Black segment, partly offset by lower volume in the Rubber Carbon Black segment.

Cost of sales

Cost of sales decreased by $72.7 million, or 17.0%, to $356.0 million in the third quarter of 2023, compared to the third quarter of 2022 primarily due to the effect of declining oil prices.

Gross profit

Gross profit decreased by $4.2 million, or 3.7%, to $110.2 million, year over year. The decrease was primarily driven by lower volume in Rubber Carbon Black segment and lower margin in the Specialty Carbon Black segment.

Gross profit per metric ton decreased by 4.4% to $449.4, year over year, driven by lower margin primarily in the Specialty carbon black pricing.

Selling, general and administrative expenses

Selling, general and administrative expenses remained flat in the third quarter of 2023 compared to the third quarter of 2022.

Provision for income taxes

For the three months ended September 30, 2023, the Company recognized Income before earnings in affiliated companies and income taxes of $35.0 million, compared to $43.4 million in the three months ended September 30, 2022. The provision for income taxes was an expense of $8.9 million and $11.7 million for the three months ended September 30, 2023 and 2022, respectively. The effective tax rate for the three months ended September 30, 2023, was 25.4%, as compared to 27.0% for the three months ended September 30, 2022. The decrease in our effective tax rate for three months ended September 30, 2023, as compared to the three months ended September 30, 2022, was primarily

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Management’s Discussion and Analysis of Financial Condition and Results of Operation

attributable to changes in projected pre-tax income mix in countries with varying statutory tax rates.

Adjusted EBITDA (A Non-GAAP Financial Measure)

Adjusted EBITDA decreased in the third quarter of 2023 by $3.2 million, or 4.0%, to $77.3 million, year over year.

The decrease was driven by lower volume in the Rubber Carbon Black segment and lower cogeneration profitability in both segments, a byproduct, partially offset by improved contractual pricing.

Comprehensive Income

Comprehensive income decreased by $9.2 million in the third quarter of 2023 compared to the third quarter of 2022. The activities from the components of Comprehensive income are discussed below:

•$8.0 million of net favorable impacts of unrealized changes in foreign currency translation adjustments.

•$9.7 million of net unfavorable impacts related to financial derivative instruments primarily driven by net periodic changes in cross currency and interest rate swaps, and

•$1.9 million of net unfavorable changes in defined pension and other post-retirement benefits.

Additionally, Net income decreased by $5.6 million in the third quarter of 2023 compared to the third quarter of 2022.

For the nine months ended September 30, 2023 compared to nine months ended September 30, 2022

Condensed Consolidated Statement of Operations Data			Nine Months Ended September 30,												Year-Over Year
			2023						2022						Delta
			(In millions)																		%
Net sales			$	1,425.7					$	1,568.8					$	(143.1)					(9.1)
Cost of sales			1,062.0						1,216.7						(154.7)						(12.7)
Gross profit			363.7						352.1						11.6						3.3
Selling, general and administrative expenses			168.3						173.2						(4.9)						(2.8)
Research and development costs			18.3						15.9						2.4						15.1
Other expenses, net			(1.0)						1.9						(2.9)						(152.6)
Income from operations			178.1						161.1						17.0						10.6
Interest and other financial expense, net			41.6						29.1						12.5						43.0
Reclassification of actuarial gain from AOCI			(6.7)						—						(6.7)						N/A
Income before earnings in affiliated companies and income taxes			143.2						132.0						11.2						8.5
Income tax expense			45.0						38.3						6.7						17.5
Earnings in affiliated companies, net of tax			0.4						0.3						0.1						33.3
Net income			98.6						94.0						4.6						4.9
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments			(12.2)						(14.7)						2.5						(17.0)
Net gains (losses) on derivatives			(1.3)						32.1						(33.4)						(104.0)
Defined benefit plans, net			(4.6)						0.4						(5.0)						(1,250.0)
Total other comprehensive (loss) income, net of tax			(18.1)						17.8						(35.9)						(201.7)
Comprehensive income			$	80.5					$	111.8					$	(31.3)					(28.0)

Net sales

Net sales decreased by $143.1 million, or 9.1%, in the nine months ended September 30, 2023 to $1,425.7 million, year over year, driven primarily by the pass-through effect of declining oil prices and lower volume in both segments. Those were partially offset by improved contractual pricing and favorable product mix in the Rubber Carbon Black segment.

Volume decreased by 41.9 kmt to 706.0 kmt compared to the nine months ended September 30, 2022.

Cost of sales

Cost of sales decreased by $154.7 million, or 12.7%, to $1,062.0 million and in the nine months ended September 30, 2023 compared to the

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Management’s Discussion and Analysis of Financial Condition and Results of Operation

nine months ended September 30, 2022, primarily due to the effect of declining oil prices and lower volume.

Gross profit

Gross profit increased by $11.6 million, or 3.3%, to $363.7 million, and gross profit per metric ton increased by 9.4% to $515.2 year over year. The increase was primarily driven by improved contractual pricing and favorable product mix in the Rubber Carbon Black segment, partially offset by lower volume in both segments.

Selling, general and administrative expenses

Selling, general and administrative expenses decreased by $4.9 million, or 2.8%, to $168.3 million in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, primarily driven by lower freight costs due to lower volume in both segments.

Provision for income taxes

For the nine months ended September 30, 2023, the Company recognized Income before earnings in affiliated companies and income taxes of $143.2 million, compared to $132.0 million in the nine months ended September 30, 2022. The provision for income taxes was an expense of $45.0 million and $38.3 million for the nine months ended September 30, 2023 and September 30, 2022, respectively. The effective tax rate for the nine months ended September 30, 2023, was 31.4%, as compared to 29.0% for the nine months ended September 30, 2022. The increase in our effective tax rate for the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022, was primarily attributable to changes in projected pre-tax income mix in countries with varying statutory tax rates.

Adjusted EBITDA (A Non-GAAP Financial Measure)

Adjusted EBITDA increased by $18.6 million, or 7.5%, from $247.1 million in the nine months ended September 30, 2022 to $265.7 million in the nine months ended September 30, 2023. The increase was primarily due to improved contractual pricing and favorable product mix in the Rubber Carbon Black segment. Those were partially offset by lower volume and cogeneration profitability in both segments.

Comprehensive Income

Comprehensive income decreased by $31.3 million in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022. The activities from the components of Comprehensive income are discussed below:

•$2.5 million of net favorable impacts of unrealized changes in foreign currency translation adjustments.

•$33.4 million of net unfavorable impacts related to financial derivative instruments primarily driven by net periodic changes in cross currency and interest rate swaps, and

•$5.0 million of net unfavorable changes in defined pension and other post-retirement benefits.

These decreases were partially offset by $4.6 million of higher net income in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022.

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Management’s Discussion and Analysis of Financial Condition and Results of Operation

Segment Discussion

Our operations are managed through two reportable segments, Specialty Carbon Black and Rubber Carbon Black. We use Segment Adjusted EBITDA as the measure of segment performance and profitability.

The table below presents our segment results derived from our unaudited Condensed Consolidated Financial Statements for the periods indicated.

			Three Months Ended September 30,																								Nine Months Ended September 30,
(In millions, except volume and percentage data)			2023						2022						Delta												2023						2022						Delta
Specialty Carbon Black
Net sales			$	150.4					$	169.6					$	(19.2)					(11.3)						$	461.9					$	529.1					$	(67.2)					(12.7)
Cost of sales			111.8						124.8						(13.0)						(10.4)						328.6						366.1						(37.5)						(10.2)
Gross profit			$	38.6					$	44.8					$	(6.2)					(13.8)						$	133.3					$	163.0					$	(29.7)					(18.2)
Volume (kmt)			59.9						52.3						7.6						14.5						166.5						177.6						(11.1)						(6.3)
Adjusted EBITDA			$	26.1					$	31.1					$	(5.0)					(16.1)						$	93.3					$	119.0					$	(25.7)					(21.6)
Adjusted EBITDA margin (%)			17.4						18.3						(0.9)						(4.9)						20.2						22.5						(2.3)						(10.2)
Rubber Carbon Black
Net sales			$	315.8					$	373.5					$	(57.7)					(15.4)						$	963.8					$	1,039.7					$	(75.9)					(7.3)
Cost of sales			244.2						303.9						(59.7)						(19.6)						733.4						850.6						(117.2)						(13.8)
Gross profit			$	71.6					$	69.6					$	2.0					2.9						$	230.4					$	189.1					$	41.3					21.8
Volume (kmt)			185.3						191.0						(5.7)						(3.0)						539.5						570.3						(30.8)						(5.4)
Adjusted EBITDA			$	51.2					$	49.4					$	1.8					3.6						$	172.4					$	128.1					$	44.3					34.6
Adjusted EBITDA margin (%)			16.2						13.2						3.0						22.7						17.9						12.3						5.6						45.5

Specialty Carbon Black

Net sales decreased by $19.2 million, or 11.3%, year over year, to $150.4 million for the three months ended September 30, 2023, primarily driven by the pass-through effect of declining oil prices.

Net sales decreased by $67.2 million, or 12.7%, year over year, to $461.9 million for the nine months ended September 30, 2023, primarily driven by the pass-through effect of declining oil prices and lower volume.

Volume increased by 7.6 kmt, or 14.5%, year over year, to 59.9 kmt for the three months ended September 30, 2023, primarily due to ramp up of our Huaibei facility.

Volumes decreased by 11.1 kmt, or 6.3% year over year, to 166.5 kmt for the nine months ended September 30, 2023, primarily due to weakness in certain end-markets.

Gross profit decreased by $6.2 million, or 13.8%, year over year, to $38.6 million, and decreased by $29.7 million, or 18.2%, year over year, to $133.3 million for the three and nine months ended September 30, 2023, respectively. The gross profit decrease in both comparative periods was primarily driven by the lower margin due to lower demand and lower volume in the first half of 2023.

Adjusted EBITDA decreased by $5.0 million, or 16.1%, year over year, to $26.1 million, for the three September 30, 2023, primarily due to lower demand, which resulted in unfavorable product mix and lower cogeneration profitability.

Adjusted EBITDA decreased by $25.7 million, or 21.6%, year over year, to $93.3 million for the nine months ended September 30, 2023. The decrease was primarily due to lower demand, which resulted in lower volume, unfavorable product mix and lower cogeneration profitability.

Adjusted EBITDA margin decreased by 90 basis points, year over year, to 17.4% and by 230 basis points, year over year, to 20.2% for the three and nine months ended September 30, 2023, respectively.

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Management’s Discussion and Analysis of Financial Condition and Results of Operation

Rubber Carbon Black

Net sales decreased by $57.7 million, or 15.4%, year over year, to $315.8 million and decreased by $75.9 million, or 7.3%, year over year, to $963.8 million for the three and nine months ended September 30, 2023, respectively. The decrease in both comparative periods was primarily due to the pass-through effect of declining oil prices and lower volumes, partially offset by improved contractual pricing.

Volume decreased by 5.7 kmt, or 3.0%, year over year, to 185.3 kmt and decreased by 30.8 kmt, or 5.4%, year over year, to 539.5 kmt, for the three and nine months ended September 30, 2023, respectively, due to lower demand in both comparative periods.

Gross profit increased by $2.0 million, or 2.9%, year over year, to $71.6 million, and increased by $41.3 million, or 21.8%, to $230.4 million for the three and nine months ended September 30, 2023, respectively. The increase in both comparative periods was primarily due to improved contractual pricing, partially offset by lower cogeneration profitability.

Adjusted EBITDA increased by $1.8 million, or 3.6%, year over year, to $51.2 million, and by $44.3 million, or 34.6%, to $172.4 million for the three and nine months ended September 30, 2023. The increase was primarily due to improved contractual pricing, partially offset by lower volume and cogeneration profitability.

For the three and nine months ended September 30, 2023, Adjusted EBITDA margin rose 300 basis points to 16.2%, year over year, and 560 basis points to 17.9%, year over year, respectively.

Liquidity and Capital Resources

Historical Cash Flows

The tables below present our historical cash flows derived from our unaudited Condensed Consolidated Financial Statements for the periods indicated.

			Nine Months Ended September 30,
			2023						2022
			(In millions)
Net cash provided by (used in) operating activities			$	273.7					$	(16.7)
Net cash used in investing activities			(111.0)						(167.1)
Net cash provided by (used in) financing activities			(164.9)						167.4

2023

Net cash provided by operating activities during the nine months ended September 30, 2023 was $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 during 2023, discussed in Note D. Debt and Other Obligations.

Net cash used in investing activities in 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 of expenditures associated with our ongoing efforts to install emissions reduction technology to meet EPA requirements in the U.S.

Net cash used in financing activities during 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.

2022

Net cash used in operating activities for the nine months ended September 30, 2022, amounted to $16.7 million. The cash used in operating activities primarily reflects changes in working capital and lower Net income.

Net cash used in investing activities for the nine months ended September 30, 2022, amounted to $167.1 million. These expenditures were comprised of a combination of safety, maintenance-related, and growth investments, as well as expenditures associated with our ongoing efforts to install emissions reduction technology to meet EPA requirements in the U.S.

Net cash provided by financing activities for the nine months ended September 30, 2022, amounted to $167.4 million. Cash inflows during the nine months of $139.9 million were primarily related to net drawings under our senior secured revolving credit facilities (“RCF”), $35.3 million borrowings to partially finance our Huaibei facility in China from Bank of China and $7.0 million of short-term working capital borrowings in Korea, partially offset by scheduled debt repayments.

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Management’s Discussion and Analysis of Financial Condition and Results of Operation

Sources of Liquidity

Our principal sources of liquidity are the net cash generated (i) from operating activities, primarily driven by our operating results and changes in working capital requirements and (ii) from financing activities, primarily driven by borrowing amounts available under our committed multicurrency, senior secured RCF and related ancillary facilities, various uncommitted local credit lines, and, from time to time, term loan borrowings and Accounts receivable factoring.

We believe our anticipated future operating cash flows, the capacity under our existing credit facilities and uncommitted bilateral lines of credit, along with access to surety bonds, will be sufficient to finance our planned Capital expenditures, settle our commitments and contingencies, and address our normal anticipated working capital needs for the foreseeable future.

As of September 30, 2023, the company had total liquidity of $333.7 million, including cash and equivalents of $59.1 million, $234.4 million availability under our revolving credit facility, including ancillary lines, and $40.2 million of capacity under other available credit lines. Net debt was $756.5 million, and Net leverage was 2.29x.

Net working capital (A Non-GAAP Financial Measure)

We define Net working capital as the sum total of current Accounts receivable, net and Inventories, net less Accounts payable. Net working capital is a non-GAAP financial measure and other companies may use a similarly titled financial measure that is calculated differently from the way we calculate Net working capital. The following table sets forth the principal components of our Net working capital as of the dates indicated.

						September 30, 2023						December 31, 2022
						(In millions)
Accounts receivable, net						$	267.3					$	367.8
Inventories, net						276.9						277.9
Accounts payable						(170.9)						(184.1)
Net working capital						$	373.3					$	461.6

Our Net working capital position can vary significantly from month to month, mainly due to fluctuations in oil prices and receipts of carbon black oil shipments. In general, increases in the cost of raw materials lead to an increase in our Net working capital requirements, as our inventories and trade receivables increase as a result of higher carbon black oil prices and related sales levels. These increases are partially offset by related increases in trade payables. Due to the quantity of carbon black oil that we typically keep in stock, such increases in Net working capital occur gradually over a period of two to three months. Conversely, decreases in the cost of raw materials lead to a decrease in our Net working capital requirements over the same period of time.

Our Net working capital decreased from $461.6 million as of December 31, 2022, to $373.3 million as of September 30, 2023. The drivers of the changes in working capital over the periods were:

•Accounts receivable, net—Improved payment terms and factoring of certain accounts receivables. See Note D. Debt and Other Obligations to the accompanying Condensed Consolidated Financial Statements for further information related to the Company’s factoring agreements.

•Inventories, net—Lower oil prices and a decrease in production due to lower demand.

•Accounts payable—Lower oil prices was the primary driver.

Capital expenditures (A Non-GAAP Financial Measure)

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.

Off-Balance Sheet Arrangements

As of September 30, 2023, we did not have any off-balance sheet arrangements.

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Cautionary Statement for the Purposes of the “Safe Harbor” Provisions of the Private Securities Litigation Reform Act of 1995

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.

Forward-looking statements are typically identified by words such as “anticipate,” “assume,” “assure,” “believe,” “confident,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “objectives,” “outlook,” “probably,” “project,” “will,” “seek,” “target,” “to be” and other words of similar meaning. These forward-looking statements include, without limitation, statements about the following matters: 

•our strategies for (i) strengthening our position in Specialty carbon black or Rubber carbon black, (ii) increasing our Specialty or Rubber carbon black margins and (iii) strengthening the competitiveness of our operations;

•our cash flow projections;

•the installation and operation of pollution control technology in our United States (“U.S.”) manufacturing facilities pursuant to the U.S. Environmental Protection Agency (“EPA”) consent decree;

•the outcome of any in-progress, pending or possible litigation or regulatory proceedings;

•the expectations regarding environmental-related costs and liabilities;

•the expectations regarding the performance of our industry and the global economy, including with respect to foreign currency rates;

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

•the ability to pay dividends;

•the ability to have access to new debt providers;

•our anticipated spending on, and the timely completion and anticipated impacts of, capital projects including growth projects, emission reduction projects and the construction of new plants;

•our projections and expectations for pricing, financial results and performance in 2023 and beyond;

•the status of contract negotiations with counterparties and the impact of new contracts on our growth;

•the implementation of our natural gas and other raw material consumption reduction contingency plans;

•the demand for our specialty products; and

•our expectation that the markets we serve will continue to remain stable or grow.

All these forward-looking statements are based on estimates and assumptions that, although believed to be reasonable, are inherently uncertain. Therefore, undue reliance should not be placed upon any forward-looking statements. There are important factors that could cause actual results to differ materially from those contemplated by such forward-looking statements. These factors include, among others:

•the negative or uncertain worldwide economic conditions and developments;

•the volatility and cyclicality of the industries in which we operate;

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

•our dependence on major customers and suppliers;

•the unanticipated fluctuations in demand for our specialty products, including due to factors beyond our control;

•our ability to compete in the industries and markets in which we operate;

•our ability to address changes in the nature of future transportation and mobility concepts which may impact our customers and our business;

•our ability to develop new products and technologies successfully and the availability of substitutes for our products;

•our ability to implement our business strategies;

•our ability to respond to changes in feedstock prices and quality;

•our ability to realize benefits from investments, joint ventures, acquisitions or alliances;

•our ability to negotiate with counterparties on terms satisfactory to us, the satisfactory performance by such counterparties of their obligations to us, as well as our ability to meet our performance obligations towards such counterparties;

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•our ability to realize benefits from planned plant capacity expansions and site development projects and impacts of potential delays to such expansions and projects;

•our information technology systems failures, network disruptions and breaches of data security;

•our relationships with our workforce, including negotiations with labor unions, strikes and work stoppages;

•our ability to recruit or retain key management and personnel;

•our exposure to political or country risks inherent in doing business in some countries;

•any and all impacts from the Russian war against Ukraine and/or any escalation thereof as well as related energy shortages or other economic or physical impairments or disruptions;

•any and all impacts from the recent Hamas terror assaults against Israel as well as any reactions by Israel and any and all escalations of the Hamas/Israel conflict;

•the geopolitical events in the European Union (“EU”), relations amongst the EU member states as well as future relations between the EU and other countries and organizations;

•the environmental, health and safety regulations, including nanomaterial and greenhouse gas emissions regulations, and the related costs of maintaining compliance and addressing liabilities;

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

•our operations as a company in the chemical sector, including the related risks of leaks, fires and toxic releases;

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

•any litigation or legal proceedings, including product liability, environmental or asbestos related claims;

•our ability to protect our intellectual property rights and know-how;

•our ability to generate the funds required to service our debt and finance our operations;

•any fluctuations in foreign currency exchange and interest rates;

•the availability and efficiency of hedging;

•any changes in international and local economic conditions, including with regard to the dollar and the euro, dislocations in credit and capital markets and inflation or deflation;

•the potential impairments or write-offs of certain assets;

•any required increases in our pension fund contributions;

•the adequacy of our insurance coverage;

•any changes in our jurisdictional earnings mix or in the tax laws or accepted interpretations of tax laws in those jurisdictions;

•any challenges to our decisions and assumptions in assessing and complying with our tax obligations;

•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

•any current or future changes to disclosure requirements and obligations, related audit requirements and our ability to comply with such obligations and requirements.

Factors that could cause our actual results to differ materially from those expressed or implied in such forward-looking statements include those factors detailed under the captions “Cautionary Statement for the Purposes of the “Safe Harbor” Provisions of the Private Securities Litigation Reform Act of 1995” and “Risk Factors” and in “Note Q. Commitments and Contingencies” to our audited Consolidated Financial Statements regarding contingent liabilities, including litigation in our Annual Report in Form 10-K for the year ended December 31, 2022 and in our quarterly reports in Form 10-Q and the unaudited Condensed Consolidated Financial Statements contained therein. It is not possible for our management to predict all risk factors and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statement, as a result of new information, future events or other information, other than as required by applicable law.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Information about market risks for the period ended September 30, 2023 does not differ materially from that discussed under “Item 7A” in our 2022 Form 10-K.

Item 4. Controls and Procedures

As of September 30, 2023, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended. Based upon that evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of that date.

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There were no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II

Item 1. Legal Proceedings

We become involved from time to time in various claims and lawsuits arising from special projects or in the ordinary course of our business, such as employment related claims or asbestos litigation. Some matters involve claims for large amounts of damages as well as other relief. We believe, based on currently available information, that the results of the proceedings we are subject to, in the aggregate, will not have a material adverse effect on our financial condition, but may be material to our operating results and cash flows for any particular period when the relevant costs are incurred. We note that the outcome of legal proceedings is inherently uncertain, and we offer no assurances as to the outcome of any of these matters or their effect on the Company.

Information regarding our litigation and legal proceedings can be found in Note J. Commitments and Contingencies to the Condensed Consolidated Financial Statements, which is incorporated into this Item 1 by reference.

Item 1A. Risk Factors

The risk factors set forth below update, and should be read together with, the risk factors described in our Annual Report in Form 10-K for the year ended December 31, 2022.

Risks Related to Our Business

Our business, financial condition and results of operations have been and could in the future be adversely affected by disruptions in the carbon black oil and natural gas supplies, including disruptions caused by the ongoing conflicts between Russia and Ukraine and Israel and Hamas.

The impacts of war and other geopolitical events, including but not limited to Russia’s invasion of Ukraine and Hamas’ attack on Israel and the resulting war, are difficult to predict. For example, the conflict in Ukraine has previously caused, and may continue to cause, volatility in crude oil and natural gas prices. The responses of countries and political bodies to Russia’s actions in Ukraine, the larger overarching tensions, and Ukraine’s military defenses and the potential for wider conflict may generally increase energy market volatility, have severe adverse effects on regional and global economic markets and cause volatility in energy and other product prices. The sanctions, shipping disruptions, collateral war damage, and the potential continuation or expansion of the conflict between Russia and Ukraine, or the conflict between Hamas and Israel, could further disrupt the availability of crude oil and natural gas supplies. These conflicts could also have other impacts on our operations, including due to increased cyberattacks, which governmental and non-governmental entities have warned, have become more frequent as part of the Russia-Ukraine conflict. Furthermore, global supply chains, already disrupted by COVID-19 pandemic, may suffer further damage if the conflicts continue or escalate .

The extent or length of any adverse effects of the war in Ukraine or the Hamas-Israel conflict on the supply of oil and natural gas and the quality and availability of carbon black oil is difficult to quantify.

The continuation or escalation of events like the war in Russia-Ukraine war or the Hamas-Israel conflict could decrease our production volumes and margins and may adversely impact our business operations, financial condition and results of operations. The war in Ukraine has caused and may continue to cause curtailed or delayed spending by our customers’ customers, particularly in the automotive industry, and increases the risk of customer defaults or delays in payments. The Hamas-Israel conflict could adversely impact our margins.

Risks Related to Indebtedness, Currency Exposure and Other Financial Matters

Disruptions in credit and capital markets may make it more difficult for us and our suppliers and customers to borrow money or raise capital.

Disruptions in the credit markets may result in less credit being made available by banks and other lending institutions. In 2023, the Federal Deposit Insurance Corporation (the “FDIC”) took control and was appointed receiver of certain banks in the United States, after those banks were unable to continue their operations. The banking issues in the United States also led to concerns about certain international bank groups. Although we do not hold any of our funds at these banks, if the financial institutions with which we do business enter receivership or become insolvent in the future, there is no guarantee that we would be able to access our existing cash, cash equivalents and investments, that we would be able to maintain any required letters of credit or other credit support arrangements, or that we would be able to adequately fund our business for a prolonged period of time or at all. Similarly, we cannot predict the impact that the high market volatility and instability of the banking sector more broadly could have on economic activity and our business in particular. The failure of other banks and financial institutions, and measures taken, or not taken, by governments, businesses and other organizations in response to these events could have an adverse impact on our ability to obtain financing for our business and acquisitions or to pursue other business plans or make necessary investments, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

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Furthermore, the inability of our customers to obtain credit facilities or capital market financing, or to access their funds, could adversely impact their ability to fund their respective businesses and perform their obligations to us, which in turn could have an adverse impact on our business, financial condition and results of operations. Additionally, recent volatility in the banking market may adversely affect our business by reducing our sales and increasing our exposure to bad debt, while the inability of our suppliers to access adequate financing may adversely affect our business by increasing prices for raw materials, energy and transportation.

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities.

On May 5, 2023, our Board of Directors approved a new stock repurchase program with authorization to management to purchase up to approximately 6.9 million shares of our outstanding common stock from time to time through open market purchases or public tender offers, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, in accordance with applicable securities laws and other restrictions, at any time through June 2027 (“6.9 million of Common Stocks Repurchase Program”). This new stock repurchase program supplements our existing stock repurchase program, which was adopted by our Board of Directors in 2022 and authorizes management to purchase up to $50 million of our common stock (“$50 million of Stock Repurchase Program”).

The maximum number of shares of our common stock that may yet be purchased under both programs is not necessarily an indication of the number of shares that will ultimately be purchased. Each authorization may be suspended or discontinued at any time and does not obligate us to acquire any specific amount of common stock.

Period						Total number of Common stocks purchased						Average price paid per stock						Total number of stocks purchased as part of publicly announced plans						Maximum number of stocks yet be purchased as part of publicly announced plans
6.9 million of Common Stocks Repurchase Program
July 1 — 31, 2023						136,846						$	21.92					136,846						6,631,950
August 1 — 31, 2023						159,824						21.58						159,824						6,472,126
September 1 — 30, 2023						136,040						22.06						136,040						6,336,086
Stocks Repurchased in 2023 third quarter						432,710						$	21.84					432,710						6,336,086

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None

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Item 6. Exhibits

Exhibit Number						Description
10.1			*			Twelfth Amendment, dated as of August 16, 2023, to the Credit Agreement, by and among Orion S.A. (f/k/a Orion Engineered Carbons S.A.), Orion Engineered Carbons Holdings GmbH, Orion Engineered Carbons BondCo GmbH, Orion Engineered Carbons GmbH, OEC Finance US LLC, the Revolving Borrowers named therein, the Guarantors party thereto, the Lenders party thereto, Goldman Sachs Bank USA, as administrative agent for the Lenders.
10.2			*			Thirteenth Amendment, dated as of October 6, 2023, to the Credit Agreement, by and among Orion S.A. (f/k/a Orion Engineered Carbons S.A.), Orion Engineered Carbons Holdings GmbH, Orion Engineered Carbons BondCo GmbH, Orion Engineered Carbons GmbH, OEC Finance US LLC, the Revolving Borrowers named therein, the Guarantors party thereto, the Lenders party thereto, Goldman Sachs Bank USA, as administrative agent for the Lenders.
31.1			*			Certification of Principal Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act.
31.2			*			Certification of Principal Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act.
32.1			**			Certification of the Principal Executive Officer pursuant to 18 U.S.C. Section 1350.
32.2			**			Certification of the Principal Financial Officer pursuant to 18 U.S.C. Section 1350.
101.INS						Inline XBRL Instance Document.
101.SCH						Inline XBRL Taxonomy Extension Schema.
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase.
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase.
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase.
101.DEF						Inline XBRL Taxonomy Extension Definition Document.
104.0						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
*			Filed herewith
**			Furnished herewith
†			Management compensatory arrangement

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

						ORION S.A.
November 2, 2023			By			/s/ Jeffrey Glajch
						Name: Jeffrey Glajch
						Title: Chief Financial Officer

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