Orion (OEC) Q4 2025 Earnings Call Transcript

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DATE

Tuesday, Feb. 17, 2026 at 8:30 a.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Corning F. Painter
• Chief Financial Officer — Jeffrey F. Glajch
• Vice President of Investor Relations — Christopher Kapsch

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TAKEAWAYS

• Full Year EBITDA -- $248,000,000, with performance exceeding prior outlook due to higher-than-expected Q4 volumes, particularly from the Specialty segment.
• Free Cash Flow -- $55,000,000 for 2025, attributed to working capital initiatives and reduced capital expenditures.
• Net Debt -- $920,000,000 at year-end, reflecting a $40,000,000 reduction during the quarter.
• Leverage Ratio -- 3.7x at year-end, improved from 3.8x in the previous quarter.
• Rubber Segment Adjusted EBITDA -- $155,000,000 for 2025, down 20% due to adverse mix and lower pricing from oil pass-through effects.
• Rubber Segment Volume -- Up 4% overall, driven by higher demand in South America and APAC, partially offset by lower EMEA demand.
• Rubber Segment Net Sales -- Down 3%, primarily from lower pricing.
• Specialty Segment Adjusted EBITDA -- $94,000,000 in 2025, with a 14% decrease attributed to reduced global demand.
• Specialty Segment Volume -- Down 5% due to soft industrial activity and weakness in transportation and polymer markets.
• Specialty Segment Net Sales -- Down 4%, with favorable currency partially offsetting volume and pricing headwinds.
• Q4 2025 Specialty Adjusted EBITDA -- $27,000,000, representing a year-over-year increase of 6% and a 23% sequential rise, mainly from improved mix and new production qualification.
• Working Capital Initiatives -- Delivered $64,000,000 in Q4 2025, playing a pivotal role in full-year free cash flow generation.
• Operating Cash Flow -- Improved by $91,000,000 year over year, reaching $2,000,000 for 2025.
• Capital Expenditures -- Reduced by $46,000,000 compared to 2024, with 2026 CapEx expected at $90,000,000, a further reduction of $70,000,000.
• Cost and Productivity Savings -- Additional $20,000,000 in productivity, efficiency, and headcount savings targeted for 2026.
• Production Footprint -- Rationalization plan led to the closure of three to five lines across the Americas and EMEA in 2025.
• Safety Performance -- Only three incidents reported globally, making 2025 the company's second best safety year since going public and outperforming industry average by nine times.
• 2026 Adjusted EBITDA Guidance -- Projected in the $160,000,000 to $200,000,000 range, with H1 expected to generate $90,000,000 to $110,000,000.
• 2026 Free Cash Flow Guidance -- Anticipated between $25,000,000 and $50,000,000, despite lower expected EBITDA.
• 2026 CapEx Guidance -- $90,000,000, reflecting major reduction from prior year.
• Credit Agreement Amendment -- Successfully amended terms to provide flexibility on leverage ratios through anticipated EBITDA downdraft.
• Rubber Segment Price Cuts -- Management cited price cuts of approximately 3%-5% for 2026 contracts, lower than competitor ranges.
• Segment Strategy Shift -- Pivot to "win-with-our-customer" approach in 2025, prioritizing share preservation over aggressive price-volume trade-offs.
• La Porte Plant Timeline -- Start-up now expected in 2027, with major CapEx delayed to better sync with end-market demand.
• EcoVadis Platinum Rating -- Received in 2025, placing Orion in the top 1% of surveyed companies for sustainability practices.

SUMMARY

Orion Engineered Carbons (NYSE:OEC) delivered full-year results above internal expectations, mainly on Specialty segment volume and working capital execution. Cash flow resilience was sustained through aggressive cost and CapEx measures, neutralizing headwinds from pricing and demand weakness. Management confirmed amended financial covenants, enabling prudent leverage management into an EBITDA trough, and highlighted improvements in safety, customer alignment, and plant reliability not yet priced into guidance.

• Management expects additive upside to 2026 free cash flow only if volume recovery outpaces subdued current assumptions.
• Downtick in oil price pass-through sharply impacted EBITDA, primarily in Rubber, reflecting continued sensitivity to input volatility.
• "We did not do the trade-off of sucking up a lot of volume loss ourselves," CEO Painter said, framing Orion's intent to match, not underperform, peer declines in a challenging environment.
• Accounts payable increases are deemed sustainable near-term as Orion continues to actively manage all working capital levers.
• Conductive carbons CapEx at La Porte has been deferred in response to industry demand moderation, with no major start-up or P&L impact expected in 2026.
• Order patterns in Specialty are smaller and more just-in-time, which management believes could preface a restocking cycle if macro conditions improve.
• European tire import trends remain elevated but could be constrained, pending ongoing anti-dumping and subsidy investigations expected to conclude mid-2026.

INDUSTRY GLOSSARY

• Pass-through Pricing: A contractual mechanism by which changes in raw material costs (often oil-based feedstocks) are reflected in product pricing, impacting segment margins.
• EcoVadis Platinum Rating: An independent assessment that places a company in the top 1% in terms of sustainability, ethics, and supply chain practices among peer benchmarks.
• Conductive Carbon Black: A grade of carbon black used to enhance electrical conductivity in polymers, coatings, and battery electrodes.
• ESS (Energy Storage Systems): Large battery solutions designed for grid or utility-scale electricity storage, distinct from EV battery applications.

Full Conference Call Transcript

Operator: Greetings. Welcome to the Orion Engineered Carbons S.A. Fourth Quarter 2025 Earnings Conference Call. At this time, participants will be in listen-only mode. A question and answer session will follow the formal presentation. Anyone requiring operator assistance during the conference, please note this conference is being recorded. I will now hand the conference over to Christopher Kapsch, Vice President of Investor Relations. Thank you. You may now begin. Thank you, Rob. Good morning, everyone. This is Christopher Kapsch, VP of Investor Relations at Orion Engineered Carbons S.A. Welcome to our conference call to discuss our fourth quarter full year 2025 earnings results.

Christopher Kapsch: Joining our call are Corning F. Painter, Orion's Chief Executive Officer, and Jeffrey F. Glajch, our Chief Financial Officer. We issued our fourth quarter results this morning, and we have posted a slide presentation in the Investor Relations portion of our website. We will be referencing this deck during the call. Before we begin, we are obligated to remind you that some of the comments made on today's call are forward-looking statements. These statements are subject to the risks and uncertainties as described in the company's filings with the Securities and Exchange Commission, and our actual results may differ from those described during the call.

In addition, all non-GAAP financial measures discussed during this call are reconciled to the most directly comparable GAAP measures in the tables attached to our press release and the quarterly earnings deck. Any non-GAAP financial measures presented in these materials should not be considered as alternatives to financial measures required by GAAP. All forward-looking statements are made as of today, 02/17/2026. Orion Engineered Carbons S.A. is not obligated to update any forward-looking statements based on new circumstances or revised expectations. With that, I will turn the call over to Corning F. Painter. Good morning. Thank you, Chris, and thank you all for taking the time to join our conference call.

Before getting into our Q4 review commentary, I'm excited to introduce our new Chief Financial Officer, Jeffrey F. Glajch, who joined Orion in early December. Jeffrey has over thirty years of financial leadership experience including fourteen years in the chemical industry. Some of you may know him from his tenure at Stelleny's, where he most recently served as a Vice President and CFO of the acetyl segment. Jeff, it has been a few months, but welcome again to Orion. Moving to our results discussion. Starting on slide three. We finished 2025 with better Q4 results than we had contemplated early in November. The upside was primarily a function of higher volumes than customers had forecast.

In Rubber, tire factory curtailments were not as pronounced as customers had indicated. A larger factor, however, was our Specialty segment, where volume and mix were better than expected. I am particularly pleased with our free cash flow of $55,000,000 for the full year. Thanks to a concerted effort from our team to drive working capital we will discuss in a moment why we expect positive free cash flow to continue in 2026 despite lower EBITDA low. One of Orion's core values is our emphasis on safety. And 2025 was a near record year for employee safety within our company global.

With only three incidents across our network of plants, last year was the second best year since Orion became a public company. And based on industry-standard metrics, our performance was about nine times better than the broader chemicals space. A huge congratulations to our team on this distinguished achievement. Moving to slide four. And really for the next few slides, my intent here is to touch on three key points. First, what the industry has endured leading to the guidance we have conveyed today. Second, the actions we have taken to navigate these trough conditions including what is needed to ensure we deliver positive free cash flow this year, next year, and in the future.

And third, tire industry data which is indicating our business' fundamental drivers are setting up for recovery. On slide four, we recap a few dynamics that translated into a uniquely difficult backdrop for the carbon black industry in 2025, leading to challenging negotiations for 2026 supply agreements. We have talked for some time about the elevated imports of tires into key Western regions. These generally persisted throughout the year, and some auto industry experts have argued that tariff uncertainty only magnified this surge throughout much of 2025.

Corning F. Painter: I will share encouraging data in a moment

Corning F. Painter: that suggests an inflection could now be at hand. Part of what fueled the import surge was a lingering consumer response to higher inflation, resulting in a trade down to lower value brands, which are mainly imported. We believe this trade down has occurred in the truck and bus category as well, especially with smaller fleet operators. Encouragingly, industry trade journals have reported this trend reversing.

Corning F. Painter: In the past couple of months,

Corning F. Painter: tier two and tier one tires outsold tier three brands for the first time last year. This trade up reversion is a positive trend for our customers and more consistent with historical consumer preferences. Shifting from passenger car to truck tires, freight activity has been a drag for the tire industry for the past few years. This may surprise some on the call, but it is an important point. Truck and bus tires account for about one third of all carbon black that is consumed in tire production globally, and more than 40% of the tire market in the U.S.

Of course, this suggests that the freight industry's recession has also been a headwind to the truck tire demand and therefore carbon black volumes. The Specialty portion of carbon black has been affected by persistently weak PMI.

Corning F. Painter: In addition,

Corning F. Painter: broad uncertainty has discouraged investment, encouraged lean inventories, and weighed on consumer confidence. Collectively, these soft demand conditions have been a significant factor in the carbon black industry's challenging contract negotiations. On slide five, we highlight the actions Orion has taken to ensure our resilience through today's conditions. We are relentlessly focused on managing costs. On top of the cost reductions last year, we are taking additional actions which should drive $20,000,000 in productivity, efficiency, and headcount savings. We are sharply reducing CapEx, which is a key lever that will enable us to deliver positive free cash flow again this year.

We executed on the plan we announced last summer to rationalize three to five production lines and have already closed the lines we to. We are also pleased that our operational initiatives are building momentum and bearing fruit. For example, the reliability of our North American plants improved more than 200 basis points over the course of 2025, enabling markedly improved on-time order metrics.

Corning F. Painter: We are focused on replicating our early successes here across

Corning F. Painter: our plant network worldwide. Efforts include adopting a variety of capital-light but novel process technologies, and at least one AI tool is being leveraged for greater process efficiency.

Corning F. Painter: As you know,

Corning F. Painter: Orion believes we are entitled to earn a fair return when selling our products. In prior years, we have traded off some volume and end share to achieve this. However, in early negotiations last year, it became clear that this approach was not going to work for us, or our customers. We pivoted to a more win-with-our-customer strategy to maintain share. At the same time, we found that our customers with weaker demand themselves were looking to consolidate suppliers. This approach favored global suppliers like Orion. We believe that we emerged from this process having defended our overall share and gotten closer to a few of our key customers.

Finally, we successfully negotiated an amendment to our credit agreement that provides flexibility as we navigate through this cycle. Jeff will elaborate more on this in a moment. Moving to slide six. Underlying carbon black indicators are improving. Passenger car, truck, and off-road tire categories each comprise about a third of the carbon black consumed as a reinforcement material in the tire market on a global basis. The upper right chart with U.S. import data depicts the above-normal level of imports starting in 2023 and persisting during 2024 before surging throughout much of 2025. The more recent trends suggesting import levels are subsiding is encouraging.

In Europe, an investigation into the dumping of Chinese tires is now expected to conclude in June, and the European Commission has simultaneously launched a probe into the subsidizing of Chinese-made tires exported to Europe. A bit more of a leading indicator for imports is the export data from key tire manufacturing countries. Thailand is the single largest exporter of both passenger car and truck and bus tires to the U.S. And as depicted in the lower left chart, exports from Thailand have been trending favorably, generally declining, since the initial framework for a country-specific trade deal with Thailand was announced August 1, and subsequent to new Section 232 tariffs on truck parts, including tires, effective as of November 1.

We are also monitoring potential positive outcomes from changes to the USMCA trade agreement likely this summer. On this slide, we also show a sharp decline in tire exports from India, the largest exporter of off-road tires including construction, mining, and ag equipment tires. On slide seven, I merely wanted to remind investors just how pronounced the downturn in the key truck and bus category has been as gauged by freight activity. The Cass Freight Shipment Index shows three straight years of progressively lower freight activity in North America, including 2025 levels below the 2020 lows. There are indicators, including a rebound in spot freight rates,

Corning F. Painter: suggesting this market could be at an inflection.

Corning F. Painter: And with that, let's turn the call over to Jeff. Thanks, Corning. On slide eight, we highlight our 2025 results. We delivered full year EBITDA of $248,000,000, which exceeded our most recent outlook. The main driver for the overperformance was better-than-expected Q4 volumes, primarily in Specialty and to a lesser extent in Rubber. Our Rubber segment generated full year adjusted EBITDA of $155,000,000. Rubber's full year results were impacted predominantly by lower tire production rates in key Western markets due to elevated levels of lower-tier tire imports and soft freight industry conditions. Volumes increased 4% mainly on higher demand in South America and APAC, partially offset by lower demand in EMEA. Net sales decreased 3% on lower pricing.

Adjusted EBITDA decreased 20% primarily due to adverse customer and regional mix, as well as the unfavorable effect from the pass-through of lower oil prices. Our Specialty segment delivered adjusted EBITDA of $94,000,000. Specialty's full year results reflect soft global industrial activity, particularly in transportation and polymer markets, and macro uncertainty and a lack of clarity around global trade policy. Volumes decreased 5% owing to lower global demand. Net sales decreased 4% on lower volumes and pass-through pricing, partially offset by favorable foreign currency translation. Adjusted EBITDA of the Specialty Carbon Black segment decreased 14% primarily due to the lower demand. Most notable achievement here is our free cash flow results for 2025.

We generated $55,000,000 of free cash flow on higher-than-expected EBITDA in the fourth quarter, working capital initiatives, and a little help from lower oil prices. 2025 demonstrates our ability to generate positive free cash flow in a challenging environment, and we expect this to continue in 2026. Let's move to slide nine for Rubber segment highlights and outlook.

Jeffrey F. Glajch: On a year-over-year basis,

Jeffrey F. Glajch: fourth quarter demand softness was due to higher-than-normal seasonality. The key driver was lower tire production rates in the West, impacted by import levels as well as channel inventories that remain high due to the surge in imports throughout 2025. This headwind was only partially offset by higher volumes from additional life.

Jeffrey F. Glajch: In terms of outlook,

Jeffrey F. Glajch: we are assuming higher build rates in our key markets will remain subdued. Contract pricing for 2026 is set and baked into our outlook. Our strong and improved relationships with key tire makers position us well to take advantage of better industry and demand conditions, particularly in North America, as they materialize. Let's move to slide 10 for Specialty highlights and outlook. The segment's adjusted EBITDA of $27,000,000 improved 6% year over year and 23% sequentially despite lower volumes. This was largely attributable to positive mix, including the benefit from new production qualification. In terms of outlook, we assume flat to slightly lower volumes as PMI readings in key Western markets and global auto build rates remain muted.

It is important to note order trends are smaller and more frequent, often with just-in-time urgency. This tells us that inventory levels are quite lean, and should the macro backdrop improve, we could benefit from a restocking cycle. Now on slide 11 for cash flow and balance sheet metrics. Working capital initiatives were a key driver of positive free cash flow for the year, delivering $64,000,000 during the fourth quarter alone. On a year-over-year basis, operating cash flow improved by $91,000,000 to $2,000,000 for 2025. We also spent $46,000,000 less on CapEx in 2025 than in 2024.

Our focused efforts drove $55,000,000 of free cash flow, and I am confident we will continue to pull all levers available to continue this trend in 2026. Strong cash flow performance in the quarter enabled $40,000,000 in net debt reduction. We finished the year with $920,000,000 of net debt and a leverage ratio of 3.7x, down from 3.8x at the end of the third quarter. Finally, given the anticipated downdraft in our EBITDA in 2026, we proactively addressed potential issues related to leverage with an amendment to our credit agreement.

Our banking group was very supportive with unanimous approval, and our revised first lien leverage ratios ensure ample headroom even when considering scenarios more severe than those implied in our guide. With that, I will turn the call back to Corning to discuss our outlook. Thanks, Corning. On slide 12, we provide 2026 guidance ranges for adjusted EBITDA, free cash flow, and capital expenditures as well as some key sensitivities. For the full year, we expect to generate between $160,000,000 and $200,000,000 of adjusted EBITDA. For the first half of 2026, we expect to generate adjusted EBITDA between $90,000,000 and $110,000,000.

This additional guidance measure is based on past seasonality weightings where we have historically generated about 55% of total EBITDA in the first half of any given year and about 45% in the second half. In 2026, we anticipate generating free cash flow between $25,000,000 and $50,000,000 as we continue to execute on our working capital initiatives and reduce capital expenditures. We expect $90,000,000 of CapEx in 2026, down $70,000,000 from 2025 levels. Finally, on slide 13, I have a few concluding remarks before moving to your Q&A. No doubt about it, 2025 was a difficult year for the broader chemicals industry. In our case, the surge in tire imports was a pain point.

However, we have entered 2026 with a number of corporate strengths. You can see it in our safety performance as well as our employee engagement scores. We see it commercially through customer loyalty. Our plant reliability is improving sharply. Just yesterday, EcoVadis awarded Orion its platinum rating, putting us in the top 1% of all companies surveyed in 2025. From a market perspective, while leading indicators suggest conditions may be set up for a broad recovery, we remain cautious about the business environment for now. Moreover, we have taken aggressive actions on footprint rationalization, cost, productivity, and efficiency based on the planning assumption that the backdrop will not improve.

Our single highest priority after safety is to generate free cash flow again in 2026 through the actions we have taken on cost and capital. We do see several potential upsides over the balance of 2026, including a favorable shift in trade flows, burgeoning reshoring activity, and the inevitable freight industry recovery. In addition to helping our financial performance in 2026, a pronounced inflection in any of these dynamics would help set the stage for decidedly improved prospects heading into 2027. In the meantime, we pulled a variety of levers and are prepared should the trough-like conditions persist. And with that, Rob, let's open up the call for the Q&A session.

Operator: Thank you. We will now be conducting the question and answer session. If you would like to ask a question at this time, please press star 1 from your telephone keypad and a confirmation tone will indicate your line is in the question queue. Press star 2 if you would like to withdraw your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please for our first question. Thank you. The first question comes from the line of Josh Spector with UBS. Please proceed with your question. I had a couple of questions around the guidance and specifically Rubber.

So if you look at the bridge, you talked about flat to slightly down volumes and the rest being contract negotiation. So it seems like you are pointing towards maybe a $60,000,000 impact negative from contract outcomes. And, one, is that right? And, two, when you talked about that in your prepared remarks, you seemed to talk about improved customer alignment and good outcome for Orion. Does that mean that you guys gave up pricing to gain some volumes? And I guess it does not appear that you are baking in the volumes into the guidance. So just trying to square all those moving parts if you can help me out.

Corning F. Painter: Yeah. So I think you broadly have it for in terms of the walk. Price is definitely the largest amount. There is some regional mix in that. As you said also, there is some volume in there as well. Specifically, though, to the negotiations, what we pivoted to was just let's hold share. So I would say is the tone and where we ended up with a few customers coming through. It is a difficult period for them. It was a difficult period for us. Together is where I put that, and we felt there was, you know, an element of collaboration in that. But to be clear on this, we do not see ourselves as having clogged volume.

I think our volumes will be down with the overall industry. It is just that compared to previous years, we are not going to be down more than the overall industry. We did not do the trade-off of sucking up a lot of volume loss ourselves.

Josh Spector: Understood. That makes sense. And if I could just follow up then. So how do you think customers approach kind of this outcome? So, you know, obviously, was up a good amount over the last five years. Is this a normalization or is this to how you phrased it, you know, your customers had a tough year last year, kind of sharing in some of the pain. Do you get some of this back if the industry improves into 2027? Or, you know, how would you frame that?

Corning F. Painter: Yeah. I would definitely expect to get some of this back in '27.

Operator: Okay. Thank you. Our next question is from the line of Laurence Alexander with Jefferies. Please proceed with your questions.

Dan Rizzo: Good morning. It's Dan Rizzo on for Laurence. Thanks for taking my question.

Dan Rizzo: So you have gotten to roughly like $50,000,000 in free cash flow. I was wondering if that is what we could expect at kind of at the bottom of the cycle. And how we should think about if things were to improve or what the top of the cycle looks. I mean, should we just look at historical averages?

Jeffrey F. Glajch: Yeah. Dan, you know, the range that we put on free cash flow for next year is 25 to 50. And, you know, this is through active management of the business, active management of working capital, active management of CapEx. So this did not happen on its own. This is because we are taking actions on things like payment terms. We are working through inventory and trying to keep inventory at a low level

Dan Rizzo: Without

Jeffrey F. Glajch: risking anything in safety stock or customer deliveries. And we are managing CapEx down to a much lower level than what it has been. And so, you know, this is where we expect to be for 2026. And we expect to continue to generate positive free cash flow as we go forward. And maybe just specific. If we saw conditions reverse and some of these things that we have talked about, there is maybe early signs of, obviously, that would be additive to our desk position for '26.

Dan Rizzo: You mentioned, you know, negotiating with your customers about pricing given, you know, the current environment. Is there anything in the contracts that if things were to kind of snap back or turn around by the middle of the year that there could be some sort of pricing escalator involved?

Corning F. Painter: To be clear, I think the good thing about this industry, the contracts are honored. I think back to 2020, when it cut the other way and customers honored them. I think that to a large degree, unfortunately, the Rubber area, we are somewhat locked in. Yep. There can be spot opportunities. There can be people going above their contracts. There can be some opportunities around that. But by and large, I think we are in this pricing range.

Operator: Alright. Thank you very much. Our next question is from the line of Jonathan E. Tanwanteng with CJS Securities. Please proceed with your questions. I was wondering if there is any change to how much capacity you have under contract versus a normal year. How much you are leaving open for spot, number one, or if there are any minimums

Jonathan E. Tanwanteng: in the contracts that you may have that may not have been there before.

Corning F. Painter: Sure. First of all, take those in reverse order. In minimums, there are sometimes contract structures that do not really create a, let's say, take-or-pay environment around minimums, but do give them a financial incentive around minimums. So we have that in place. I am sorry, Jonathan. Can you take me through your two other parts to that question?

Jonathan E. Tanwanteng: Yeah. The first part was how much do you have under contract, capacity versus your capacity versus a normal year?

Corning F. Painter: Yeah. Well, so I'd say it is slightly lower in that, like, if you look at the key markets, North America, for example, like, tire manufacturing trended down through the course of last year. And I'd say they put out their forecast for this year sort of based on second-half run rate. So, like, that just naturally puts you at a little bit lower level than last year. Now the flip about loading for us since we took out, you know, maybe 3%, 5% of our capacity. If volumes go down by the same amount, our loading itself remains on a percentage basis pretty similar.

Operator: Okay.

Jonathan E. Tanwanteng: Makes sense. And then I think you had a couple of items in Q4. If you could touch on those. The first was a large tax item. Maybe talk about that, number one. And number two, I think you mentioned in the prepared remarks in the press release there is a timing benefit in Specialty that you may have addressed that. I might have missed it. But if you could talk about that as well, that would be great. Thank you.

Jeffrey F. Glajch: Yeah. And I will be glad to cover the tax item. Primarily, the single biggest item that we have in our effective tax rate for the year is the goodwill impairment charge that we took in Q3 and the non

Jonathan E. Tanwanteng: deductible nature of that

Jeffrey F. Glajch: and so that was the main driver. There is some movement in valuation allowances as well. But we would expect we return to a more normal level going forward from a tax rate standpoint. And if I think about on the volume side where we saw the upside, and, you know, we also said mix, so, like, one element of that was areas like coatings where we saw stronger demand than we had anticipated. And, of course, that is very additive for us in terms of the overall margin.

Jonathan E. Tanwanteng: Great. Thank you.

Operator: Our next question is from the line of John Roberts with JPMorgan.

John Roberts: Please proceed with your question.

Jeffrey F. Glajch: Thanks very much. Your accounts

John Roberts: payable? to think, a 197,000,000. Come Does that have to come down? Well, Jeff, we are

Jeffrey F. Glajch: we are actively managing the different elements of working capital. So we look at it with

John Roberts: accounts risk. I'm sorry.

Jeffrey F. Glajch: We are getting a little feedback from your line. Did not know if you were continuing. No. No. It is okay. I was just wondering because your receivables and inventory receivables year over year were a bit flat, and inventory came down a little bit.

John Roberts: Yeah.

Jeffrey F. Glajch: But payables really jumped. And so

John Roberts: Yeah.

Jeffrey F. Glajch: I was wondering whether that was a sustainable number or that had to come down. Yeah. Jeff. So, yeah. Sorry. We just got a little bit of feedback. So I did not know if that is the

John Roberts: yeah.

Jeffrey F. Glajch: We, so we are actively managing all the elements of working capital, and we are looking at all those as different levers as we go through the year and through each quarter. And, you know, one of the things that we are doing in accounts payable is to look at terms extensions. And so I would not say that the accounts payable has to immediately reverse. There will obviously be some quarterly activity that happens there. But we are really looking at it as a whole with inventory and how do we manage inventory levels given the current demand situation.

And also on accounts receivable, we have taken an active stance on accounts receivable to manage that going forward as well. So we look at it altogether. And we will make decisions about the whole depending on how we are tracking the report.

John Roberts: K. Secondly, can you give us an update on the La Porte plant and what is going on in conductive carbons?

Corning F. Painter: Sure. So the conductive carbons market is a dynamic place right

Corning F. Painter: now with obviously a slowdown in EVs, some pickup in the large battery energy storage area, ESS. For our part and part of the way we have been able to reduce the capital for 2026 is that we have slowed down our time period on it. We would now expect to complete and be starting up the project in 2027. And our feeling is this just better aligns with the end market demand for

John Roberts: Okay. And then lastly, you guys really

John Roberts: provided a lot of data on higher shipments. I was wondering, what about tire shipments into Europe? Are they up a little bit or a lot or decline? I mean, is it a similar trend to the United States, or is it different? How would you assess the European market?

Dan Rizzo: Sure. And so one thing is you just do not get

Corning F. Painter: quite as rapid data in the European market as you do in the U.S. But we would say that it include it rose, let's say, in the 2023, 2024 time period, the tire imports to Europe were

Operator: Of John Roberts with Mizuho. Please proceed with your questions. Thank you. And I will just ask one here. Could you tell us where the three lines were that you have closed? And the other two lines that were under review, have you concluded that they are long-term competitive now? Yeah. So we intentionally said that they were in the Americas than in EMEA. From a competitive perspective, we thought it was advantageous not to be totally clear on that. So we are sticking with that we have closed what we intend to close. We did something, obviously, in the range of three to five. And it cuts across those two ranges. And, or those two regions. Excuse me.

And I just think that is the best approach for Orion on that and our shareholders. Okay. Thank you. Next question is a follow-up from the line of John Roberts with JPMorgan. Please proceed with your question. Thanks very much. I think Cabot on its conference call said that it expected tire black prices to be down 7% to 9% for them. Is that the level that you are experiencing, or is it more, or is it less? Hey, John. Excellent question there. But the difficult thing is, like, it is hard to know exactly what one company is dividing the price change by. You know, like, how big is the denominator.

So that is, I think, the limitation to making these comparisons. As we make the comparison for ourselves, we do come up with a lower number in terms of what is the price cut. I would say, more or less, say, the 3% to 5% range. But I am not sure, you know, exactly how comparable those two things are. And then lastly, you have that interesting chart about Thailand tire exports by month and Indian tire exports. But the tire imports actually go up. And I think part of that is Cambodia, which is a smaller producer.

You know, do you have any sort of general comments about the areas in which tire imports are, you know, sort of going up from as well as the ones where they are coming down. Yeah. So I think rather so I think we picked those two countries. They are very large. Right? So Thailand, the number one to the U.S. And I guess I am not really prepared, John, to go through country by country, how to get both from here and from there to be honest with you.

I would say in general, though, the pattern of trade flows and the pattern of that underlying consumer behavior going back to tier two being the biggest, and tier one being the second, like, that is what it used to be. And so I think that is a really fundamental positive shift in terms of the underlying demand. I think that is going to be good for our customers. I would also say, I think the general pattern of trade flows and tariffs, yeah, are moving this in a similar direction. But, you know, from our perspective, we are not banking on that at this point. We are taking action.

Maybe as a last question, when La Porte comes on, how much depreciation will that add, in annual terms? I'd say the neighborhood of maybe $10,000,000. 10? Okay. Great. Yeah. Alright. Thanks. Yeah. Thanks so much. Sorry for so many questions. Yeah. John, it is always a pleasure. Yep. Thank you. Our last and final question is from the line of Josh Spector with UBS. Please proceed with your question. Yeah. Hi. Thanks for taking my follow-up. I wanted to ask just on the cost

Corning F. Painter: side of things. I mean, I think when I was looking at particularly Rubber over the most of 2025, you know, between some outages in 1Q, and inventory revaluations through the 2Q and 3Q, there is maybe about $20,000,000 of cost that last year we were calling more one-timey. Are you adding that back into your guidance? Or is there other offsets to that we should be considering in the 2026 bridge?

Corning F. Painter: Yeah. So I think as we about it, I am not sure we would come to the same conclusions about the number of one-offs. Certainly, inventory revaluation, for all our listeners, I know you know this, Josh, is really based on the movement of oil price and therefore the value of our inventories. So that will move with the overall oil situation. There is no other, like, really dramatic fundamentals moving that other than the general leaning out of the company even further this year. We took actions last year, and we take additional actions this year. Does that help, Josh? Oh,

Josh Spector: yeah. That does. And I can follow up more offline. The other one I wanted to ask about kind of the same line of thinking is just with La Porte, when you are talking about a 2027 start, does that mean there is no real start-up costs in 2026, that mostly remains in capital and we will see that in '27, or is some of that layered into '26 at all?

Corning F. Painter: No. That will be mainly '27.

Josh Spector: Okay. Thank you.

Operator: Thank you.

Operator: This concludes our question and answer session. I would like to turn the floor back over to Corning F. Painter for closing comments.

Corning F. Painter: Alright. Hey. We appreciate everyone's time today, and for the analysts, we appreciate your insightful questions. Thank you very much for that. We are looking forward to speaking with many of you over the couple days, and we will be out on the road at a couple investor forums in March and hope to see some other people there. Anyway, have a good rest of your day. Thank you very much.

Operator: Ladies and gentlemen, thank you for your participation. This does conclude today's conference. You may now disconnect your lines at this time, and have a wonderful day.

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