Orion SA Q3 FY2024 earnings call

• Adjusted EBITDA of $80 million was delivered, a 7% sequential improvement and 4% higher year-over-year. • Rubber segment demand in Americas and EMEA was a key drag. • Specialty business debottlenecking efforts largely complete, and Huaibei plant expected to contribute positively. • Capital allocation: CapEx expected to be down in 2025 and 2026, with focus on maintenance and finishing projects. • Free cash flow poised to improve with higher EBITDA and lower CapEx. • Fraud event impacted cash flow and balance sheet metrics, with remediation steps taken.

Rubber segment: Endured 11% lower volumes compared to a year ago, which equated to roughly 20 KT or an additional $8 million to $10 million of EBITDA drag. Specialty segment: Volume in third quarter was flat against last year’s Q3, but mix was favorable with decline in volumes in lower-value markets compensated by sales into high-margin applications. Adjusted EBITDA for the company was $80 million, a 7% sequential improvement and 4% higher year-over-year.

• Anticipate volume growth in Rubber segment in 2025 even if overall markets are flat. • Expect Rubber segment GP per ton to be comparable to 2024 levels, with upside if economy strengthens or import pressures abate. • Specialty segment expects volume improvement, favorable pricing, mix productivity, and positive contribution from Huaibei plant to offset cost inflation. • CapEx expected to be down in 2025 and 2026, with free cash flow poised to improve sharply.

• Rubber segment demand in Americas and EMEA is a significant headwind. • Elevated tire imports affecting business. • Uncertainty around government policies and trade flows. • Fraud event impact on cash flow and balance sheet. • Sustainability and regulatory uncertainties affecting investment in capacity expansion.

Q: On the Rubber side, are volumes at a trough and what about gross profit per ton expectations?

A: Volumes are at a trough with positive outlook for next year due to import trends and tariff possibilities. Gross profit per ton is expected to be comparable to 2024 levels with potential upside.

Q: On Specialty, how much is Huaibei a benefit to 2025?

A: Huaibei is expected to have a minimum $10 million swing as a benefit in 2025, with half of a $20 million total benefit seen in 2025.

Q: What's driving increased working capital this year?

A: Building inventory, particularly in the third quarter, with expectation of seasonal inventory and receivables changes in Q4.