What changed in this filing

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Item 1. Financial Statements

2022-05-10 compared with 2021-11-04 · 202 added, 326 removed, 246 unchanged (68% of the section changed)

1 unchanged sentence

Condensed Consolidated Statements of Operations

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

(In thousands, except per share amounts)

Three Months Ended March 31,

(In millions, except share and per share amounts)

Net sales $ 484.5 $ 360.1

3 unchanged sentences

Research and development costs 5.5 4.7

Gain related to litigation settlement — — ( 82,858 ) —

Other (income) expenses, net ( 103 ) 4,528 1,904 11,530

Other expenses, net 0.3 2.5

Income from operations 54.6 42.9

3 unchanged sentences

Income tax expense 13.8 8.3

Equity in earnings of affiliated companies, net of tax 143 141 536 426

Earnings in affiliated companies, net of tax 0.1 0.1

Net income $ 32.5 $ 23.5

Weighted-average shares outstanding:

Weighted-average shares outstanding (in thousands of shares):

Basic 60,879 60,648

5 unchanged sentences

Orion Engineered Carbons S.A.

Condensed Consolidated Statements of Comprehensive Income (Loss)

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

(In thousands)

Condensed Consolidated Statements of Comprehensive Income

Three Months Ended March 31,

(In millions)

Net income $ 32.5 $ 23.5

1 unchanged sentence

Foreign currency translation adjustments 11.8 ( 5.1 )

Unrealized net gains (losses) on hedges of a net investment in a foreign operation 364 ( 66 ) 414 ( 61 )

Unrealized net losses on cash flow hedges ( 2,103 ) ( 1,134 ) ( 440 ) ( 3,399 )

Gains on defined benefit plans 951 990 2,877 4,432

Other comprehensive loss ( 11,496 ) ( 3,829 ) ( 5,235 ) ( 26,088 )

Comprehensive income (loss) $ 9,516 $ 5,168 $ 128,373 $ ( 16,838 )

Net gains on derivatives 13.0 1.2

Defined benefit plans, net 0.1 1.2

Other comprehensive income (loss) 24.9 ( 2.7 )

Comprehensive income $ 57.4 $ 20.8

See accompanying Notes to these Condensed Consolidated Financial Statements

1 unchanged sentence

Condensed Consolidated Balance Sheets

September 30, 2021 December 31, 2020

(In thousands, except share amounts)

March 31, 2022 December 31, 2021

(In millions, except share amounts)

Current assets

1 unchanged sentence

Accounts receivable, net 373.6 288.9

Other current financial assets 2,958 3,630

Inventories, net 256.9 229.8

8 unchanged sentences

Deferred income tax assets 60.9 50.4

Other financial assets 712 761

Other assets 3.2 3.5

5 unchanged sentences

Current portion of long term debt and other financial liabilities 202.3 151.7

Current portion of employee benefit plan obligation 1,055 1,118

Accrued liabilities 36.5 50.9

12 unchanged sentences

Outstanding – 60,656,076 and 60,656,076 shares

85,323 85,323

Treasury stock, at cost, 336,183 and 336,183

8 unchanged sentences

Condensed Consolidated Statements of Cash Flows

Nine Months Ended September 30,

Three Months Ended March 31,

(In millions)

Cash flows from operating activities:

4 unchanged sentences

Share-based incentive compensation 1.5 1.0

Deferred tax (benefit) ( 2,693 ) ( 11,224 )

Deferred tax (benefit) provision 2.6 ( 2.1 )

Foreign currency transactions ( 5.6 ) 3.6

8 unchanged sentences

Other assets and liabilities, net 9.5 ( 9.1 )

Net cash provided by operating activities 121,269 92,352

Net cash (used in) provided by operating activities ( 27.8 ) 1.8

Cash flows from investing activities:

Acquisition of property, plant and equipment ( 113,682 ) ( 120,343 )

Acquisition of intangible assets and property, plant and equipment ( 48.8 ) ( 27.2 )

Net cash used in investing activities ( 48.8 ) ( 27.2 )

2 unchanged sentences

Repayments of long-term debt ( 0.8 ) ( 2.1 )

Payments for debt issue costs ( 2,750 ) —

Cash inflows related to current financial liabilities 90.4 35.5

1 unchanged sentence

Dividends paid to shareholders ( 1.2 ) —

Taxes paid for shares issued under net settlement feature ( 36 ) ( 1,202 )

Net cash provided by (used in) financing activities ( 7,587 ) 60,858

Increase in cash, cash equivalents and restricted cash — 32,867

Net cash provided by financing activities 51.4 25.6

Increase (decrease) in cash, cash equivalents and restricted cash ( 25.2 ) 0.2

Cash, cash equivalents and restricted cash at the beginning of the period 68.5 67.9

6 unchanged sentences

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(In thousands, except per share amounts) Number Amount Treasury shares Additional paid-in capital Retained earnings Accumulated other comprehensive loss Total

Common stock Treasury shares Additional paid-in capital Retained earnings Accumulated other comprehensive loss Total

(In millions, except per share amounts) Number Amount

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 loss, net of tax — — — — — ( 2,728 ) ( 2,728 )

Share based compensation — — — 1,024 — — 1,024

Issuance of stock under equity compensation plans 103,409 — 1,170 ( 1,170 ) — — —

Balance at March 31, 2021 60,590,526 85,323 ( 7,345 ) 68,356 107,945 ( 51,432 ) 202,847

Net income — — — — 89,058 — 89,058

Other comprehensive income, net of tax — — — — — 24.9 24.9

Share based compensation — — — 1,216 — — 1,216

Balance at June 30, 2021 60,590,526 85,323 ( 7,345 ) 69,572 197,003 ( 42,443 ) 302,110

Net income — — — — 21,012 — 21,012

Other comprehensive loss, net of tax — — — — — ( 11,496 ) ( 11,496 )

Dividends - $ 0.02 per share — — — — ( 1.2 ) — ( 1.2 )

Share based compensation — — — 1.5 — — 1.5

Issuance of stock under equity compensation plans 42,776 — 799 (799) — — —

Balance at September 30, 2021 60,633,302 $ 85,323 $ ( 6,546 ) $ 69,893 $ 218,015 $ ( 53,939 ) $ 312,746

(In thousands, except per share amounts) Number Amount Treasury shares Additional paid-in capital Retained earnings Accumulated other comprehensive loss Total

Balance at March 31, 2022 60,656,076 $ 85.3 $ ( 6.3 ) $ 72.9 $ 249.1 $ ( 23.6 ) $ 377.4

Balance at January 1, 2021 60,487,117 $ 85.3 $ ( 8.5 ) $ 68.5 $ 84.4 $ ( 48.7 ) $ 181.0

1 unchanged sentence

Other comprehensive loss, net of tax — — — — — ( 2.7 ) ( 2.7 )

Dividends paid - $ 0.20 per share — — — — ( 12,045 ) — ( 12,045 )

Share based compensation — — — 1.0 — — 1.0

1 unchanged sentence

Balance at March 31, 2021 60,590,526 $ 85.3 $ ( 7.3 ) $ 68.3 $ 107.9 $ ( 51.4 ) $ 202.8

Net loss — — — — ( 17,780 ) — ( 17,780 )

Other comprehensive income, net of tax — — — — — 585 585

Share based compensation — — — 1,199 — — 1,199

Balance at June 30, 2020 60,487,117 85,323 ( 8,515 ) 64,129 66,504 ( 56,621 ) 150,820

Net income — — — — 8,997 — 8,997

Other comprehensive loss, net of tax — — — — — ( 3,829 ) ( 3,829 )

Share based compensation — — — 1,182 — — 1,182

Balance at September 30, 2020 60,487,117 $ 85,323 $ ( 8,515 ) $ 65,311 $ 75,501 $ ( 60,450 ) $ 157,170

See accompanying Notes to these Condensed Consolidated Financial Statements

7 unchanged sentences

Employee Benefit Plans

Restructuring Expenses

Accumulated Other Comprehensive Income (Loss)

2 unchanged sentences

Financial Information by Segment

Subsequent Events 18

Orion Engineered Carbons S.A

1 unchanged sentence

Organization, Description of the Business and Summary of Significant Accounting Policies

Orion Engineered Carbons S.A.’s unaudited Condensed Consolidated Financial Information includes Orion Engineered Carbons S.A.

Orion Engineered Carbons S.A.’s unaudited Condensed Consolidated Financial Statements include Orion Engineered Carbons S.A.

and its subsidiaries (“Orion” or the “Company”).

2 unchanged sentences

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 fiscal year ended December 31, 2020.

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, 2021.

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.

2 unchanged sentences

Adoption of accounting standards

In January 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2020-01, Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) .

The amendments in this update clarify the interaction of the accounting for equity securities under Topic 321 and investments accounted for under the equity method of accounting in Topic 323 and the accounting for certain forward contracts and purchased options accounted for under Topic 815.

The amendments in this update are effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years.

We adopted this standard on January 1, 2021.

The adoption of this standard did not materially impact our Consolidated Financial Statements.

Reference Rate Reform (Topic 848)— In March 2020, FASB issued ASU No.

2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting (ASU 2020-04), a new standard.

In January 2021, FASB issued ASU 2021-01, Reference Rate Reform (Topic 848):

Scope, which refines the scope of ASC 848 and clarifies some of its guidance as part of the Board’s monitoring of global reference rate reform.

This guidance permits entities to elect certain optional expedients and exceptions when accounting for contract modifications for receivables, debt, and leases related to reference rate reform as well as derivative contracts and certain hedging relationships affected by reference rate reform activities under way in global financial markets.

The Company adopted this guidance prospectively from July 1, 2021.

The adoption of this standard did not impact our Consolidated Financial Statements.

The adoption of this ASU will enable us to update our assessments of effectiveness, probability, and hedged risk in order to continue hedge accounting for the designated hedges that reference LIBOR, which is expected to be discontinued as a result of reference rate reform.

The Company will continue to evaluate the guidance to determine the timing and extent to which we will apply other accounting relief provided by the guidance.

Orion Engineered Carbons S.A

Notes to the Condensed Consolidated Financial Statements—(continued)

The company’s right-of-use assets (“ROU”) and lease liabilities related to operating and finance leases reflected in the Consolidated Balance Sheets are as follows:

September 30, 2021 December 31, 2020

(In thousands)

Operating leases $ 24,464 $ 25,321

Finance leases 66,052 60,318

Total $ 90,516 $ 85,639

Lease Liabilities (1)

Operating leases

Current $ 8,605 $ 7,215

Long-term 16,096 18,999

24,701 26,214

Finance leases

Current 3,733 4,862

Long-term 62,912 55,527

66,645 60,389

Total $ 91,346 $ 86,603

(1) Reflected in Current and Other liabilities in the Consolidated Balance Sheets.

Inventories, net of obsolete, unmarketable and slow-moving reserves are as follows:

September 30, 2021 December 31, 2020

(In thousands)

Raw materials, consumables and supplies, net $ 75,708 $ 57,011

Work in process 151 322

Finished goods, net 117,039 84,128

Total $ 192,898 $ 141,461

Government Assistance (Topic 832) —On November 17, 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2021-10, Disclosures by Business Entities About Government Assistance, which requires business entities to provide certain disclosures when they have received government assistance and use a grant or contribution accounting model by analogy to other accounting guidance (e.g., a grant model under IAS 20, Accounting for Government Grants and Disclosure of Government Assistance ;

ASC 958-605, Not-for-Profit Entities—Revenue Recognition ).

This ASU creates Accounting Standards Codification (“ASC”) Topic 832 (“ASC 832”).

The guidance is effective for financial statements issued for annual periods beginning after December 15, 2021.

Entities may apply the ASU’s provisions either (1) prospectively to all transactions within the scope of ASC 832 that are reflected in the financial statements as of the adoption date and all new transactions entered into after the date of adoption or (2) retrospectively.

We adopted this standard prospectively on January 1, 2022.

The adoption of this standard did not materially impact our Consolidated Financial Statements or related disclosures.

Accounts Receivable

The company had the following accounts receivable as of September 30, 2021 and December 31, 2020:

September 30, 2021 December 31, 2020

(In thousands)

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

March 31, 2022 December 31, 2021

(In millions)

Accounts receivable $ 376.6 $ 291.5

1 unchanged sentence

Accounts receivable, net of expected credit losses $ 373.6 $ 288.9

Inventories, net of reserves, are as follows:

March 31, 2022 December 31, 2021

(In millions)

Raw materials, consumables and supplies, net $ 101.6 $ 97.1

Work in process 0.3 0.2

Finished goods, net 155.0 132.5

Total $ 256.9 $ 229.8

Orion Engineered Carbons S.A

1 unchanged sentence

Debt and Other Obligations

The Company had the following debt arrangements in place as of September 30, 2021 and December 31, 2020:

September 30, 2021 December 31, 2020

(In thousands)

The company financing arrangements are as follows:

March 31, 2022 December 31, 2021

(In millions)

Current portion of Term-Loan $ 3.0 $ 3.0

4 unchanged sentences

Deferred debt issuance costs - Term Loan ( 4.5 ) ( 4.8 )

BOC Term-loan 0.9 —

Long-term debt, net 625.0 631.2

Total $ 827.3 $ 782.9

In 2014, Orion entered into an $ 895.0 million term loan credit facility (the “Credit Agreement”), which was allocated to a term loan facility denominated in U.S.

Dollars of $ 358.0 million and a term loan facility denominated in Euros of € 399.0 million with both having an original maturity date of July 25, 2021 (the “Prior Term Loans”).

Initial interest was calculated based on three-month EURIBOR (for the Euro-denominated loan), and three-month USD-LIBOR (for the USD-denominated loan) plus a 3.75 % - 4.00 % margin depending on the Company’s net leverage ratio.

For both EURIBOR and USD-LIBOR a floor of 1.0 % applied.

At least 1 % of the principal amount is required to be repaid per annum.

Subsequent to 2014, Orion entered into a number of amendments, achieving a significant reduction of both interest margins to currently 2.00 % for the U.S.

dollar term loan and 2.25 % for the Euro term loan.

In addition, the interest margin was no longer linked to Orion's net leverage ratio and the EURIBOR and USD-LIBOR floors were eliminated.

In 2017, the duration of the Prior Term Loans was extended to July 25, 2024.

In September 2021, Orion entered into the Ninth Amendment to the Credit Agreement, which includes an amended and restated term loan agreement (the "Term Loan").

The term loan credit facility was allocated to a term loan facility denominated in U.S.

dollars of $ 300 million and denominated in Euros of € 300 million with both having a maturity date of September 24, 2028 (the “Term Loans”) replacing the existing term loan credit facility.

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 %.

dollar loan, a floor of 0.50 % applies and for the Euro denominated loan a floor of 0.00 % applies.

1 % of the principal amount is required to be repaid per annum in respect to the Dollar Term Loans whereas there is no scheduled amortization for the Euro Term Loans.

The Credit Agreement was also amended to include LIBOR replacement language in preparation for the eventual phase out of the London Interbank Offered Rate (LIBOR).

The Term Loans include a sustainability-linked margin adjustment that applies to both the Euro and U.S.

dollar term loan credit facilities.

The margin adjustment is based on annual SOx and NOx emission reduction targets for the Company’s North American plants between 2022 and 2028, respectively.

Specifically, the credit spread on the Term Loans will decline or rise by up to 10 basis points depending on the emissions profile of the Company’s North American plants, in aggregate.

Starting in 2022 and continuing through 2025, the Company will review annually whether both interim targets have been met.

Only if the Company achieves both targets will it benefit from up to a 10 basis point credit spread reduction for the prospective 12 month period following the submission of the sustainability linked compliance certificate.

For the period from 2026 to 2028, a margin step-up by 5 or 10 basis points would occur if Orion does not maintain the reduced emissions profile of one or both targets.

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

In connection with the September 2021 modification of the term loan, Orion incurred approximately $ 7.8 million of refinancing costs of which $ 2.8 million of loan origination costs were capitalized and $ 5.0 million of other fees were directly expensed.

In September 2021, the Company restructured its previously existing cross-currency swaps in the amount of $ 197 million, to align them with the new U.S.

dollar denominated term loan credit facility.

Specifically for changes in the loan interest margin of 2.25 % (formerly 2.0 %) and the three-month USD-LIBOR floor of 0.50 % (formerly 0.00 %).

The cross-currency swap became effective on September 30, 2021 and will expire on September 30, 2028, in line with the maturity of the term loan.

This cross-currency swap was determined to be highly effective, continues to qualify for hedge accounting and was cost-neutral.

Orion Engineered Carbons S.A

Notes to the Condensed Consolidated Financial Statements—(continued)

Revolving credit facility

To fund operating activities and generally safeguard the Company’s liquidity, the Company has entered into a revolving credit facility (“RCF”) of € 250 million ($ 277.5 million).

As of September 30, 2021, the total commitment of $ 289 million was split between a $ 93 million RCF tranche and $ 197 million of bilateral ancillary facilities established directly with several banks under the RCF.

As of September 30, 2021, and December 31, 2020, no RCF borrowings, as defined in the Credit Agreement, had been drawn.

However, as of September 30, 2021 and December 31, 2020, $ 50.7 million and $ 70.3 million, respectively, of drawings under ancillary facilities reduced the overall amount available under the RCF to $ 238.8 million and $ 236.5 million, respectively.

As of March 31, 2022, the total commitment of $ 278 million was split between an $ 89 million RCF tranche and $ 189 million of bilateral ancillary facilities established directly with several banks under the RCF.

As part of the RCF, the Company can establish ancillary credit facilities by converting the commitments of select lenders under the € 250 million RCF into bilateral credit agreements.

Original borrowings under ancillary credit facilities reduce availability under the RCF.

Borrowings under ancillary credit facilities do not count toward debt drawn under the RCF for the purposes of determining whether the financial covenant under the Credit Agreement related to the RCF must be tested.

As of March 31, 2022, $ 55.5 million was outstanding under the RCF, and there were no borrowings under the RCF as of December 31, 2021.

We classify amounts outstanding under the RCF as current in our Consolidated Balance Sheets as the borrowings are for short-term working capital needs, typically for one-month periods, and based on management’s intention to repay the amounts outstanding within one year from the date of drawing.

As of March 31, 2022 and December 31, 2021, unused availability under the RCF was $ 122.6 million and $ 166.7 million, respectively.

Local bank loans and other short-term borrowings

As of September 30, 2021, the Company had partially drawn its uncommitted local credit line in Korea by $ 4.2 million and in Brazil by $ 1.8 million (December 31, 2020:

$ 4.6 million and $ 0.8 million), respectively.

Repurchase Agreement —On March 3, 2021 we entered in to a repurchase agreement to sell European Emission Allowance (“EUA”) certificates.

The local credit lines in Brazil and Korea are with local banks that are not lenders under the RCF and were negotiated bilaterally.

As of March 31, 2022 and December 31, 2021, the Company had the following ancillary facilities and uncommitted lines of credit outstanding:

March 31, 2022 December 31, 2021

(In millions)

Ancillary credit facilities

Total capacity (€ 170 million)

$ 188.7 $ 192.5

OEC GmbH outstanding borrowings $ 77.8 $ 103.0

OEC LLC outstanding borrowings 21.6 13.4

Uncommitted local lines of credit:

Korea (capacity $ 39.1 million)

Brazil (capacity $ 3.3 million)

Repurchase agreement 37.7 —

Total of Other short-term debt and obligations $ 200.1 $ 149.5

Repurchase Agreement —On March 15, 2022, we entered into a repurchase agreement to sell European Emission Allowance (“EUA”) certificates.

Under the agreement, we sold 450 thousand EUA certificates for € 33.5 million cash to a counterparty.

The counterparty has an obligation to resell, and we have the obligation to purchase, the same or substantially the same EUA certificates at December 22, 2021 for € 10.06 million.

The difference between the consideration received and the amount of consideration to be paid is recognized as interest expense.

At September 30, 2021, the amount outstanding was $ 11.7 million.

The same counterparty has an obligation to resell, and we have the obligation to purchase, the same or substantially the same EUA certificates on January 27, 2023

Orion Engineered Carbons S.A

Notes to the Condensed Consolidated Financial Statements—(continued)

for € 34.0 million.

The difference between the consideration received and the amount of consideration to be paid will be recognized as interest expense.

At March 31, 2022, the amount outstanding was $ 37.7 million.

Due to the short maturity, the carrying value approximates the fair value.

For additional information relating to our debt, see Note H.

Bank of China— To partially finance our Huaibei facility in China, on March 16, 2022, our wholly owned subsidiary, Orion Engineered Carbons (Huaibei) Co., Ltd.

(“OECCL”), entered into a 4.5 % fixed interest rate, CNY 500 million (approximately $ 80 million), eight year term-loan agreement with Bank of China (‘BOC Term-Loan”) maturing on December 21, 2029.

OECCL is required to repay the BOC Term-Loan principal in semi-annual payments beginning June 2024.

Interest is payable quarterly, beginning June 2022.

The agreement restricts OECCL’s ability to make external investments or make intercompany loan repayments or dividend distributions.

The principal repayments under the agreement are:

2 % in 2024, 10 % in 2025 and 22 % each year thereafter, concluding in June 2029.

The BOC Term-Loan is secured with the Huaibei facility’s land, construction in progress, and buildings as collateral.

As of March 31, 2022, we are in compliance with our debt covenants.

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, 2021.

Financial Instruments and Fair Value Measurement

The Company measures financial instruments, such as derivatives, at fair value at each balance sheet date.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the following fair value hierarchy based on the lowest level input that is significant to the fair value measurement as a whole:

• Level 1 —Unadjusted quoted market prices in active markets for identical assets or liabilities that the entity can access at the measurement date.

• Level 2 —Inputs other than quoted prices within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices such as quoted prices for similar items in active markets, quoted prices for identical or similar items in markets that are not active, inputs other than quoted prices that are observable such as interest rate and yield curves), and market-corroborated inputs.

• Level 3 —Unobservable inputs for the asset or liability.

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 March 31, 2022 or December 31, 2021.

Fair value measurement

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

March 31, 2022 December 31, 2021 Balance Sheet Classification

Notional Amount Fair Value Notional Amount Fair Value

(In millions)

Derivatives designated as hedges:

Cross currency swaps $ 197.0 $ 20.8 $ 197.0 $ 4.3 Prepaid expenses and other current assets

Total $ 197.0 $ 20.8 $ 197.0 $ 4.3

Derivatives designated as hedges:

Interest rate swaps 305.3 2.7 311.5 8.6 Other liabilities (non-current)

Total $ 305.3 $ 2.7 $ 311.5 $ 8.6

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 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.

The following table shows the fair value measurement at September 30, 2021 and December 31, 2020.

All measurements are based on observable inputs such as interest rates and are classified as Level 2 within the fair value hierarchy:

Fair Value Hierarchy September 30, 2021 December 31, 2020

(In thousands)

Receivables from hedges/derivatives $ 4 $ 195

Prepaid expenses and other current assets Level 2 4 195

Liabilities from derivatives $ 13,377 $ 23,127

Other current liabilities Level 2 1,322 296

Other liabilities (non-current) Level 2 12,055 22,831

Term loan Level 2 $ 647,923 $ 667,980

Local bank loans Level 2 $ 68,443 $ 75,640

There were no transfers of assets measured at fair value between Level 1 and Level 2 and there were no Level 3 investments during fiscal 2022 or 2021.

Orion Engineered Carbons S.A

Notes to the Condensed Consolidated Financial Statements—(continued)

Accounting for Derivative Instruments and Hedging Activities , included in our Annual Report in Form 10-K for the year ended December 31, 2020, for additional information relating to our derivatives instruments.

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 Consolidated Balance Sheets.

March 31, 2022 December 31, 2021

Notional Amount Fair Value Notional Amount Fair Value

(In millions)

Non-derivatives:

Term loan $ 639.0 $ 620.4 $ 639.0 $ 637.2

Term Loan in the table above is classified as Level 2.

At both March 31, 2022 and December 31, 2021, the fair values of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, and short term borrowings and variable rate debt approximated their carrying values due to the short-term nature of these instruments.

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

Effect of Financial Instruments

Three Months Ended March 31, 2022

Gain (Loss) Recognized in AOCI Gain (Loss) Reclassified from AOCI to Income Income Statement Classification

(In millions)

Derivatives designated as hedges:

Cross currency swaps $ 12.6 $ 0.5 Interest and other financial expense, net

Interest rate swaps 5.9 — Interest and other financial expense, net

Total $ 18.5 $ 0.5

Effect of Financial Instruments

Three Months Ended March 31, 2021

Gain (Loss) Recognized in AOCI Gain (Loss) Reclassified from AOCI to Income Income Statement Classification

(In millions)

Derivatives designated as hedges:

Cross currency swaps $ 0.8 $ — Interest and other financial expense, net

Interest rate swaps 0.7 — Interest and other financial expense, net

Total $ 1.5 $ —

Our cross currency swaps designated as a cash flow hedge of principal and interest payments related to our Term Loan mature in September 2028.

The amount recognized in AOCI related to cash flow hedges that will be reclassified to the Consolidated Statement of Operations in the next twelve months is approximately $ 1.8 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, 2021, for additional information relating to our derivatives instruments.

Employee Benefit Plans

1 unchanged sentence

The benefit obligations vary depending on the legal, tax and economic circumstances in various countries in which the Company operates.

Generally, level of benefit depends on the length of service and the remuneration.

Generally, the level of benefit depends on the length of service and the remuneration.

Orion Engineered Carbons S.A

Notes to the Condensed Consolidated Financial Statements—(continued)

Net periodic defined benefit pension benefit costs include the following:

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

(In thousands)

Three Months Ended March 31,

(In millions)

Service cost $ 0.3 $ 0.3

4 unchanged sentences

The amortization of actuarial 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.

Orion Engineered Carbons S.A

Notes to the Condensed Consolidated Financial Statements—(continued)

Restructuring Expenses

During 2016, the Company ceased operations at its plant in Ambes, France as part of the restructuring of its Rubber business segment.

Restructuring reserves related to this facility, in the Condensed Consolidated Balance Sheets, are included in Accrued Liabilities.

Details of the reserves were as follows:

Expenses Demolition and

Removal Costs Ground

Costs Other Total

(In thousands)

Provision at January 1, 2021 $ 3,559 $ 229 $ 4,251 $ — $ 8,039

Charges ( 322 ) — — — ( 322 )

Cash paid ( 43 ) — — — ( 43 )

Foreign currency translation adjustment ( 153 ) ( 10 ) ( 189 ) — ( 352 )

Provision at March 31, 2021 3,041 219 4,062 — 7,322

Charges ( 323 ) — 1,043 — 720

Cash paid ( 49 ) ( 225 ) — — ( 274 )

Foreign currency translation adjustment 46 6 41 — 93

Provision at June 30, 2021 2,715 — 5,146 — 7,861

Charges ( 1 ) — 620 — 619

Cash paid — — ( 66 ) — ( 66 )

Foreign currency translation adjustment ( 69 ) — ( 142 ) — ( 211 )

Provision at September 30, 2021 $ 2,645 $ — $ 5,558 $ — $ 8,203

Expenses Demolition and

Removal Costs Ground

Costs Other Total

(In thousands)

Provision at January 1, 2020 $ 3,400 $ 561 $ 488 $ 317 $ 4,766

Cash paid ( 514 ) ( 402 ) ( 252 ) ( 263 ) ( 1,431 )

Foreign currency translation adjustment ( 81 ) ( 11 ) ( 14 ) ( 6 ) ( 112 )

Provision at March 31, 2020 2,805 148 222 48 3,223

Cash paid ( 486 ) ( 74 ) ( 148 ) — ( 708 )

Foreign currency translation adjustment 53 2 2 1 58

Provision at June 30, 2020 2,372 76 76 49 2,573

Cash paid ( 814 ) — ( 48 ) — ( 862 )

Foreign currency translation adjustment 108 3 2 2 115

Provision at September 30, 2020 $ 1,666 $ 79 $ 30 $ 51 $ 1,826

Orion Engineered Carbons S.A

Notes to the Condensed Consolidated Financial Statements—(continued)

Accumulated Other Comprehensive Income/(Loss)

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Currency Translation Adjustments Hedging Activities Adjustments Pension and Other Postretirement Benefit Liability Adjustment Total

(In thousands)

(In millions)

Balance at January 1, 2022 $ ( 34.1 ) $ ( 10.8 ) $ ( 3.6 ) $ ( 48.5 )

Other comprehensive loss before reclassifications ( 4,693 ) 803 — ( 3,890 )

Income tax effects before reclassifications ( 402 ) ( 277 ) — ( 679 )

Amounts reclassified from AOCI — — 1,228 1,228

Income tax effects on reclassifications — — ( 394 ) ( 394 )

Currency translation AOCI — 632 375 1,007

Balance at March 31, 2021 ( 31,638 ) ( 12,327 ) ( 7,467 ) ( 51,432 )

Other comprehensive income before reclassifications 11.2 18.7 — 29.9

Income tax effects before reclassifications 0.6 ( 6.0 ) — ( 5.4 )

Amounts reclassified from AOCI — — 1,224 1,224

Income tax effects on reclassifications — — ( 398 ) ( 398 )

Currency translation AOCI — 0.3 0.1 0.4

Balance at June 30, 2021 ( 23,921 ) ( 11,772 ) ( 6,750 ) ( 42,443 )

Other comprehensive income (loss) before reclassifications ( 10,383 ) ( 3,218 ) — ( 13,601 )

Income tax effects before reclassifications ( 325 ) 1,145 — 820

Amounts reclassified from AOCI — — 1,197 1,197

Income tax effects on reclassifications — — ( 390 ) ( 390 )

Currency translation AOCI — 334 144 478

Balance at September 30, 2021 $ ( 34,629 ) $ ( 13,511 ) $ ( 5,799 ) $ ( 53,939 )

Currency Translation Adjustments Hedging Activities Adjustments Pension and Other Postretirement Benefit Liability Adjustment Total

(In thousands)

Balance at March 31, 2022 $ ( 22.3 ) $ 2.2 $ ( 3.5 ) $ ( 23.6 )

Balance at January 1, 2021 $ ( 26.5 ) $ ( 13.5 ) $ ( 8.7 ) $ ( 48.7 )

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Balance at March 31, 2021 $ ( 31.6 ) $ ( 12.3 ) $ ( 7.5 ) $ ( 51.4 )

Other comprehensive income (loss) before reclassifications 799 ( 2,224 ) — ( 1,425 )

Income tax effects before reclassifications ( 169 ) 708 — 539

Amounts reclassified from AOCI — — 2,654 2,654

Income tax effects on reclassifications — — ( 904 ) ( 904 )

Currency translation AOCI — ( 124 ) ( 155 ) ( 279 )

Balance at June 30, 2020 ( 35,723 ) ( 13,151 ) ( 7,747 ) ( 56,621 )

Other comprehensive income (loss) before reclassifications ( 3,503 ) ( 1,284 ) — ( 4,787 )

Income tax effects before reclassifications ( 116 ) 294 — 178

Amounts reclassified from AOCI — — 2,272 2,272

Income tax effects on reclassifications — — ( 919 ) ( 919 )

Currency translation AOCI — ( 209 ) ( 364 ) ( 573 )

Balance at September 30, 2020 $ ( 39,342 ) $ ( 14,350 ) $ ( 6,758 ) $ ( 60,450 )

Orion Engineered Carbons S.A

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

Three Months Ended September 30, 2021 Nine Months Ended September 30,

2021 2020 2021 2020

(In thousands, except per share amounts)

Three Months Ended March 31,

(In millions, except share and per share amounts)

Net income attributable to ordinary equity holders $ 32.5 $ 23.5

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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 the future tax benefits that arise from the losses in jurisdictions for which no benefit can be recognized.

The estimated annual effective tax rate may be significantly impacted by nondeductible expenses and the Company’s projected earnings mix by tax jurisdiction.

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, 2021 and 2020 were $ 6.8 million and $ 2.3 million, respectively.

Income tax expense for the nine months ended September 30, 2021 and 2020 were $ 48.5 million and $ 4.0 million, respectively.

Income tax expense for the three months ended March 31, 2022 and 2021 were $ 13.8 million and $ 8.3 million, respectively.

Our effective income tax rates were as follows:

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Three Months Ended March 31,

Effective income tax rates 29.8 % 26.0 %

The decrease in our effective tax rate for the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020, was primarily attributable to the impact of a discrete deferred tax gain impacting the valuation allowance on deferred tax assets.

The increase in our effective tax rate for the three months ended September 30, 2021 as compared to the three-months ended September 30, 2020, was primarily attributable to the reassessment of the recoverability of deferred tax assets and its projected earnings mix by geography and tax jurisdiction as compared to the prior period.

The increase in our effective tax rate for the three months ended March 31, 2022 as compared to the three-months ended March 31, 2021, was primarily attributable to the projected earnings mix by geography and tax jurisdiction.

Commitments and Contingencies

Environmental Matters

During 2008 and 2009, the U.S.

Restructuring— In 2016, the Company ceased operations at its plant in Ambes, France as part of the restructuring of its Rubber business segment.

Expenses related to the closing include personnel costs, demolition, removal costs and remediation costs.

Total estimated and recognized costs and total remaining costs to be paid as of March 31, 2022 are $ 44.3 million and $ 7.8 million, respectively.

Orion's reserves for restructuring of its Rubber segment in 2022 are reflected in Accrued liabilities on the Consolidated Balance Sheets.

Orion has accrued liabilities for personnel expenses of $ 2.3 million and $ 2.6 million, and for ground remediation costs of $ 5.5 million and $ 6.7 million, as of March 31, 2022 and December 31, 2021, respectively.

Environmental Reserves— Our accrued liability for future environmental reserves at our current and former plant sites and other sites totaled $ 6.6 million and $ 7.8 million as of March 31, 2022 and December 31, 2021, respectively.

Environmental-related costs are expected to occur over a number of years and are not concentrated in any single year.

In our opinion, it is reasonably possible that losses in excess of the liabilities recorded will be incurred.

However, we cannot estimate any amount or range of such possible additional losses.

New information about sites, new technology or future developments, such as involvement in investigations by regulatory agencies, could require us to reassess our potential exposure related to environmental matters.

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.

Orion Engineered Carbons S.A

Notes to the Condensed Consolidated Financial Statements—(continued)

We regularly assess the adequacy of legal accruals based on our professional judgment, experience and the information available regarding our cases.

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 Consolidated Financial Statements.

EPA Action— During 2008 and 2009, the U.S.

Environmental Protection Agency (“EPA”) contacted all U.S.

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In response to information requests received by the Company’s U.S.

facilities, the Company furnished information to

Orion Engineered Carbons S.A

Notes to the Condensed Consolidated Financial Statements—(continued)

the EPA on each of its U.S.

EPA subsequently sent notices under Section 113(a) of the Clean Air Act in 2010 alleging violations of Prevention of Significant Deterioration (“PSD”) and Title V permitting requirements under the Clean Air Act at the Company’s Belpre (Ohio) facility.

In October 2012, the Company received a corresponding notice and finding of violation (a “NOV”) alleging the failure to obtain PSD and Title V permits reflecting Best Available Control Technology (“BACT”) at several units of the Company’s Ivanhoe (Louisiana) facility, and in January 2013 the Company also received a NOV issued by the EPA for its facility in Borger (Texas) alleging the failure to obtain PSD and Title V permits reflecting BACT during the years 1996 to 2008.

facilities, the Company furnished information to the EPA on each of its U.S.

The EPA subsequently sent notices under Section 113(a) of the Clean Air Act in 2010 alleging violations of Prevention of Significant Deterioration (“PSD”) and Title V permitting requirements under the Clean Air Act at the Company’s Belpre (Ohio) facility.

In October 2012, the Company received a corresponding notice and finding of violation (a “NOV”) alleging the failure to obtain PSD and Title V permits reflecting Best Available Control Technology (“BACT”) at several units of the Company’s Ivanhoe (Louisiana) facility, and in January 2013, the Company also received an NOV issued by the EPA for its facility in Borger (Texas) alleging the failure to obtain PSD and Title V permits reflecting BACT during the years 1996 to 2008.

A comparable NOV for the Company’s U.S.

facility in Orange (Texas) was issued by the EPA in February 2013;

and EPA issued an additional NOV in March 2016 alleging more recent non-PSD air emissions violations primarily at the dryers and the incinerator of the Orange facility.

facility in Orange (Texas) was issued by the EPA in February 2013, and the EPA issued an additional NOV in March 2016 alleging more recent non-PSD air emissions violations primarily at the dryers and the incinerator of the Orange facility.

In 2013, Orion began discussions with the EPA and the U.S.

“Orion”) and the United States (on behalf of the EPA), as well as the Louisiana Department of Environmental Quality.

Department of Justice (“DOJ”) about a potential settlement to resolve the NOVs received, which ultimately led to a consent decree executed between Orion Engineered Carbons LLC (“Orion LLC” for purposes of this Note J.) and the United States (on behalf of the EPA), as well as the Louisiana Department of Environmental Quality.

The consent decree (the “EPA CD”) became effective on June 7, 2018.

The EPA CD resolves and settles the EPA’s claims of noncompliance set forth in the NOVs and in a respective complaint filed in court against Orion by the United States immediately prior to the filing of the consent decree.

All five U.S.

carbon black producers have settled with the U.S.

Under Orion’s EPA CD, Orion is installing certain pollution control technology in order to further reduce emissions at its four U.S.

Under the EPA CD, Orion LLC is installing certain pollution control technology in order to further reduce emissions at its four U.S.

manufacturing facilities in Ivanhoe (Louisiana), Belpre (Ohio), Borger (Texas), and Orange (Texas) over approximately five years .

The EPA CD also requires the continuous monitoring of emissions reductions that Orion will need to comply with over a number of years.

Orion has commenced the installation works for its Ivanhoe and Orange facilities.

While the construction at Orange has been completed according to schedule, the construction at the Ivanhoe facility has been subject to COVID-19 and hurricane Ida-related delays.

As a result, we have declared force majeure with respect to the EPA CD and requested an extension of the timeline for completion of installations.

Orion is negotiating the extension of the EPA CD deadlines, but that extension has not yet been approved by the government as of this date, and, when it is, it must also be submitted to the court for approval.

In line with EPA’s respective request, Orion continues to provide regular updates to the EPA on the Ivanhoe installation works timeline and respective COVID-19 related impacts and mitigation measures.

Under the EPA CD, Orion can choose either its Belpre or Borger facilities as the next site for installation of pollution control equipment with comparable effectiveness.

We estimate the installations of monitoring and pollution control equipment at all four Orion plants in the U.S.

will require capital expenditures in an approximate range between $ 270 million to $ 290 million of which approximately $ 181 million has been spent to date.

However, factors, such as timing, locations, target levels, changing scope or cost estimates as well as local regulations or unforeseen necessities could cause actual capital expenditures to exceed or be lower than current expectations or could affect Orion’s ability to meet the agreed target emission levels or target dates for installing required equipment as anticipated or at all.

Under the EPA CD, Orion also agreed to and paid a civil penalty of $ 0.8 million and agreed to perform environmental mitigation projects totaling $ 0.6 million.

Noncompliance with applicable emissions limits could lead to further penalty payments to the EPA.

As part of Orion’s compliance plan under the EPA CD, in April 2018 Orion signed a contract with Haldor Topsoe group to install its SNOX TM emissions control technology to remove SO2, NOx and dust particles from tail gases at Orion’s Ivanhoe, Louisiana Carbon Black production plant.

The SNOX TM technology has not been used previously in the carbon black industry.

Orion’s Share Purchase Agreement with Evonik in connection with the acquisition of the carbon black business line from Evonik Industries AG, completed on July 29, 2011 (“Acquisition), provided for a partial indemnity from Evonik against various exposures, including, but not limited to, capital investments, fines and costs arising in connection with Clean Air Act violations that occurred prior to July 29, 2011.

In June 2019, Orion initiated arbitration proceedings to enforce its rights against Evonik.

In June 2021, Orion and Evonik agreed to settle all claims made under this partial indemnity as well as certain other claims and counterclaims Orion and Evonik asserted against each other.

Evonik made a one-time cash payment of € 66.55 million ($ 79.5 million) to Orion which resolved all pending claims as well as counterclaims of $ 3.4 million.

In the Condensed Consolidated Financial Statements, Orion recorded a gain aggregating $ 82.9 million.

The EPA CD also requires continuous monitoring of emissions reductions that Orion LLC will need to comply with over a number of years.

In addition, the EPA CD required Orion LLC to pay a fine of $ 0.8 million and perform other environmental mitigation projects that are not anticipated to be material.

As part of Orion LLC’s compliance plan under the EPA CD, in April 2018, Orion LLC signed a contract with Haldor Topsoe group to install its SNOX TM emissions control technology to remove SO2, NOx and dust particles from tail gases at Orion LLC’s Ivanhoe, Louisiana Carbon Black production plant.

In 2021, the construction projects at the Ivanhoe (Louisiana) and Orange (Texas) facilities were completed.

Under the EPA CD, Orion LLC can choose either its Belpre or Borger facilities as the next site for installation of pollution control equipment with comparable effectiveness.

We have started construction on both the Belpre and Borger facilities.

While the construction at Orange was completed according to schedule, the construction at the Ivanhoe facility was subject to COVID-19 and Hurricane Ida-related delays.

As a result, we have declared force majeure with respect to the EPA CD and received an extension of the timeline for completion of installations.

Orion has successfully commissioned the new emissions control equipment at Ivanhoe within the extended timeline under the amended EPA CD.

As of March 31, 2022, we have spent $ 229 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 refer to “Note Q.

Commitments and Contingencies”, included in our Annual Report in Form 10-K for the year ended December 31, 2021.

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 excluding China as collateral under the Credit Agreement.

As of September 30, 2021, the Company had guarantees totaling $ 16.4 million issued by various financial institutions.

As of March 31, 2022, the Company had guarantees totaling $ 15.5 million issued by various financial institutions.

Financial Information by Segment

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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, Rubber Carbon Black and Specialty Carbon Black.

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.

• Specialties —Used as pigments and performance additives in coatings, polymers, printing and special applications.

• Specialties —Used as pigments and performance additives in coatings, polymers, batteries, printing and special applications.

Corporate includes income and expenses that cannot be directly allocated to the business segments or that are managed at the corporate level including:

finance income and expenses, taxes and items with less bearing on the underlying core business.

Orion Engineered Carbons S.A

Notes to the Condensed Consolidated Financial Statements—(continued)

The CEO, CFO and certain other senior management members, together, are the chief operating decision maker (“CODM”).

Discrete financial information is available for each of the segments, and the CODM uses operating results of each operating segments for performance evaluation and resource allocation.

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 segment Adjusted EBITDA as Income from operations before depreciation and amortization, adjusted for acquisition related expenses, restructuring expenses, consulting fees related to Company strategy, share of profit or loss of joint venture and certain other items.

We define Adjusted EBITDA as income from operations before depreciation and amortization, restructuring expenses, consulting fees related to Company strategy, gain related to legal settlements, and includes equity earnings (loss) 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.

The following table shows the percent of revenue recognized in each of the Company’s reportable segment:

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Rubber 62 % 63 % 61 % 61 %

Specialty 38 % 37 % 39 % 39 %

Adjustment items are not allocated to the individual segments as they are managed on a group basis.

Segment reconciliation for the three months ended September 30, 2021 and 2020:

Segment operating results for the three months ended March 31, 2022 and 2021 are as follows:

Rubber Specialties Corporate Total Segments

(In thousands)

Net sales from external customers $ 242,848 $ 150,218 $ — $ 393,066

Adjusted EBITDA $ 27,386 $ 39,030 $ — $ 66,416

Corporate charges — — ( 2,188 ) ( 2,188 )

Depreciation and amortization of intangible assets, right of use assets, and property, plant and equipment ( 13,333 ) ( 10,477 ) — ( 23,810 )

Excluding equity in earnings of affiliated companies, net of tax ( 143 ) — — ( 143 )

Interest and other financial expense, net ( 11,456 ) ( 11,456 )

Reclassification of actuarial losses from AOCI ( 1,197 ) ( 1,197 )

Income before earnings in affiliated companies and income taxes $ 27,622

(In millions)

Net sales from external customers $ 306.9 $ 177.6 $ — $ 484.5

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Interest and other financial expense, net ( 8.4 ) ( 8.4 )

Reclassification of actuarial losses from AOCI ( 2,273 ) ( 2,273 )

Income before earnings in affiliated companies and income taxes $ 46.2

Orion Engineered Carbons S.A

Notes to the Condensed Consolidated Financial Statements—(continued)

Segment reconciliation for the nine months ended September 30, 2021 and 2020:

Rubber Specialties Corporate Total Segments

(In thousands)

Net sales from external customers $ 215.9 $ 144.2 $ — $ 360.1

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Depreciation and amortization of intangible assets, right of use assets, and property, plant and equipment ( 14.3 ) ( 11.3 ) — ( 25.6 )

Gain related to litigation settlement 82,858 82,858

Excluding equity in earnings of affiliated companies, net of tax ( 0.1 ) — — ( 0.1 )

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Income before earnings in affiliated companies and income taxes $ 31.7

Net sales from external customers $ 502,895 $ 317,796 $ — $ 820,691

Adjusted EBITDA $ 63,060 $ 71,024 $ — $ 134,084

Expense from operations before income taxes and finance costs of the segment “ Corporate” comprises the following:

Three Months Ended March 31,

(In millions)

Long Term Incentive Plan $ 1.5 $ 1.0

EPA-related expenses — 1.7

Other non-operating ( 0.3 ) ( 0.4 )

Corporate Charges 1.2 2.3

Depreciation and amortization of intangible assets, right of use assets, and property, plant and equipment ( 41,382 ) ( 28,339 ) — ( 69,721 )

Excluding equity in earnings of affiliated companies, net of tax ( 426 ) — — ( 426 )

Interest and other financial expense, net ( 28,656 ) ( 28,656 )

Reclassification of actuarial losses from AOCI ( 7,325 ) ( 7,325 )

Income before earnings in affiliated companies and income taxes $ 12,830

The sales information noted above relates to external customers only.

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

In the Consolidated Statements of Operations, shipping and handling costs of $ 23.3 million and $ 17.9 million for the three months ended September 30, 2021 and 2020, respectively, and $ 69.8 million and $ 48.7 million for the nine months ended September 30, 2021 and 2020, respectively, were reflected in Selling, general and administrative expenses.

Subsequent Events

On October 29, 2021, the Company’s Board of Directors declared interim dividend in the aggregate amount of $ 1.25 million, which is equivalent to approximately $ 0.02 per common stock of the company.

The interim dividend will be paid on January 12, 2022, to holders of record as of the close of business on January 5, 2022.

Orion Engineered Carbons S.A.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements