Item 1. Financial Statements
Item 1. Financial Statements and Supplementary Data (Unaudited)
Condensed Consolidated Statements of Operations
Three Months Ended June 30, Six Months Ended June 30,
2024 2023 2024 2023
(In millions, except share and per share data)
Net sales $ 477.0 $ 458.8 $ 979.9 $ 959.5
Cost of sales 367.2 341.7 747.9 706.0
Gross profit 109.8 117.1 232.0 253.5
Selling, general and administrative expenses 60.3 55.0 121.8 112.7
Research and development costs 6.5 5.9 13.1 12.1
Other (income) expenses, net 1.4 ( 2.7 ) 2.7 ( 3.7 )
Income from operations 41.6 58.9 94.4 132.4
Interest and other financial expense, net 12.2 13.5 24.9 28.7
Reclassification of actuarial gain from AOCI — ( 2.3 ) — ( 4.5 )
Income before earnings in affiliated companies and income taxes 29.4 47.7 69.5 108.2
Income tax expense 9.1 17.8 22.6 36.1
Earnings in affiliated companies, net of tax 0.2 0.2 0.3 0.3
Net income $ 20.5 $ 30.1 $ 47.2 $ 72.4
Weighted-average shares outstanding (in thousands):
Basic 58,388 59,012 58,514 59,646
Diluted 59,185 59,510 59,229 60,085
Earnings per share:
Basic $ 0.35 $ 0.51 $ 0.81 $ 1.21
Diluted $ 0.35 $ 0.51 $ 0.80 $ 1.20
See accompanying Notes to these Condensed Consolidated Financial Statements.
1
Table of Contents
Orion S.A.
Condensed Consolidated Statements of Comprehensive Income
Three Months Ended June 30, Six Months Ended June 30,
2024 2023 2024 2023
(In millions)
Net income $ 20.5 $ 30.1 $ 47.2 $ 72.4
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments ( 8.3 ) ( 5.2 ) ( 14.7 ) ( 12.5 )
Net losses on derivatives ( 1.2 ) ( 0.4 ) ( 1.7 ) ( 2.2 )
Defined benefit plans, net 0.1 ( 1.5 ) 0.2 ( 2.9 )
Other comprehensive loss ( 9.4 ) ( 7.1 ) ( 16.2 ) ( 17.6 )
Comprehensive income $ 11.1 $ 23.0 $ 31.0 $ 54.8
See accompanying Notes to these Condensed Consolidated Financial Statements.
2
Table of Contents
Orion S.A.
Condensed Consolidated Balance Sheets
June 30, 2024 December 31, 2023
(In millions, except share data)
ASSETS
Current assets
Cash and cash equivalents $ 34.2 $ 37.5
Accounts receivable, net 272.2 241.0
Inventories, net 284.5 287.1
Income tax receivables 9.2 6.1
Prepaid expenses and other current assets 77.8 74.4
Total current assets 677.9 646.1
Property, plant and equipment, net 919.5 900.1
Right-of-use assets 123.6 110.6
Goodwill 73.7 76.1
Intangible assets, net 22.5 25.5
Investment in equity method affiliates 5.0 5.1
Deferred income tax assets 44.2 30.0
Other assets 42.4 39.9
Total non-current assets 1,230.9 1,187.3
Total assets $ 1,908.8 $ 1,833.4
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 186.2 $ 183.7
Current portion of long-term debt and other financial liabilities 173.6 137.0
Accrued liabilities 38.3 41.7
Income taxes payable 30.2 34.2
Other current liabilities 61.0 43.7
Total current liabilities 489.3 440.3
Long-term debt, net 660.7 677.3
Employee benefit plan obligation 59.8 60.4
Deferred income tax liabilities 75.1 66.3
Other liabilities 120.0 110.6
Total non-current liabilities 915.6 914.6
Commitments and contingencies
Stockholders' equity
Common stock
Authorized: 65,035,579 and 65,035,579 shares with no par value
Issued – 60,992,259 and 60,992,259 shares with no par value
Outstanding – 58,356,621 and 57,898,772 shares
85.3 85.3
Treasury stock, at cost, 2,635,638 and 3,093,487
( 62.7 ) ( 70.1 )
Additional paid-in capital 76.2 85.6
Retained earnings 461.2 417.6
Accumulated other comprehensive loss ( 56.1 ) ( 39.9 )
Total stockholders' equity 503.9 478.5
Total liabilities and stockholders' equity $ 1,908.8 $ 1,833.4
TY
See accompanying Notes to these Condensed Consolidated Financial Statements.
3
Table of Contents
Orion S.A.
Condensed Consolidated Statements of Cash Flows
7
Six Months Ended June 30,
2024 2023
(In millions)
Cash flows from operating activities:
Net income $ 47.2 $ 72.4
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property, plant and equipment and amortization of intangible assets and right of use assets 59.2 52.9
Amortization of debt issuance costs 0.8 1.3
Share-based compensation 6.5 4.7
Deferred tax provision ( 6.0 ) 1.4
Foreign currency transactions 0.3 4.9
Reclassification of actuarial gain from AOCI — ( 4.5 )
Other operating non-cash items, net — ( 0.5 )
Changes in operating assets and liabilities, net:
Trade receivables ( 39.3 ) 99.0
Inventories ( 5.4 ) 6.2
Trade payables 5.1 ( 8.3 )
Other provisions ( 0.7 ) ( 9.3 )
Income tax liabilities ( 3.0 ) ( 7.4 )
Other assets and liabilities, net ( 3.0 ) ( 6.6 )
Net cash provided by operating activities 61.7 206.2
Cash flows from investing activities:
Acquisition of property, plant and equipment ( 87.8 ) ( 69.1 )
Net cash used in investing activities ( 87.8 ) ( 69.1 )
Cash flows from financing activities:
Proceeds from long-term debt borrowings — 7.8
Repayments of long-term debt ( 2.1 ) ( 1.5 )
Payments for debt issue costs ( 0.2 ) ( 0.2 )
Cash inflows related to current financial liabilities 115.9 85.6
Cash outflows related to current financial liabilities ( 80.9 ) ( 160.4 )
Dividends paid to shareholders ( 2.4 ) ( 2.5 )
Repurchase of common stock ( 6.8 ) ( 49.5 )
Net cash provided by (used in) financing activities 23.5 ( 120.7 )
Increase (decrease) in cash, cash equivalents and restricted cash ( 2.6 ) 16.4
Cash, cash equivalents and restricted cash at the beginning of the period 40.2 63.4
Effect of exchange rate changes on cash ( 1.8 ) 0.1
Cash, cash equivalents and restricted cash at the end of the period 35.8 79.9
Less restricted cash at the end of the period
1.6 2.6
Cash and cash equivalents at the end of the period $ 34.2 $ 77.3
See accompanying Notes to these Condensed Consolidated Financial Statements.
4
Table of Contents
Orion S.A.
Condensed Consolidated Statements of Changes in Stockholders’ Equity
Common stock Treasury shares Additional paid-in capital Retained earnings Accumulated other comprehensive loss Total
(In millions, except share and per share amounts) Number Amount
Balance at January 1, 2024 57,898,772 $ 85.3 $ ( 70.1 ) $ 85.6 $ 417.6 $ ( 39.9 ) $ 478.5
Net income — — — — 26.7 — 26.7
Other comprehensive loss, net of tax — — — — — ( 6.8 ) ( 6.8 )
Dividends $ 0.02 per share — — — — ( 1.2 ) — ( 1.2 )
Repurchases of Common stock ( 294,000 ) — ( 6.8 ) — — — ( 6.8 )
Share based compensation — — — 3.5 — — 3.5
Issuance of stock under equity compensation plans 703,161 — 13.4 ( 15.1 ) — — ( 1.7 )
Balance at March 31, 2024 58,307,933 85.3 ( 63.5 ) 74.0 443.1 ( 46.7 ) 492.2
Net income — — — — 20.5 — 20.5
Other comprehensive loss, net of tax — — — — — ( 9.4 ) ( 9.4 )
Dividends $ 0.04 per share — — — — ( 2.4 ) — ( 2.4 )
Share based compensation — — — 3.0 — — 3.0
Issuance of stock under equity compensation plans 48,688 — 0.8 ( 0.8 ) — — —
Balance at June 30, 2024 58,356,621 $ 85.3 $ ( 62.7 ) $ 76.2 $ 461.2 $ ( 56.1 ) $ 503.9
j
Balance at January 1, 2023 60,571,556 $ 85.3 $ ( 8.8 ) $ 76.4 $ 319.0 $ ( 12.5 ) $ 459.4
Net income — — — — 42.3 — 42.3
Other comprehensive loss, net of tax — — — — — ( 10.5 ) ( 10.5 )
Dividends $ 0.02 per share — — — — ( 1.3 ) — ( 1.3 )
Repurchases of Common stock ( 1,286,915 ) — ( 29.3 ) — — — ( 29.3 )
Share based compensation — — — 2.1 — — 2.1
Issuance of stock under equity compensation plans 131,550 — 2.9 ( 4.6 ) — — ( 1.7 )
Balance at March 31, 2023 59,416,191 85.3 ( 35.2 ) 73.9 360.0 ( 23.0 ) 461.0
Net income — — — — 30.1 — 30.1
Other comprehensive loss, net of tax — — — — — ( 7.1 ) ( 7.1 )
Dividends $ 0.04 per share — — — — ( 2.4 ) — ( 2.4 )
Repurchases of Common stock ( 822,595 ) — ( 20.2 ) — — — ( 20.2 )
Share based compensation — — — 2.6 — — 2.6
Issuance of stock under equity compensation plans 47,250 — 1.4 ( 1.2 ) — — 0.2
Balance at June 30, 2023 58,640,846 $ 85.3 $ ( 54.0 ) $ 75.3 $ 387.7 $ ( 30.1 ) $ 464.2
See accompanying Notes to these Condensed Consolidated Financial Statements.
5
Table of Contents
Orion S.A
Notes to the Condensed Consolidated Financial Statement (Unaudited)
Table of Contents—Notes
Note A. Organization, Description of the Business and Summary of Significant Accounting Policies
7
Note B. Accounts Receivable
8
Note C. Inventories
7
Note D. Debt and Other Obligations
8
Note E. Financial Instruments and Fair Value Measurement
9
Note F. Employee Benefit Plans
11
Note G. Accumulated Other Comprehensive Income (Loss)
11
Note H. Earnings Per Share
12
Note I. Income Taxes
12
Note J. Commitments and Contingencies
13
Note K. Financial Information by Segment
13
6
Table of Contents
Orion S.A
Notes to the Condensed Consolidated Financial Statements—(continued)
Note A. Organization, Description of the Business and Summary of Significant Accounting Policies
Orion S.A.’s unaudited Condensed Consolidated Financial Statements include Orion S.A. and its subsidiaries (“Orion” or the “Company”). The unaudited Condensed Consolidated Financial Statements have been prepared in accordance with the United States (“U.S.”) Generally Accepted Accounting Principles (“GAAP”) and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for annual financial statements. These financial statements should be read in conjunction with the Consolidated Financial Statements included in our Annual Report in Form 10-K for the year ended December 31, 2023.
The accompanying unaudited Condensed Consolidated Financial Statements include all adjustments that are necessary for the fair presentation of our results for the interim periods presented. These statements contain some amounts that are based upon management estimates and judgments. Future actual results could differ from such current estimates. Results for interim periods are not necessarily indicative of results to be expected for the full year.
Summary of Significant Accounting Policies — Accounting Standards Not Yet Adopted
Income Taxes —In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740) Improvements to Income Tax Disclosures. This ASU:
• Establishes new income tax disclosure requirements in addition to modifying and eliminating certain existing requirements.
• Requires disaggregated information about a reporting entity’s effective tax rate reconciliation.
• Requires disaggregated information about a reporting entity’s information on income taxes paid.
• Requires all entities to disclose annually income taxes paid (net of refunds received) disaggregated by federal (national), state and foreign taxes and to disaggregate the information by jurisdiction based on a quantitative threshold.
• Is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted.
We believe, the adoption of this ASU will not materially impact our Condensed Consolidated Financial Statements, however will require additional disclosures in future Annual Reports.
Segment —In November 2023, the Financial Account Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment . This ASU:
• Introduces a new requirement to disclose significant segment expenses regularly provided to the Chief Operating Decision Maker (“CODM”),
• Extends certain annual disclosures to interim periods,
• Permits more than one measure of segment profit or loss to be reported under certain conditions, and
• Requires disclosure of the title and position of the CODM. However, but does not change how the CODM is identified.
• This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted.
We believe, the adoption of this ASU will not materially impact our Condensed Consolidated Financial Statements, however will require additional segment disclosures in future periods .
Note B. Accounts Receivable
Accounts receivable, net of allowance for credit losses, are as follows:
June 30, 2024 December 31, 2023
(In millions)
Accounts receivable $ 274.1 $ 242.2
Expected credit losses ( 1.9 ) ( 1.2 )
Accounts receivable, net $ 272.2 $ 241.0
7
Table of Contents
Orion S.A
Notes to the Condensed Consolidated Financial Statements—(continued)
Accounts Receivable Factoring Facilities ― For the three months ended June 30, 2024 and 2023 the gross amount of receivables sold were $ 110.8 million and $ 125.2 million, respectively. For the six months ended June 30, 2024 and 2023 the gross amount of receivables sold were $ 218.4 million and $ 194.1 million, respectively.
In the Condensed Consolidated Statements of Operations, the loss on receivables sold is reflected in Other expenses, net. For the three months ended June 30, 2024 and 2023 the loss on receivables sold was approximately $ 1.3 million and $ 1.3 million, respectively. For the six months ended June 30, 2024 and 2023 the loss on receivables sold was approximately $ 2.4 million and $ 1.8 million , respectively.
Note C. Inventories
Inventories, net of reserves, are as follows:
June 30, 2024 December 31, 2023
(In millions)
Raw materials, consumables and supplies, net $ 115.3 $ 113.8
Work in process 0.1 0.2
Finished goods, net 169.1 173.1
Inventories, net $ 284.5 $ 287.1
Note D. Debt and Other Obligations
Debt and other obligations are as follows:
June 30, 2024 December 31, 2023
(In millions)
Current
Current portion of Term-Loan $ 3.0 $ 3.1
Deferred debt issuance costs - Term-Loan ( 0.8 ) ( 0.8 )
Current portion of China Term-Loan 3.4 —
Other short-term debt and obligations 168.0 134.7
Current portion of long-term debt and other financial liabilities 173.6 137.0
Non-current
Term-Loan 609.9 621.8
Deferred debt issuance costs - Term-Loan ( 2.6 ) ( 3.1 )
China Term-Loan 53.4 58.6
Long-term debt, net 660.7 677.3
Total $ 834.3 $ 814.3
a. Revolving credit facility
As of June 30, 2024, total capacity under our senior secured revolving credit facility (the “RCF”) and Ancillary facilities is € 280 million ($ 299.8 million). As of June 30, 2024 and December 31, 2023, availability under the RCF and Ancillary facilities is $ 157.4 million and $ 221.6 million, respectively.
There were no borrowings under the RCF as of June 30, 2024 or December 31, 2023.
8
Table of Contents
Orion S.A
Notes to the Condensed Consolidated Financial Statements—(continued)
b. Other Short-Term Debt and Obligations
June 30, 2024 December 31, 2023
(In millions)
Revolving Credit Facility $ — $ —
Ancillary Credit Facilities
OEC GmbH outstanding borrowings 124.0 88.8
OEC LLC outstanding borrowings 12.4 21.1
Brazil Uncommitted Local Lines of Credit (capacity $ 2.8 million)
— —
Korea Working Capital Loan (capacity $ 38.1 million)
Uncommitted 1.8 1.9
Committed 23.3 20.1
China Working Capital Loans
Qingdao (capacity $ 6.9 million)
5.4 2.8
Huaibei (capacity $ 21.4 million)
1.1 —
Total of Other Short-term Debt and Obligations $ 168.0 $ 134.7
Supplemental information:
Total ancillary capacity - EUR € 214.0 € 214.0
Total ancillary capacity - U.S. Dollars $ 229.1 $ 236.5
As of June 30, 2024, 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, 2023.
Note E. Financial Instruments and Fair Value Measurement
Risk management
We have policies governing the use of derivative instruments and do not enter into financial instruments for trading or speculative purposes.
By using derivative instruments, we are subject to credit and market risk. To minimize counterparty credit (or repayment) risk, we enter into transactions primarily with investment grade financial institutions. The market risk exposure is not hedged in a manner to completely eliminate the effects of changing market conditions on earnings or cash flow.
No significant concentration of credit risk existed as of June 30, 2024 or December 31, 2023.
Fair value measurement
The following table summarizes outstanding financial instruments that are measured at fair value on a recurring basis:
June 30, 2024 December 31, 2023 Balance Sheet Classification
Notional Amount Fair Value Notional Amount Fair Value
(In millions)
Assets
Derivatives designated as hedges:
Cross currency swaps $ 197.0 $ 37.8 $ 197.0 $ 31.3 Other financial assets (non-current)
Interest rate swaps 294.4 0.6 303.9 4.6 Other financial assets (non-current)
Total $ 491.4 $ 38.4 $ 500.9 $ 35.9
All financial instruments in the table above are classified as Level 2. We present the gross assets and liabilities of our derivative financial instruments in the Condensed Consolidated Balance Sheets.
For financial assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization at the end of each reporting period. There were no transfers of assets measured at fair value between Level 1 and Level 2 and there were no Level 3 investments during 2024 or 2023.
9
Table of Contents
Orion S.A
Notes to the Condensed Consolidated Financial Statements—(continued)
The following table presents the carrying value and estimated fair value of our financial instruments that are not measured at fair value on a recurring basis for the periods presented. Short-term and Long-term debt are recorded at amortized cost in the Condensed Consolidated Balance Sheets.
June 30, 2024 December 31, 2023
Notional Amount Fair Value Notional Amount Fair Value
(In millions)
Non-derivatives:
Liabilities:
Term-Loan $ 612.9 $ 606.3 $ 624.9 $ 617.0
China Term-Loan 56.8 57.1 58.6 57.1
Total $ 669.7 $ 663.4 $ 683.5 $ 674.1
The Term-Loan and China Term-Loan in the table above are classified as Level 2.
At both June 30, 2024 and December 31, 2023, the fair values of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, short term borrowings and variable rate debt approximated their carrying values due to the short-term nature of these instruments.
The following tables summarize the pre-tax effect of derivative and non-derivative instruments recorded in Accumulated other comprehensive income (loss) (“AOCI”), the gains (losses) reclassified from AOCI to earnings and additional gains (losses) recognized directly in earnings:
Effect of Financial Instruments
Three Months Ended Jun 30,
Gain (Loss) Recognized in AOCI Gain (Loss) Reclassified from AOCI to Income Income Statement Classification
2024 2023 2024 2023
(In millions)
Derivatives designated as hedges:
Cross currency swaps $ 0.1 $ ( 0.8 ) $ 0.4 $ 0.4 Interest and other financial expense, net
Interest rate swaps ( 2.1 ) — — — Interest and other financial expense, net
Total $ ( 2.0 ) $ ( 0.8 ) $ 0.4 $ 0.4
Effect of Financial Instruments
Six Months Ended June 30,
Gain (Loss) Recognized in AOCI Gain (Loss) Reclassified from AOCI to Income Income Statement Classification
2024 2023 2024 2023
(In millions)
Derivatives designated as hedges:
Cross currency swaps $ 0.8 $ ( 3.0 ) $ 0.8 $ 0.8 Interest and other financial expense, net
Interest rate swaps ( 4.1 ) ( 0.9 ) — — Interest and other financial expense, net
Total $ ( 3.3 ) $ ( 3.9 ) $ 0.8 $ 0.8
Our cross currency swaps and interest rate swaps are designated as cash flow hedges of principal and interest payments related to our Term-Loan and mature in September 2028.
In the next twelve months, approximately $ 1.1 million recognized in AOCI related to cash flow hedges will be reclassified to the Condensed Consolidated Statement of Operations.
See “ Note K. Financial Instruments and Fair Value Measurement” , included in our Annual Report in Form 10-K for the year ended December 31, 2023, for additional information relating to our derivatives instruments.
10
Table of Contents
Orion S.A
Notes to the Condensed Consolidated Financial Statements—(continued)
Note F. Employee Benefit Plans
Provisions for pensions are established to cover benefit plans for retirement, disability and surviving dependents’ pensions. The benefit obligations vary depending on the legal, tax and economic circumstances in various countries in which the Company operates. Generally, the level of benefit depends on the length of service and the remuneration.
Net periodic defined benefit pension costs include the following:
Three Months Ended June 30, Six Months Ended June 30,
2024 2023 2024 2023
(In millions)
Service cost $ 0.2 $ 0.2 $ 0.5 $ 0.5
Interest cost 0.8 0.7 1.2 1.3
Amortization of actuarial (gain) — ( 2.3 ) — ( 4.5 )
Net periodic pension cost $ 1.0 $ ( 1.4 ) $ 1.7 $ ( 2.7 )
Service costs were recorded in Income from operations in Selling, general and administrative expenses, and interest costs were recorded in Interest and other financial expense, net.
The amortization of actuarial (gain) losses, associated with the pension obligations recorded in prior years, in Accumulated other comprehensive income exceeding 10% of the defined benefit obligation are recorded ratably in the Condensed Consolidated Statements of Operations.
Note G. Accumulated Other Comprehensive Income (Loss)
Changes in each component of AOCI, net of tax, are as follows:
Currency Translation Adjustments Hedging Activities Adjustments Pension and Other Postretirement Benefit Liability Adjustment Total
(In millions)
Balance at January 1, 2024 $ ( 55.1 ) $ 16.1 $ ( 0.9 ) $ ( 39.9 )
Other comprehensive loss before reclassifications ( 6.3 ) ( 0.4 ) 0.2 ( 6.5 )
Income tax effects before reclassifications ( 0.1 ) 0.1 ( 0.1 ) ( 0.1 )
Amounts reclassified from AOCI — 0.4 — 0.4
Income tax effects on reclassifications — ( 0.1 ) — ( 0.1 )
Currency translation AOCI — ( 0.5 ) — ( 0.5 )
Balance at March 31, 2024 ( 61.5 ) 15.6 ( 0.8 ) ( 46.7 )
Other comprehensive loss before reclassifications ( 7.8 ) ( 1.4 ) — ( 9.2 )
Income tax effects before reclassifications ( 0.5 ) 0.5 0.1 0.1
Amounts reclassified from AOCI — 0.4 — 0.4
Income tax effects on reclassifications — ( 0.2 ) — ( 0.2 )
Currency translation AOCI — ( 0.5 ) — ( 0.5 )
Balance at June 30, 2024 $ ( 69.8 ) $ 14.4 $ ( 0.7 ) $ ( 56.1 )
11
Table of Contents
Orion S.A
Notes to the Condensed Consolidated Financial Statements—(continued)
Currency Translation Adjustments Hedging Activities Adjustments Pension and Other Postretirement Benefit Liability Adjustment Total
(In millions)
Balance at January 1, 2023 $ ( 47.5 ) $ 24.4 $ 10.6 $ ( 12.5 )
Other comprehensive income before reclassifications ( 7.8 ) ( 3.3 ) — ( 11.1 )
Income tax effects before reclassifications 0.5 1.0 — 1.5
Amounts reclassified from AOCI — 0.4 ( 2.2 ) ( 1.8 )
Income tax effects on reclassifications — ( 0.1 ) 0.7 0.6
Currency translation AOCI — 0.2 0.1 0.3
Balance at March 31, 2023 ( 54.8 ) 22.6 9.2 ( 23.0 )
Other comprehensive income (loss) before reclassifications ( 5.1 ) ( 0.5 ) — ( 5.6 )
Income tax effects before reclassifications ( 0.1 ) 0.2 — 0.1
Amounts reclassified from AOCI — 0.4 ( 2.3 ) ( 1.9 )
Income tax effects on reclassifications — ( 0.2 ) 0.7 0.5
Currency translation AOCI — ( 0.3 ) 0.1 ( 0.2 )
Balance at June 30, 2023 $ ( 60.0 ) $ 22.2 $ 7.7 $ ( 30.1 )
Note H. Earnings Per Share
Basic earnings per share (“EPS”) is computed by dividing Net income attributable to Orion by the weighted average number of common stock outstanding during the period. Diluted EPS equals Net income attributable to Orion divided by the weighted average number of common stock outstanding during the period, adjusted for the dilutive effect of our stock–based and other equity compensation awards.
The following table reflects the income and share data used in the basic and diluted EPS computations:
Three Months Ended June 30, Six Months Ended June 30,
2024 2023 2024 2023
(In millions, except share and per share data)
Net income attributable to ordinary equity holders $ 20.5 $ 30.1 $ 47.2 $ 72.4
Weighted average number of Common stock (in thousands) 58,388 59,012 58,514 59,646
Basic EPS $ 0.35 $ 0.51 $ 0.81 $ 1.21
Dilutive effect of share based payments (in thousands) 797 498 715 439
Weighted average number of diluted Common stock (in thousands) 59,185 59,510 59,229 60,085
Diluted EPS $ 0.35 $ 0.51 $ 0.80 $ 1.20
Note I. Income Taxes
The Company records its tax provision or benefit on an interim basis using an estimated annual effective tax rate. This rate is applied to the current period ordinary income to determine the income tax provision or benefit allocated to the interim period. Losses from jurisdictions for which no benefit can be recognized and the income tax effects of unusual and infrequent items are excluded from the estimated annual effective tax rate and are recognized in the impacted interim period as discrete items. Valuation allowances are provided against any future tax benefits that arise from losses in jurisdictions for which no benefit can be recognized. The estimated annual effective tax rate may be significantly impacted by nondeductible expenses and by the Company’s projected earnings mix by tax jurisdiction. Adjustments to the estimated annual effective income tax rate are recognized in the period when such estimates are revised.
Income tax expense for the three months ended June 30, 2024 and 2023 was $ 9.1 million and $ 17.8 million, respectively.
Income tax expense for the six months ended June 30, 2024 and 2023 was $ 22.6 million and $ 36.1 million, respectively.
12
Table of Contents
Orion S.A
Notes to the Condensed Consolidated Financial Statements—(continued)
Our effective income tax rates were as follows:
Three Months Ended June 30, Six Months Ended June 30,
2024 2023 2024 2023
Effective income tax rates 31.0 % 37.3 % 32.5 % 33.4 %
The change in our effective tax rate for the three and six months ended June 30, 2024 as compared to the three and six months ended June 30, 2023 was primarily attributable to changes in projected pre-tax income mix in countries with varying statutory tax rates.
Note J. Commitments and Contingencies
Commitments— In the second quarter of 2024, we invested in Alpha Carbone (“AC”), a French tire recycling company. This partnership will enable AC to produce commercial volumes of tire pyrolysis oil and recovered carbon black. In addition, we entered in a long-term supply agreement for the tire pyrolysis oil produced by AC. The tire pyrolysis oil will be used to manufacture circular carbon black for tire and rubber goods customers.
We invested approximately $ 0.3 million (€ 0.3 million) in shares of AC and $ 0.7 million (€ 0.7 million) in a convertible bond. We agreed to contribute an additional $ 6.4 million (€ 6.0 million) in convertible bonds to be paid in 12 installments through 2025.
Legal Proceedings— We are subject to various lawsuits and claims including, but not limited to, matters involving contract disputes, environmental damages, personal injury and property damage. We vigorously defend ourselves and prosecute these matters as appropriate. We regularly assess the adequacy of legal accruals based on our professional judgment, experience and the information available regarding our cases.
The outcome of legal proceedings is inherently uncertain, and we offer no assurances as to the outcome of any of these matters or their effect on the Company.
Based on 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 the Condensed Consolidated Financial Statements.
Pledges and guarantees
The Company has pledged the majority of its assets (amongst others shares in affiliates, bank accounts and receivables) within the different regions in which it operates excluding China as collateral under its debt agreements. As of June 30, 2024, the Company had guarantees totaling $ 26.9 million issued by various financial institutions.
Note K. Financial Information by Segment
Segment information
We disclose the results of each of our operating segments in accordance with ASC 280, Segment Reporting . We manage our business in two operating segments as follows:
• Rubber Carbon Black —Used in the reinforcement of rubber in tires and mechanical rubber goods, and
• Specialty Carbon Black —Used for protection, colorization and conductivity in coatings, polymers, batteries, printing and other special applications.
Corporate includes income and expenses that cannot be directly allocated to the business segments or that are managed at the corporate level. This includes finance income and expenses, taxes and items with less bearing on the underlying core business.
Discrete financial information is available for each of the segments, and the CODM uses operating results of each operating segment for performance evaluation and resource allocation.
Our CODM uses Adjusted EBITDA as the primary measure for reviewing our segment profitability. We define Adjusted EBITDA as Income from operations before depreciation and amortization, share-based compensation, and non-recurring items (such as restructuring expenses, legal settlements gains, etc.) plus Earnings in affiliated companies, net of tax.
The CODM does not review reportable segment asset or liability information for purposes of assessing performance or allocating resources.
13
Table of Contents
Orion S.A
Notes to the Condensed Consolidated Financial Statements—(continued)
Segment operating results for the three months ended June 30, 2024 and 2023 are as follows:
Rubber Specialty Corporate Total
(In millions)
2024
Net sales from external customers $ 311.5 $ 165.5 $ — $ 477.0
Depreciation and amortization of intangible assets, right of use assets, and property, plant and equipment 18.1 12.2 — 30.3
Equity in earnings of affiliated companies, net of tax 0.2 — — 0.2
Interest and other financial expense, net ( 12.2 ) ( 12.2 )
Adjusted EBITDA 47.1 28.0 — 75.1
2023
Net sales from external customers $ 309.3 $ 149.5 $ — $ 458.8
Depreciation and amortization of intangible assets, right of use assets, and property, plant and equipment 17.9 9.3 — 27.2
Equity in earnings of affiliated companies, net of tax 0.2 — — 0.2
Interest and other financial expense, net ( 13.5 ) ( 13.5 )
Reclassification of actuarial gain from AOCI 2.3 2.3
Adjusted EBITDA 57.4 29.9 — 87.3
Segment operating results for the six months ended June 30, 2024 and 2023:
Rubber Specialty Corporate Total
(In millions)
2024
Net sales from external customers $ 643.5 $ 336.4 $ — $ 979.9
Depreciation and amortization of intangible assets, right of use assets, and property, plant and equipment 34.8 24.4 — 59.2
Equity in earnings of affiliated companies, net of tax 0.3 — — 0.3
Interest and other financial expense, net ( 24.9 ) ( 24.9 )
Adjusted EBITDA 104.5 55.9 — 160.4
2023
Net sales from external customers $ 648.0 $ 311.5 $ — $ 959.5
Depreciation and amortization of intangible assets, right of use assets, and property, plant and equipment 33.7 19.2 — 52.9
Excluding equity in earnings of affiliated companies, net of tax 0.3 — — 0.3
Interest and other financial expense, net ( 28.7 ) ( 28.7 )
Reclassification of actuarial losses from AOCI 4.5 4.5
Adjusted EBITDA 121.2 67.2 — 188.4
14
Table of Contents
Orion S.A
Notes to the Condensed Consolidated Financial Statements—(continued)
A reconciliation of Income before earnings in affiliated companies and income taxes to Adjusted EBITDA for each of the periods presented is as follows:
Three Months Ended June 30, Six Months Ended June 30,
2024 2023 2024 2023
(In millions)
Income before earnings in affiliated companies and income taxes $ 29.4 $ 47.7 $ 69.5 $ 108.2
Corporate charges 3.0 1.0 6.5 2.8
Depreciation and amortization of intangible assets, right of use assets, and property, plant and equipment 30.3 27.2 59.2 52.9
Equity in earnings of affiliated companies, net of tax 0.2 0.2 0.3 0.3
Interest and other financial expense, net 12.2 13.5 24.9 28.7
Reclassification of actuarial gain from AOCI — ( 2.3 ) — ( 4.5 )
Adjusted EBITDA $ 75.1 $ 87.3 $ 160.4 $ 188.4
Corporate charges include the following:
Three Months Ended June 30, Six Months Ended June 30,
2024 2023 2024 2023
(In millions)
Long term incentive plan $ 3.0 $ 2.6 $ 6.5 $ 4.7
Other non-operating — ( 1.6 ) — ( 1.9 )
Corporate Charges $ 3.0 $ 1.0 $ 6.5 $ 2.8
15
Table of Contents
Orion S.A.
Management’s Discussion and Analysis of Financial Condition and Results of Operation
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.