What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-20 compared with 2024-02-15 · 154 added, 156 removed, 1102 unchanged (22% of the section changed)

32 unchanged sentences

Valuation of Cross-Currency Swaps

Description of the Matter As discussed in notes A and K to the consolidated financial statements, the Company’s financial instruments held a fair value of $35.9 million as of December 31, 2023, of which financial instruments related to cross-currency swaps totaled $31.3 million for the year ended December 31, 2023.

Description of the Matter As discussed in notes A and K to the consolidated financial statements, the Company’s financial instruments held a fair value of $38.9 million as of December 31, 2024, of which financial instruments related to cross-currency swaps totaled $38.9 million.

The fair value of the cross-currency swaps are calculated using the present value of future cash flows discounted using observable inputs (level 2) including notional value amounts, yield curves, basis curves, and various spot and forward foreign exchange rates on the valuation date.

19 unchanged sentences

Research and development costs 27.1 24.5 21.7

Gain related to litigation settlement — — ( 82.9 )

Other expenses/(income) ( 0.7 ) 2.9 8.6

Loss due to misappropriation of assets, net 59.3 — —

Other expense (income), net 1.9 ( 0.7 ) 2.9

Income from operations 102.7 205.3 197.1

Interest and other financial expense, net 49.4 50.9 39.9

Reclassification of actuarial (gains)/losses from AOCI ( 8.9 ) — 4.8

Reclassification of actuarial gains from AOCI — ( 8.9 ) —

Income before earnings in affiliated companies and income taxes 53.3 163.3 157.2

73 unchanged sentences

Amortization of debt issuance costs 1.5 2.7 1.9

Stock-based incentive compensation 15.4 7.7 5.2

Deferred tax provision 6.3 7.2 20.3

Stock based compensation 15.3 15.4 7.7

Deferred tax (benefit) provision ( 19.7 ) 6.3 7.2

Foreign currency transactions ( 1.7 ) 5.0 ( 8.4 )

19 unchanged sentences

Dividends paid to stockholders ( 4.8 ) ( 4.9 ) ( 5.0 )

Repurchase of common stock under Stock Repurchase Program ( 65.6 ) ( 4.3 ) —

Repurchases of Common stock ( 26.6 ) ( 65.6 ) ( 4.3 )

Other financing activities — — ( 0.2 )

20 unchanged sentences

— — — — ( 5.0 ) — ( 5.0 )

Repurchases of Common stock ( 244,032 ) — ( 4.3 ) — — — ( 4.3 )

Stock based compensation — — — 7.7 — — 7.7

2 unchanged sentences

Net income — — — — 103.5 — 103.5

Other comprehensive income, net of tax — — — — — 36.0 36.0

Other comprehensive loss, net of tax — — — — — ( 27.4 ) ( 27.4 )

Dividends - $ 0.08 per share — — — — ( 4.9 ) — ( 4.9 )

31 unchanged sentences

Significant Accounting Policies

Orion S.A.’s (formerly, Orion Engineered Carbons S.A.) Consolidated Financial Statements include Orion S.A.

Orion S.A.’s Consolidated Financial Statements include Orion S.A.

and its subsidiaries (“Orion”, the “Company”, “we”, “us”, “our”, or “OEC”).

14 unchanged sentences

Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents comprise bank balances and cash on hand and include highly liquid investments with maturities of three-months or less at the date of purchase.

Cash and cash equivalents comprise bank balances and cash on hand and also include highly liquid investments with maturities of three-months or less at the date of purchase.

We record cash and cash equivalents as restricted when we are unable to freely use such cash and cash equivalents for our general operating purposes.

10 unchanged sentences

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

• In the Condensed Consolidated Statements of Operations, the loss on receivables sale is reflected in Other expenses, net.

In the Condensed Consolidated Statements of Operations, the loss on receivables sale is reflected in Other expense (income), net.

The Company values inventory at the lower of cost or net realizable value using the average cost method.

7 unchanged sentences

Expenditures for major renewals and improvements, which significantly extend the useful lives of the existing property, plant and equipment, are capitalized and depreciated.

Routine maintenance costs are expensed as incurred.

Notes to the Consolidated Financial Statements

Routine maintenance costs are expensed as incurred.

Depreciation is computed using the straight-line method over the estimated useful lives of assets.

Depreciation of property, plant and equipment is calculated using the straight-line method over the expected useful lives of the related assets.

The depreciable lives for Buildings, Plant and machinery, as well as Furniture, fixtures and office equipment, are between 5 and 50 years, 3 and 25 years, and 3 and 25 years, respectively.

3 unchanged sentences

If it is determined that an asset or asset group’s undiscounted future cash flows will not be sufficient to recover the carrying amount, the asset is written down to its estimated fair value.

Gain or loss on retirement or sale of property, plant and equipment is reflected in Other expenses, net in the Consolidated Statements of Operations.

Gain or loss on retirement or sale of property, plant and equipment is reflected in Other expense (income), net in the Consolidated Statements of Operations.

There were no material write-offs in 2024, 2023 or 2022.

5 unchanged sentences

For 2024 and 2023, we performed qualitative impairment assessments of our reporting units, which indicated that the fair value of our reporting units was more likely than not greater than their carrying value including goodwill.

Based on this assessment, our historical assessment for impairment and forecasted demand for our products, a quantitative goodwill impairment test was not required and no goodwill impairment was recognized.

Based on this assessment, our historical assessment for impairment and forecasted demand for our products, a quantitative goodwill impairment test at September 30, 2024 was not necessary.

Intangible Assets

Intangible assets are comprised of trade names and trademarks, customer relationships, developed technologies and software costs.

Intangible assets comprise trade names and trademarks, customer relationships, developed technologies and software costs.

These assets are amortized, using the straight-line method, over their estimated useful lives of 3 - 15 years or over the term of the related agreement.

10 unchanged sentences

If the estimated fair value is less than the carrying value and our management considers the decline in value to be other-than-temporary, the excess of the carrying value over the estimated fair value is recognized in the Consolidated Financial Statements as an impairment.

We have investments in Kommanditgesellschaft Deutsche Gasrußwerke GmbH & Co and Kommanditgesellschaft Deutsche Gasrußwerke GmbH & Co , (together “DGW”), which are accounted for using the equity method.

We have investments in Kommanditgesellschaft Deutsche Gasrußwerke GmbH & Co and Kommanditgesellschaft Deutsche Gasrußwerke GmbH & Co , (together “DGW”), and Alpha Carbone which are accounted for using the equity method of investment.

Notes to the Consolidated Financial Statements

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An asset or liability may result from advance payments or payments due, respectively, to a defined contribution fund.

Classification

Certain prior year amounts have been reclassified to conform with the current year presentation.

Previously reported financial statements presentation have been adjusted to reflect the following changes:

Income Taxes, Uncertain tax position was previously reported in Rate reconciliation table as component of Other tax effects.

In addition, Deferred compensation and Other Deferred tax assets were previously reported in Significant components of deferred income taxes table as component of Others.

During the fourth quarter of 2023, we concluded that separate classification of those items better reflects the Rate reconciliation and Significant components of deferred income taxes tables.

Recent Accounting Pronouncements

Recently Issued Accounting Standards Not Yet Adopted

Recently Adopted Accounting Standards

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.

• 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.

This ASU improves disclosures about a public entity’s reportable segments, including expanded segment expenses disclosure.

We adopted this standard on January 1, 2024 for the 2024 fiscal year, and for interim periods beginning January 1, 2025.

The adoption of this standard did not have a material impact to our Consolidated Financial Statements.

Refer to Note R.

Segment Financial Information for additional information .

Recently Issued Accounting Standards Not Yet Adopted

Consolidated Statements of Operations— In November 2024, the FASB issued ASU 2024-03, and in January 2025, ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-4 0) and Clarifying the Effective Date, respectively.

This ASU requires public entities to disclose, on an annual and interim basis, disaggregated information about certain income statement expense line items.

This ASU does not change the expense captions an entity presents in the face of its Consolidated Statements of Operations.

Rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the Consolidated Financial Statements.

This ASU is effective for fiscal years beginning after December 15, 2026 and interim periods within annual reporting periods beginning after December 15, 2027.

Early adoption is permitted.

We believe, the adoption of this ASU will not materially impact our Consolidated Financial Statements, however will require additional segment disclosures in Note R.

Segment Financial Information.

We believe, the adoption of this ASU will not materially impact our Consolidated Financial Statements, however, will require additional disclosures in the footnotes to the Consolidated Financial Statements.

Income Taxes— In December 2023, the FASB issued ASU No.

18 unchanged sentences

Allowance for credit losses as of January 1, $ ( 1.2 ) $ ( 2.6 )

Credit loss expense — ( 0.2 )

Credit loss income and utilization — 0.4

1 unchanged sentence

Allowance for credit losses as of December 31, $ ( 1.2 ) $ ( 1.2 )

Accounts Receivable Factoring ―For the fiscal year ended December 31, 2023, the gross amount of receivables sold was $ 427.2 million.

For the fiscal year ended December 31, 2023 the loss on receivables sale was $ 4.4 million.

In the Condensed Consolidated Statements of Operations, the loss on receivables sale is reflected in Other expenses, net.

No sales were made in 2022.

Accounts Receivable Factoring Facilities ―For the fiscal years ended December 31, 2024 and 2023, the gross amounts of receivables sold were $ 440.7 million and $ 427.2 million, respectively.

In the Condensed Consolidated Statements of Operations, the loss on receivables sold is reflected in Other expense (income), net .

For the fiscal years ended December 31, 2024 and 2023, the loss on receivables sale was $ 5.0 million and $ 4.4 million, respectively.

Inventories, net of reserves, at December 31, are as follows:

14 unchanged sentences

Total $ 54.2 $ 74.4

Notes to the Consolidated Financial Statements

Other assets, at December 31, consist of the following components:

3 unchanged sentences

Total $ 41.5 $ 39.9

Notes to the Consolidated Financial Statements

Property, Plant and Equipment

4 unchanged sentences

Plant and machinery 1,339.7 1,308.3

Other equipment, furniture and fixtures 46.2 38.1

Other equipment, furniture and fixtures, including Asset retirement obligation 51.0 46.2

Construction in progress 215.9 140.0

12 unchanged sentences

Total $ 27.6 $ 23.3 $ 18.8

Notes to the Consolidated Financial Statements

ROU assets and lease liabilities related to operating and finance leases reflected in the Consolidated Balance Sheets, at December 31, are as follows:

13 unchanged sentences

The weighted remaining average minimum lease period for finance and operating leases are 16.1 years and 6.3 years, respectively.

Notes to the Consolidated Financial Statements

Maturities of operating and finance lease liabilities are as follows:

10 unchanged sentences

Lease liability (current and non-current) $ 85.6 $ 36.1 $ 121.7

The weighted average discount rate applied to the lease liabilities is 4.79 %.

The weighted average discount rate applied to the lease liabilities for finance and operating leases are 4.8 % and 5.6 %, respectively.

Goodwill and Intangible Assets

10 unchanged sentences

$ 28.6 $ 42.9 $ 71.5

Notes to the Consolidated Financial Statements

Intangible Assets

9 unchanged sentences

Amortization expense for the years ended December 31, 2024, 2023 and 2022 was $ 7.2 million, $ 6.1 million and $ 6.6 million, respectively, and is included in Cost of sales and Selling, general and administrative expenses in the Consolidated Statements of Operations.

Notes to the Consolidated Financial Statements

The estimated aggregate amortization expense for intangible assets for the fiscal years ending December 31, are as follows:

17 unchanged sentences

Total $ 57.4 $ 43.7

Notes to the Consolidated Financial Statements

The components of Other long-term liabilities, at December 31, are as follows:

6 unchanged sentences

Total $ 123.7 $ 110.6

Notes to the Consolidated Financial Statements

Debt and Other Obligations

1 unchanged sentence

(In millions)

Current portion of Term Loans $ 3.1 $ 3.0

Term Loans $ 3.0 $ 3.1

Deferred debt issuance costs - Term Loans ( 0.8 ) ( 0.8 )

China Term Loan 5.7 —

Other short-term debt and obligations 250.9 134.7

28 unchanged sentences

During 2024, the Company received a 10 basis point interest rate reduction on its sustainability linked Term-Loan because it met 2023 emissions target.

Notes to the Consolidated Financial Statements

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.

3 unchanged sentences

dollars denominated Term Loan 7.4 % 7.4 %

Notes to the Consolidated Financial Statements

(b) China Term Loan

15 unchanged sentences

OEC LLC outstanding borrowings 14.0 21.1

Brazil Uncommitted Local Lines of Credit (capacity $ 3.2 million)

Korea Working Capital Loan (capacity $ 40.5 million)

OEC Huaibei outstanding borrowings 16.5 —

Korea Working Capital Loans (capacity $ 49.2 million)

Uncommitted 1.7 1.9

Committed 22.7 20.1

China Working Capital Loan 2.8 1.5

China Working Capital Loans 11.7 2.8

Repurchase Agreement 36.5 —

14 unchanged sentences

Interest is calculated based on EURIBOR plus a 1.65 % - 3.30 % margin (depending on leverage ratio).

Notes to the Consolidated Financial Statements

The RCF includes a sustainability-linked margin adjustment.

2 unchanged sentences

Other provisions of the Credit Agreement relating to the RCF remained unchanged, including the commitment fee, which remains at 35 % of the interest margin or 1.0 % at December 31, 2024.

As of December 31, 2023, there were no borrowings under the RCF.

As of December 31, 2022, the borrowing under the Prior RCF was $ 53.3 million .

As of December 31, 2024 and 2023, there were no borrowings under the RCF.

Letters of credit can be issued for the amount available under the RCF and ancillary facilities.

The weighted average interest rates on the RCF as of December 31, 2023 and 2022 were 6.2 % and 4.8 %, respectively.

For the year ended December 31, 2023 , amortized transaction costs were $ 1.9 million which included the release of $ 0.5 million from Prior RCF.

For the years ended December 31, 2022 and 2021, amortized transaction costs were immaterial.

The weighted average interest rates on the utilized RCF and ancillary facilities as of December 31, 2024 and 2023 were 5.7 % and 6.2 %, respectively.

Notes to the Consolidated Financial Statements

For the years ended December 31, 2024 and 2023, amortized transaction costs were $ 0.7 million and $ 1.9 million, respectively.

Amortized transaction costs in 2023 included the release of $ 0.5 million from Prior RCF.

Unamortized transaction costs included in the Consolidated Balance Sheets, as of December 31, 2024 and 2023, were approximately $ 2.6 million and $ 3.6 million, respectively.

As of December 31, 2023, the Company’s net leverage ratio, as defined under the Credit Agreement, was 2.63 x which corresponds to an interest margin of 2.30 for both USD and Euro denominated borrowings.

As of December 31, 2024, the Company’s net leverage ratio, as defined under the Credit Agreement, was 3.14 x.

Ancillary Credit Facilities —As part of the RCF, the Company can also establish ancillary credit facilities by converting the commitments of select lenders under the RCF into bilateral credit agreements.

1 unchanged sentence

For RCF financial covenant testing, borrowing under ancillary credit facilities are considered debt drawn under the RCF, as discussed elsewhere in this footnote.

As of December 31, 2023, the total commitment was reduced to € 300 million (approximately $ 332 million) and was split between an € 86 million RCF tranche and € 214 million of bilateral ancillary facilities established directly with several banks under the RCF.

As of December 31, 2024, the total commitment was € 300 million (approximately $ 312 million) and was split between an € 66 million RCF tranche and € 234 million of bilateral ancillary facilities established directly with several banks under the RCF.

As of December 31, 2024 and 2023, committed ancillary credit facilities totaled $ 243.1 million and $ 236.5 million, respectively.

1 unchanged sentence

The general terms of the ancillary credit facilities are linked to the terms in the RCF.

Uncommitted Local Lines of Credit — The uncommitted local lines of credit in Brazil and Korea are with local banks that are not lenders under the Credit Agreement and were negotiated bilaterally.

Korea Working Capital Loans — For working capital flexibility, we have entered into various credit facility agreements with Hana Bank totaling ₩ 47.5 billion ($ 36.6 million) availability.

Korea Working Capital Loans — For working capital flexibility, we have a local facility of ₩ 67.5 billion ($ 45.8 million).

As of December 31, 2024, we have outstanding borrowings of ₩ 33.5 billion ($ 22.7 million).

The weighted average interest rate is 5.1 %.

For early repayment, we are required to pay a 1 % prorated early repayment fee.

In the Consolidated Statements of Cash Flows, this loan is reflected in Cash inflows related to current financial liabilities .

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

China Working Capital Loan — For working capital flexibility in Qingdao, we have a CNY 30 million ($ 4.2 million) facility with a local branch of Bank of China with no commitment fee.

Interest is calculated based on People’s Bank of China (“PBOC”) one-year loan prime rate (“LPR”) plus 0.35 % margin.

As of December 31, 2023, we have drawn CNY 20 million ($ 2.8 million) as a one-year term-loan.

In 2022, drawings totaled CNY 10.0 million ($ 1.5 million).

The 2023 weighted average interest rate was 4.0 %.

In the Consolidated Statements of Cash Flows, this loan is reflected in Cash inflows related to current financial liabilities .

China Working Capital Loans — For working capital flexibility in Qingdao, we have a local facility of CNY 50.0 million ($ 6.8 million).

As of December 31, 2024 and 2023, we have drawn CNY 49.2 million ($ 6.8 million) and CNY 20.0 million ($ 2.8 million), respectively.

For working capital flexibility in Huaibei, in October 2024, we began drawings from a facility agreement totaling $ 10.0 million.

As of December 31, 2024, we have drawn $ 4.9 million ( CNY 36.0 million).

In the Consolidated Statements of Cash Flows, these loans are reflected in Cash inflows related to current financial liabilities .

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

Notes to the Consolidated Financial Statements

Repurchase Agreement —On August 23, 2024, we entered into a repurchase agreement to sell European Emission Allowance (“EUA”) certificates.

Under the agreement, we sold 500 thousand EUA certificates for € 35.1 million cash to a counterparty.

The same counterparty has an obligation to resell, and we have the obligation to purchase, the same or substantially the same EUA certificates on June 25, 2025 for € 36.5 million.

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

At December 31, 2024, the amount outstanding, including accrued interest, was $ 37.0 million.

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

Future Years Payment Schedule

4 unchanged sentences

Covenant Compliance

The Credit Agreement contains certain non-financial covenants that, among other things, limit the Company’s ability and the ability of certain of its subsidiaries to (i) incur additional debt, (ii) pay dividends, repurchase stocks or make certain other restricted payments or investments, (iii) incur liens, (iv) sell assets, (v) to pay dividends or to make other payments to the Company, (vi) enter into affiliate transactions, (vii) engage in sale and leaseback transactions, and (viii) consolidate, merge, sell or otherwise dispose of all or substantially all of the Company’s assets.

Notes to the Consolidated Financial Statements

transactions, (vii) engage in sale and leaseback transactions, and (viii) consolidate, merge, sell or otherwise dispose of all or substantially all of the Company’s assets.

These covenants are subject to significant exceptions and qualifications.

12 unchanged sentences

Both of these instruments were designated as accounting hedges at the time we entered into the transactions.

We performed a hedge effectiveness test based on the critical terms match method (prospectively) and the dollar offset test (retrospectively) for each.

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.

In July 2024 our interest rate swap expired and was not renewed.

There were no material transactions recorded as a result of the expiration.

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

dollar denominated term loan credit facility.

2 unchanged sentences

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

Notes to the Consolidated Financial Statements

Fair value measurement

16 unchanged sentences

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

Notes to the Consolidated Financial Statements

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.

10 unchanged sentences

At both December 31, 2024 and 2023, the fair values of Cash and cash equivalents and restricted cash, Accounts receivable, net, Accounts payable and Accrued liabilities and short term borrowings approximated their carrying values due to the short-term nature of these instruments.

Notes to the Consolidated Financial Statements

The carrying amounts of our variable rate debt approximate the fair values due to variable interest rates with short reset periods.

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

15 unchanged sentences

Total $ ( 13.8 ) $ 1.7 $ —

Notes to the Consolidated Financial Statements

Effect of Financial Instruments

145 unchanged sentences

During 2023 and 2022 weighted average RSU grant-date fair value was $ 26.14 and $ 15.83 , respectively.

Total grant date fair value of RSUs were approximately $ 5.9 million, $ 3.8 million and $ 4.0 million during 2023, 2022 and 2021, respectively.

Total fair value of RSUs vested was approximately $ 3.3 million, $ 7.4 million and $ 3.0 million during 2023, 2022 and 2021, respectively.

Total grant date fair value of RSUs were approximately $ 5.9 million and $ 3.8 million during 2023 and 2022, respectively.

Total fair value of RSUs vested was approximately $ 3.3 million and $ 7.4 million during 2023 and 2022, respectively.

As of December 31, 2024, we had unrecognized compensation cost of $ 14.6 million, based on the target amounts, related to unvested PSU, RSU and RS, which is expected to be recognized over a weighted average period of 1.54 years.

6 unchanged sentences

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

Other comprehensive loss before reclassifications ( 7.3 ) 2.3 2.0 ( 3.0 )

Income tax effects before reclassifications ( 0.3 ) ( 0.7 ) ( 0.7 ) ( 1.7 )

Other comprehensive income (loss) before reclassification ( 13.6 ) 46.9 20.3 53.6

Income tax effects 0.2 ( 15.2 ) ( 6.3 ) ( 21.3 )

Amounts reclassified from AOCI — 1.7 — 1.7

Income tax effects on reclassifications — — ( 1.6 ) ( 1.6 )

Income tax effects — ( 0.5 ) — ( 0.5 )

Currency translation AOCI — 2.3 0.2 2.5

12 unchanged sentences

Balance at December 31,2024 $ ( 79.4 ) $ 10.8 $ ( 1.3 ) $ ( 69.9 )

The amounts recorded in AOCI exceeding 10% of the defined benefit obligation are recorded ratably as reclassification of actuarial gains or losses over the current year through profit and loss separately from income from operations and amounted to $ 8.9 million income and $ 4.8 million loss for the years ended December 31, 2023 and 2021, respectively.

We were no t outside of the 10% corridor for 2022.

Amounts recorded in AOCI exceeding 10% of the defined benefit obligation are recorded ratably as reclassification of actuarial gains or losses over the current year through profit and loss separately from income from operations and amounted to $ 8.9 million income for the year ended December 31, 2023.

We were no t outside of the 10% corridor for 2024 or 2022.

Earnings Per Share

10 unchanged sentences

Diluted EPS $ 0.76 $ 1.73 $ 1.73

Notes to the Consolidated Financial Statements

The Company operates in multiple jurisdictions with complex tax and regulatory environments and our income tax returns are periodically audited or subjected to review by tax authorities.

We monitor tax law changes and the potential impact to our results of operations.

Notes to the Consolidated Financial Statements

Tax provision (benefit) for income taxes consisted of the following:

31 unchanged sentences

Tax rate differences 1.0 ( 4.2 ) ( 4.0 )

Effect of cross-border tax laws ( 9.4 ) — —

Change in valuation allowance 13.0 5.0 1.8

3 unchanged sentences

Non-deductible expenses, and non-deductible taxes 1.5 2.1 3.5

Effects of changes in permanent differences 1.2 — —

Tax effect on tax-free income ( 1.4 ) ( 1.5 ) ( 1.4 )

3 unchanged sentences

The 2024 effective income tax rate was 18.0 % compared with 36.9 % in 2023.

The increase in the effective tax rate was mainly due to the increase of valuation allowance, income taxes for prior years and the increase of non-deductible business expenses and taxes.

Those were partially offset by the effects of earnings in various countries with lower statutory tax rates and tax-free income.

For the tax year ended December 31, 2023, additional valuation allowance was established primarily related to certain foreign net operating losses and other deferred tax assets.

The decrease in the effective tax rate was mainly due to the release of uncertain tax positions and changes in U.S.

international tax laws.

Those were partially offset by the effects of valuation allowances on tax losses and nondeductible expenses.

For the tax year ended December 31, 2024, additional valuation allowances were established primarily related to certain foreign net operating losses and other deferred tax assets.

As part of the process of preparing the consolidated financial statements, we are required to determine the provision for income taxes.

1 unchanged sentence

Non-deductible expenses and non-deductible taxes were analyzed and resulted in additional income tax.

These differences were partially offset by the effects of earnings in various countries with lower statutory tax rates and tax-free income.

Notes to the Consolidated Financial Statements

19 unchanged sentences

Receivables, other assets 7.1 9.0

Other 14.7 28.6

Total deferred tax liabilities $ 114.2 $ 126.1

8 unchanged sentences

Net deferred tax asset / (liability) positions $ ( 14.9 ) $ ( 36.3 )

Notes to the Consolidated Financial Statements

As of each reporting date, management considers the weight of all evidence, both positive and negative, to determine if a valuation allowance is necessary for each jurisdiction's deferred tax assets.

5 unchanged sentences

As of January 1, $ 40.1 $ 38.1 $ 36.3

Additions for Tax Credits — — 3.5

Additions for Loss carryforwards 10.6 6.0 5.2

1 unchanged sentence

Reduction for Tax Credits — — ( 4.2 )

Reduction for Loss carryforwards ( 4.2 ) — ( 1.8 )

Reductions for Interest carryforwards — — ( 8.5 )

Reduction for Loss and Interest carryforwards ( 0.4 ) ( 4.2 ) —

As of December 31, $ 50.5 $ 40.1 $ 38.1

Notes to the Consolidated Financial Statements

The following table provides detail surrounding the expiration dates of the gross amount of tax loss carryforwards and tax credits:

15 unchanged sentences

Tax uncertainties

Tax benefits totaling $ 13.3 million, $ 11.6 million and $ 12.1 million relating to uncertain tax positions were unrecognized as of December 31, 2023, 2022 and 2021, respectively.

We had no tax benefit relating to uncertain tax positions unrecognized as of December 31, 2024.

Tax benefits totaling $ 13.3 million and $ 11.6 million relating to uncertain tax positions were unrecognized as of December 31, 2023 and 2022, respectively.

The following table presents a reconciliation of the beginning and ending amounts of unrecognized tax benefits:

2 unchanged sentences

Balance at beginning of the year $ 13.3 $ 11.6 $ 12.1

Additions based on tax positions related to the current year — — 0.3

Additions for tax positions of prior year — 1.7 —

Reductions of tax positions of prior year ( 11.9 ) — ( 0.5 )

Reductions related to settlements and other ( 1.4 ) — —

Balance at end of the year $ — $ 13.3 $ 11.6

We recognize interest and penalties associated with unrecognized tax positions in income tax expense.

Income tax expense includes a benefit of interest and penalties of $ 0.4 million, $ 0.4 million and $ 0.7 million in 2023, 2022 and 2021, respectively.

We had accrued $ 4.4 million, $ 4.0 million and $ 4.4 million for interest and penalties as of December 31, 2023, 2022 and 2021, respectively.

The majority of the unrecognized tax benefits for the fiscal years ended December 31, 2023, 2022 and 2021, respectively would favorably affect our effective income tax rate if recognized.

Notes to the Consolidated Financial Statements

Orion and certain subsidiaries are under audit in several jurisdictions, and in particular in Germany, for periods 2011-2017.

It is reasonably possible that our existing liabilities for unrecognized tax benefits may increase or decrease, primarily due to the progression of open audits and the expiration of statutes of limitation, during the next twelve months.

As per December 31, 2024 we released all uncertain tax positions in a total amount of $ 13.3 million and related interest and penalties and associated interest and penalties.

We did not accrue anything for interest and penalties as of December 31, 2024.

We accrued $ 4.4 million and $ 4.0 million for interest and penalties as of December 31, 2023 and 2022, respectively.

Orion and certain subsidiaries are under audit in several jurisdictions.

In 2024, the audits in Germany for periods 2011-2017 had been closed and an audit in France has been initiated.

It is reasonably possible that our existing liabilities for unrecognized tax benefits may increase in future, primarily due to the progression of open audits.

We cannot reasonably estimate a range of potential changes in our existing liabilities for unrecognized tax benefits due to various uncertainties, such as the unresolved nature of various audits.

On August 16, 2022, the U.S.

enacted the Inflation Reduction Act (“IRA”) which is intended to address several environmental, social and tax topics.

We are continuing to analyze the provisions included in the IRA and await proposed and final regulations from the Department of the Treasury.

We believe it will not have a material impact on our Consolidated Financial Statements.

Notes to the Consolidated Financial Statements

Commitments and Contingencies

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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 an adverse effect upon our operations, financial condition or impact the Consolidated Financial Statements.

EPA Action — Under a consent decree between Orion LLC and the United States on behalf of the U.S.

Environmental Protection Agency (“EPA”) as well as the Louisiana Department of Environmental Quality entered into in 2018 (the “EPA CD”) the EPA CD, Orion LLC had to install certain pollution control technology in order to further reduce emissions at its four U.S.

manufacturing facilities.

In line therewith, Orion LLC completed the installation of emissions control technology to remove SO 2 , NOx and dust particles from tail gases at all of its US facilities by the end of 2023, in accordance with the EPA CD.

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

As of December 31, 2023, in aggregate we incurred $ 306 million of capital expenditures on EPA CD projects of which approximately $ 80 million was received as an indemnity from Evonik.

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

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

Loss due to misappropriation of assets, net —On August 10, 2024, the Company determined that a Company employee, who is not a Named Executive Officer, was the target of a criminal scheme that resulted in multiple fraudulently induced outbound wire transfers to accounts controlled by unknown third parties.

As a result of this incident, we recognized a one-time pre-tax charge of approximately $ 55.7 million, net of recoveries, for the unrecovered fraudulently induced wire transfers.

The Company has cooperated, and will continue to cooperate, with law enforcement as appropriate and is pursuing recovery of these funds through all legally available means, including potentially available insurance coverage.

The incident did not result in any unauthorized access to data or systems maintained by the Company.

The business and operations of the Company were not affected.

In addition, we incurred $ 3.6 million of professional fees in connection with our investigations.

Together, the amount of $ 59.3 million is reported in Loss due to misappropriation of assets, net in our Condensed Consolidated Statements of Operations.

The tax benefit related to Loss due to misappropriation of assets, net was $ 16.4 million.

Pledges and guarantees

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As of December 31, 2024, the Company had guarantees totaling $ 23.8 million issued by various financial institutions.

Notes to the Consolidated Financial Statements

Segment Financial Information

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This includes Interest and other financial expense, net, taxes and items with less bearing on the underlying core business.

Notes to the Consolidated Financial Statements

Our operations are managed by senior executives who report to our Chief Executive Officer (“CEO”), the chief operating decision maker (“CODM”).

1 unchanged sentence

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, stock-based compensation, and non-recurring items (such as, restructuring expenses, legal settlement gain, etc.) plus Earnings in affiliated companies, net of tax.

We define Adjusted EBITDA as Income from operations before depreciation and amortization, stock-based compensation, and non-recurring items (such as, restructuring expenses, Loss due to misappropriation of assets, net, 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.

Notes to the Consolidated Financial Statements

Segment operating results are as follows:

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Net sales from external customers $ 1,231.2 $ 646.3 $ — $ 1,877.5

Depreciation and amortization of intangible assets, right of use assets, and property, plant and equipment 70.4 42.6 — 113.0

Cost of Sales 954.3 494.4 — 1,448.7

Gross Profit 276.9 151.9 — 428.8

Selling, general and administrative expenses 152.1 84.7 1.0 237.8

Loss due to misappropriation of assets, net — — 59.3 59.3

Other segment items 14.3 15.7 ( 1.0 ) 29.0

Income (loss) from operations 110.5 51.5 ( 59.3 ) 102.7

LTIP and other non-operating charges 7.2 7.1 — 14.3

Loss due to misappropriation of assets, net — — 59.3 59.3

Equity in earnings of affiliated companies, net of tax 0.6 — — 0.6

Interest and other financial expense, net — — 50.9 50.9

Depreciation and amortization of intangible assets, right of use assets, and property, plant and equipment 75.8 49.5 — 125.3

Adjusted EBITDA $ 194.1 $ 108.1 — $ 302.2

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Net sales from external customers $ 1,283.3 $ 610.6 $ — $ 1,893.9

Depreciation and amortization of intangible assets, right of use assets, and property, plant and equipment 65.1 40.6 — 105.7

Cost of Sales 992.6 450.3 — 1,442.9

Gross Profit 290.7 160.3 — 451.0

Selling, general and administrative expenses 135.0 85.7 1.2 221.9

Other segment items 12.2 13.5 ( 1.9 ) 23.8

Income (loss) from operations 143.5 61.1 0.7 205.3

LTIP and other non-operating charges 7.2 7.0 ( 0.7 ) 13.5

Equity in earnings of affiliated companies, net of tax 0.5 — — 0.5

Interest and other financial expense, net — — 39.9 39.9

Depreciation and amortization of intangible assets, right of use assets, and property, plant and equipment 70.4 42.6 — 113.0

Adjusted EBITDA $ 221.6 $ 110.7 — $ 332.3

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Net sales from external customers $ 1,355.5 $ 675.4 $ — $ 2,030.9

Depreciation and amortization of intangible assets, right of use assets, and property, plant and equipment 59.0 45.1 — 104.1

Gain related to litigation settlement — — ( 82.9 ) ( 82.9 )

Cost of Sales 1,107.4 474.7 — 1,582.1

Gross Profit 248.1 200.7 — 448.8

Selling, general and administrative expenses 137.7 88.6 0.8 227.1

Other segment items 11.0 12.3 1.3 24.6

Income (loss) from operations 99.4 99.8 ( 2.1 ) 197.1

LTIP and other non-operating charges 3.4 3.5 2.1 9.0

Equity in earnings of affiliated companies, net of tax 0.5 — — 0.5

Interest and other financial expense, net — — 38.0 38.0

Reclassification of actuarial (gains)/losses from AOCI — — 4.8 4.8

Depreciation and amortization of intangible assets, right of use assets, and property, plant and equipment 65.1 40.6 — 105.7

Adjusted EBITDA $ 168.4 $ 143.9 — $ 312.3

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Capital expenditures 134.1 98.7 — 232.8

Other segment items —Other segment items for each reportable segment includes Research and Development costs and Other expense (income), net.

Notes to the Consolidated Financial Statements

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Income before earnings in affiliated companies and income taxes $ 53.3 $ 163.3 $ 157.2

Corporate charges 13.5 9.0 18.0

LTIP and other non-operating charges 14.3 13.5 9.0

Depreciation and amortization of intangible assets, right of use assets, and property, plant and equipment 125.3 113.0 105.7

Gain related to litigation settlement — — ( 82.9 )

Loss due to misappropriation of assets, net

Misappropriation of assets, net 55.7 — —

Professional fees related to misappropriation of assets 3.6 — —

Equity in earnings of affiliated companies, net of tax 0.6 0.5 0.5

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Adjusted EBITDA $ 302.2 $ 332.3 $ 312.3

Corporate charges includes the following:

LTIP and other non-operating charges include the following:

2024 2023 2022

(In millions)

Long Term Incentive Plan 15.4 7.7 5.2

EPA-related expenses — — 2.3

Environmental reserve ( 2.2 ) ( 0.4 ) 7.2

LTIP 15.3 15.4 7.7

Environmental reserves — ( 2.2 ) ( 0.4 )

Other non-operating ( 1.0 ) 0.3 1.7

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Ge ographic information:

We are a global producer and supplier of carbon black and an industry leader in many of our product lines.

Our businesses consist primarily of large processing plants that convert carbon black oil into powdered form carbon black.

Our carbon black products are primarily used as additives for the production of polymers, batteries, printing inks and coatings and in the reinforcement of rubber polymers.

We have operations in several geographical locations.

Our holding company, Orion S.A., is located in Luxembourg and generates no revenue.

In the fourth quarter of 2023, we made certain changes to our disaggregated Net sales by country disclosure.

We now disclose disaggregated Net sales by Country in which the Customer is located .

This change had no impact on our historical Consolidated Financial Statements.

We believe this presentation better reflects our business.

Comparative Net sales disaggregated based on legal entity billing to the customer , reported in prior periods, is also included in this Footnote.

Notes to the Consolidated Financial Statements

We make the following geographic disclosures.

Net sales disaggregated based upon customer location, is as follows:

Net sales by Country in which the Customer is Located Years Ended December 31,

Net sales Years Ended December 31,

2024 2023 2022

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Total $ 1,877.5 $ 1,893.9 $ 2,030.9

Net sales disaggregated based on legal entity billing to the customer, is as follows:

Net sales by Legal Entity Billing to the Customer Years Ended December 31,

2023 2022 2021

(In millions)

Germany $ 778.0 $ 829.4 $ 648.6

United States 515.3 564.9 405.1

South Korea 203.0 237.5 208.9

Brazil 144.4 156.3 100.1

China 139.5 114.2 92.7

South Africa 68.4 69.9 53.3

Other 19.5 25.3 24.9

Rest of Europe 25.8 33.4 13.2

Total $ 1,893.9 $ 2,030.9 $ 1,546.8

For the years ended December 31, 2023 and 2022, two customers accounted for 10% or more revenues in the Rubber segment aggregating to approximately $ 466.5 million and $ 480.2 million, respectively.

For the year ended December 31, 2021, one customer accounted for 10% or more revenues in the Rubber segment totaling approximately $ 218.6 million.

For the year ended December 31, 2024, one customer in the Rubber segment, aggregating to approximately $ 280.1 million, accounted for 10% or more of consolidated revenue.

For the years ended December 31, 2023 and 2022, two customers in the Rubber segment, aggregating to approximately $ 466.5 million and $ 480.2 million, respectively, accounted for 10% or more of consolidated revenue.

Notes to the Consolidated Financial Statements

Net sales to top ten customers Years Ended December 31,

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Specialty segment 165.4 161.4 177.0

Notes to the Consolidated Financial Statements

Long-lived tangible assets (1)

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In the normal course of business, Orion from time to time receives services from, or sells products to, related unconsolidated parties, in transactions that are either not material or approved in accordance with our Related Party Transaction Approval Policy.

As of December 31, 2023, related parties primarily include one joint venture that is accounted for using the equity method, “Deutsche Gaßrußwerke” (DGW).

As of December 31, 2024, related parties primarily includes our joint venture that is accounted for using the equity method of accounting, “Deutsche Gaßrußwerke” (DGW).

(In millions)

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Sales and services 3.9 2.5 5.6

Alpha Carbone —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 agreed to contribute, in 12 installments through 2025, $ 7.0 million (€ 6.7 million) in convertible bonds.

In 2024, we contributed $ 2.8 million (€ 2.7 million) in a convertible bond.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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-K

Item 8. Financial Statements and Supplementary Data