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Item 2. Management’s Discussion and Analysis

2025-11-04 compared with 2025-08-06 · 144 added, 94 removed, 192 unchanged (55% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis summarizes the significant factors affecting our results of operations and financial condition during the three and six months ended June 30, 2025 and 2024 and should be read in conjunction with the information included under Item 1.

The following discussion and analysis summarizes the significant factors affecting our results of operations and financial condition during the three and nine months ended September 30, 2025 and 2024 and should be read in conjunction with the information included under Item 1.

Financial Statements and Supplementary Data (Unaudited ) elsewhere in this report.

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together with its consolidated subsidiaries (“Orion S.A.”).

In July 2025, we announced our plan to idle production of three to five carbon black lines at multiple operating facilities in the Americas and EMEA by the end of 2025.

This decision is part of our strategy to focus maintenance investments on higher-performing production lines – making them more reliable and productive.

PRESENTATION OF CERTAIN FINANCIAL AND OTHER INFORMATION

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For a reconciliation of these non-GAAP financial measures to their nearest comparable GAAP measures, see section Reconciliation of Non-GAAP Financial Measures below.

These non-GAAP measures include, but are not limited to, Adjusted EBITDA, Segment Gross Profit, Net Working Capital and Capital Expenditures.

These non-GAAP measures include, but are not limited to, EBITDA, Adjusted EBITDA, Segment Gross Profit, Net Working Capital and Capital Expenditures.

• EBITDA —Earnings before interest, taxes, depreciation and amortization.

• Adjusted EBITDA —Income from operations before depreciation and amortization, stock-based compensation, and non-recurring items (such as, restructuring expenses, legal settlement gain, net loss due to assets misappropriation, etc.) plus Earnings in affiliated companies, net of tax.

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The table below presents our historical results derived from our Condensed Consolidated Financial Statements for the periods indicated.

Three Months Ended June 30, Six Months Ended June 30,

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

2025 2024 Delta 2025 2024 Delta

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Research and development costs 6.9 7.0 (0.1) (1.4) 20.0 20.1 (0.1) (0.5)

Other expenses, net 2.1 1.4 0.7 50.0 4.0 2.7 1.3 48.1

Income from operations 32.1 41.6 (9.5) (22.8) 63.3 94.4 (31.1) (32.9)

Loss (recovery) due to misappropriation of assets, net (7.3) 60.7 (68.0) (112.0) (6.5) 60.7 (67.2) (110.7)

Goodwill impairment 80.8 — 80.8 — 80.8 — 80.8 —

Other (income) expenses, net 1.4 (2.8) 4.2 (150.0) 4.6 (0.1) 4.7 (4,700.0)

Income (loss) from operations (53.7) (15.3) (38.4) 251.0 9.6 79.1 (69.5) (87.9)

Interest and other financial expense, net 14.4 15.9 (1.5) (9.4) 47.2 40.8 6.4 15.7

Income before earnings in affiliated companies and income taxes 13.0 29.4 (16.4) (55.8) 30.5 69.5 (39.0) (56.1)

Income tax expense 4.6 9.1 (4.5) (49.5) 13.5 22.6 (9.1) (40.3)

Income (loss) before earnings in affiliated companies and income taxes (68.1) (31.2) (36.9) 118.3 (37.6) 38.3 (75.9) (198.2)

Income tax expense (benefit) (0.5) (10.8) 10.3 (95.4) 13.0 11.8 1.2 10.2

Earnings in affiliated companies, net of tax 0.5 0.2 0.3 150.0 1.6 0.5 1.1 220.0

Net income 9.0 20.5 (11.5) (56.1) 18.1 47.2 (29.1) (61.7)

Net income (loss) (67.1) (20.2) (46.9) 232.2 (49.0) 27.0 (76.0) (281.5)

Other comprehensive income (loss), net of tax

Foreign currency translation adjustments (1.1) 3.3 (4.4) (133.3) (1.1) (11.4) 10.3 (90.4)

Net losses on derivatives (2.0) (1.2) (0.8) 66.7 (3.5) (1.7) (1.8) 105.9

Net gains (losses) on derivatives 0.8 (3.2) 4.0 (125.0) (2.7) (4.9) 2.2 (44.9)

Defined benefit plans, net — — — — (0.2) 0.2 (0.4) (200.0)

Total other comprehensive (loss) income, net of tax (0.3) 0.1 (0.4) (400.0) (4.0) (16.1) 12.1 (75.2)

Comprehensive income $ 4.3 $ 11.1 $ (6.8) (61.3) $ 14.4 $ 31.0 $ (16.6) (53.5)

Comprehensive income (loss) $ (67.4) $ (20.1) $ (47.3) 235.3 $ (53.0) $ 10.9 $ (63.9) (586.2)

Management’s Discussion and Analysis of Financial Condition and Results of Operation

Reconciliation of Non-GAAP Financial Measures

The following table presents reconciliation of Net income to Adjusted EBITDA:

Three Months Ended June 30, Six Months Ended June 30,

The following table presents reconciliation of Net income (loss) to EBITDA and Adjusted EBITDA:

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

2025 2024 Delta 2025 2024 Delta

(In millions) % (In millions) %

Net income $ 9.0 $ 20.5 $ (11.5) (56.1) $ 18.1 $ 47.2 $ (29.1) (61.7)

Add back Income tax expense 4.6 9.1 (4.5) (49.5) 13.5 22.6 (9.1) (40.3)

Net income (loss) $ (67.1) $ (20.2) $ (46.9) 232.2 $ (49.0) $ 27.0 $ (76.0) (281.5)

Add back Income tax (benefit) expense (0.5) (10.8) 10.3 (95.4) 13.0 11.8 1.2 10.2

Add back Equity in earnings of affiliated companies, net of tax (0.5) (0.2) (0.3) 150.0 (1.6) (0.5) (1.1) 220.0

Income before earnings in affiliated companies and income taxes 13.0 29.4 (16.4) (55.8) 30.5 69.5 (39.0) (56.1)

Income (loss) before earnings in affiliated companies and income taxes (68.1) (31.2) (36.9) 118.3 (37.6) 38.3 (75.9) (198.2)

Add back Interest and other financial expense, net 14.4 15.9 (1.5) (9.4) 47.2 40.8 6.4 15.7

Income from operations 32.1 41.6 (9.5) (22.8) 63.3 94.4 (31.1) (32.9)

Income (loss) from operations (53.7) (15.3) (38.4) 251.0 9.6 79.1 (69.5) (87.9)

Add back Depreciation of property, plant and equipment and amortization of intangible assets and right of use assets 33.7 30.8 2.9 9.4 97.2 90.0 7.2 8.0

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Equity in earnings of affiliated companies, net of tax 0.5 0.2 0.3 150.0 1.6 0.5 1.1 220.0

Loss (recovery) due to misappropriation of assets, net

Misappropriation of assets, net (7.3) 59.2 (66.5) (112.3) (7.3) 59.2 (66.5) (112.3)

Professional fees related to misappropriation of assets — 1.5 (1.5) (100.0) 0.8 1.5 (0.7) (46.7)

Goodwill impairment 80.8 — 80.8 — 80.8 — 80.8 —

Long term incentive plan 3.7 4.8 (1.1) (22.9) 10.0 11.3 (1.3) (11.5)

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$ 36.1 $ 52.9 $ (16.8) (31.8) $ 125.8 $ 157.4 $ (31.6) (20.1)

Management’s Discussion and Analysis of Financial Condition and Results of Operation

Operating Results Discussion

For the three months ended June 30, 2025 compared to three months ended June 30, 2024

Volume for the three months ended June 30, 2025 increased by 6.9 kmt to 240.0 kmt, year over year, due to higher volume in the Rubber Carbon Black segment.

Net sales for the three months ended June 30, 2025 decreased by $10.6 million, or 2.2%, to $466.4 million, year over year, primarily due to lower oil prices.

This was partially offset by higher Rubber Carbon Black segment volume, favorable foreign exchange rate impact and higher cogeneration.

For the three months ended September 30, 2025 compared to three months ended September 30, 2024

Volume for the three months ended September 30, 2025 increased by 12.3 kmt, year over year, to 237.5 kmt, primarily due to higher shipments in both segments.

Net sales for the three months ended September 30, 2025 decreased by $12.5 million, or 2.7%, year over year to $450.9 million, primarily due to lower oil prices and unfavorable product mix.

Those were partially offset by higher volume and a favorable foreign exchange rate impact.

Cost of sales

Cost of sales for the three months ended June 30, 2025 increased marginally by $0.8 million, or 0.2%, to $368.0 million, year over year.

Gross profit for the three months ended June 30, 2025 decreased by $11.4 million, or 10.4%, to $98.4 million, year over year.

The decrease was driven primarily by lower volume in the Specialty Carbon Black segment, unfavorable timing from the pass-through of raw material costs and unfavorable customer and regional mix in the Rubber Carbon Black segment.

Cost of sales for the three months ended September 30, 2025 increased by $9.4 million, or 2.6%, year over year to $365.3 million, primarily due to costs associated with higher volume and higher fixed costs.

Gross profit for the three months ended September 30, 2025 decreased by $21.9 million, or 20.4%, year over year to $85.6 million.

The decrease was driven primarily by unfavorable timing from the pass-through effect of raw material costs as well as unfavorable customer and regional mix in both segments.

Selling, general and administrative expenses

Selling, general and administrative expenses for the three months ended June 30, 2025 decreased by $2.6 million, or 4.3% to $57.7 million, year over year, primarily driven by lower distribution costs.

Selling, general and administrative expenses for the three months ended September 30, 2025 decreased by $0.4 million, or 0.7%, year over year to $57.5 million, primarily driven by lower distribution costs.

Management’s Discussion and Analysis of Financial Condition and Results of Operation

Loss (recovery) due to misappropriation of assets, net

During the third quarter of 2024, we were the target of a criminal scheme that resulted in multiple fraudulently induced outbound wire transfers to accounts controlled by unknown third parties aggregating to $59.2 million.

In addition, we incurred $1.5 million of professional fees in connection with our investigations.

For more information, refer to Note Q.

Commitments and Contingencies in our Annual Report on Form 10-K for the year ended December 31, 2024.

In the third quarter of 2025, we recovered $7.3 million (€6.3 million).

In 2025, we incurred $0.8 million of professional fees.

This recovery, net of legal fee, is reported in Loss (recovery) due to misappropriation of assets, net in our Condensed Consolidated Statements of Operations.

Goodwill Impairment

During the third quarter of 2025, we experienced a significant decrease in the trading price of our common stock.

In our Rubber reporting unit, elevated levels of low value tire imports from Asia during 2025 have indirectly impacted our demand in core Western markets and our overall profitability.

In our Specialty reporting unit, persistently soft industrial economies coupled with uncertainty related to global trade, tariffs and regulatory matters have impacted our demand and portfolio mix.

We performed a quantitative impairment assessment for each of our two reporting units as of September 30, 2025.

Based on our quantitative assessments, we recognized a non-cash goodwill impairment charge of $80.8 million.

For more information, refer to Note D.

Goodwill to the Condensed Consolidated Financial Statements.

Provision for income taxes

For the three months ended June 30, 2025, the Company recognized Income before earnings in affiliated companies and income taxes of $13.0 million, compared to $29.4 million for the three months ended June 30, 2024.

The income tax expense for the three months ended June 30, 2025 was $4.6 million compared to $9.1 million for the three months ended June 30, 2024.

The effective tax rate for the three months ended June 30, 2025, and 2024 was 35.4% and 31.0%, respectively.

The increase in effective tax rate for three months ended June 30, 2025, as compared to the three months ended June 30, 2024, was primarily driven by valuation allowances for tax losses.

Comprehensive Income (loss)

Comprehensive income (loss) decreased in the second quarter of 2025 by $6.8 million to $4.3 million, year over year.

For the three months ended September 30, 2025, the Company recognized Income before earnings in affiliated companies and income taxes of $68.1 million, compared to Loss before earnings in affiliated companies and income taxes $31.2 million for the three months ended September 30, 2024.

The income tax benefit for the three months ended September 30, 2025 and 2024 was $0.5 million and $10.8 million, respectively.

The effective tax rate for the three months ended September 30, 2025, and 2024 was 0.7% and 34.6%, respectively.

The decrease in effective tax rate for three months ended September 30, 2025, as compared to the three months ended September 30, 2024, was primarily driven by valuation allowances for tax losses and a non-tax deductible loss in connection with the goodwill impairment.

The 2024 effective tax rate was impacted by $18.2 million of tax benefit related to Loss due to misappropriation of assets, net.

For more information, refer to Note Q.

Commitments and Contingencies in our Annual Report on Form 10-K for the year ended December 31, 2024.

Comprehensive Income (loss) and Net Income (loss)

Comprehensive loss increased in the third quarter of 2025 by $47.3 million year over year to $67.4 million.

The components of Comprehensive income (loss) are discussed below:

Net income decreased by $11.5 million in the second quarter of 2025 compared to the second quarter of 2024.

Net loss decreased by $46.9 million in the third quarter of 2025 compared to the third quarter of 2024 discussed above.

The activities from the components of Other Comprehensive income are discussed below:

• $5.7 million of net favorable impact due to change in foreign currency translation adjustments due to weakening of the U.S.

• $4.4 million of net unfavorable impact due to change in foreign currency translation adjustments due to weakening of the U.S.

dollar versus euro and

• $0.8 million of net unfavorable impact related to financial derivative instruments primarily driven by net periodic changes in cross currency swaps.

• $4.0 million of net favorable impact related to financial derivative instruments primarily driven by net periodic changes in cross currency swaps.

Adjusted EBITDA (A Non-GAAP Financial Measure)

Adjusted EBITDA decreased in the second quarter of 2025 by $6.3 million, or 8.4%, to $68.8 million, year over year.

The decrease was driven by lower volume in the Specialty Carbon Black segment, unfavorable price and unfavorable timing from the pass-through of raw material costs, partially offset by higher cogeneration.

Adjusted EBITDA decreased in the third quarter of 2025 by $22.4 million, or 28.0%, to $57.7 million, year over year.

The decrease was driven by unfavorable timing of the pass-through effect of raw material costs as well as unfavorable product and regional mix in both segments.

These were partially offset by increased volume and a favorable foreign exchange rate impact.

Management’s Discussion and Analysis of Financial Condition and Results of Operation

For the six months ended June 30, 2025 compared to six months ended June 30, 2024

Volume increased by 10.2 kmt to 491.7 kmt compared to the six months ended June 30, 2024, primarily due to higher Rubber Carbon Black segment volume, partially offset by lower Specialty Carbon Black segment volume.

Net sales decreased by $35.8 million, or 3.7%, in the six months ended June 30, 2025 to $944.1 million, year over year, primarily driven by the pass-through of lower oil prices, and lower Specialty Carbon Black segment volume.

Those were partially offset by higher volume in the Rubber Carbon Black segment and higher cogeneration.

For the nine months ended September 30, 2025 compared to nine months ended September 30, 2024

Volume increased by 22.5 kmt year over year to 729.2 kmt compared to the nine months ended September 30, 2024, primarily due to higher Rubber Carbon Black segment volume.

Net sales decreased by $48.3 million, or 3.3%, year over year in the nine months ended September 30, 2025 to $1,395.0 million, primarily driven by the pass-through of lower oil prices, partially offset by higher volume in the Rubber Carbon Black segment and a favorable foreign exchange rate impact.

Cost of sales

Cost of sales decreased marginally by $0.3 million, to $747.6 million in the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

Gross profit decreased by $35.5 million, or 15.3%, to $196.5 million, year over year.

The decrease was primarily driven by unfavorable impact from the pass-through of raw material costs, partially offset by higher cogeneration.

Cost of sales increased by $9.1 million, or 0.8%, year over year to $1,112.9 million in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, primarily due to higher Rubber Carbon Black volume and fixed costs.

Gross profit decreased by $57.4 million, or 16.9%, year over year to $282.1 million.

The decrease was primarily driven by unfavorable product and regional mix and unfavorable timing from the pass-through effect of raw material costs.

Selling, general and administrative expenses

Selling, general and administrative expenses decreased by $5.7 million, or 4.7%, to $116.1 million in the six months ended June 30, 2025 compared to the six months ended June 30, 2024, primarily driven by driven lower distribution, professional service and personnel costs.

Selling, general and administrative expenses decreased by $6.1 million, or 3.4%, year over year to $173.6 million in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, primarily driven by impact of cost saving measures initiated by us and lower distribution costs.

Those were partially offset by inflation and unfavorable foreign exchange rate impact.

Loss (recovery) due to misappropriation of assets, net

In addition, we incurred $1.5 million of professional fees in connection with our investigations.

For more information, refer to Note Q.

Commitments and Contingencies in our Annual Report on Form 10-K for the year ended December 31, 2024.

In the third quarter of 2025, we recovered $7.3 million (€6.3 million).

In 2025, we incurred $0.8 million of professional fees.

This recovery, net of legal fee, is reported in Loss (recovery) due to misappropriation of assets, net in our Condensed Consolidated Statements of Operations.

Goodwill Impairment

During the third quarter of 2025, we experienced a significant decrease in the trading price of our common stock.

In our Rubber reporting unit, elevated levels of low value tire imports from Asia during 2025 have indirectly impacted our demand in core Western markets and our overall profitability.

In our Specialty reporting unit, persistently soft industrial economies coupled with uncertainty related to global trade, tariffs and regulatory matters have impacted our demand and portfolio mix.

We performed quantitative impairment assessment for each of our two reporting units at September 30, 2025.

Based on our quantitative assessments, we recognized a non-cash goodwill impairment charge of $80.8 million.

For more information, refer to Note D.

Goodwill to the Condensed Consolidated Financial Statements.

Provision for income taxes

For the six months ended June 30, 2025, the Company recognized Income before earnings in affiliated companies and income taxes of $30.5 million, compared to $69.5 million in the six months ended June 30, 2024.

The provision for income taxes was an expense of $13.5 million and $22.6 million for the six months ended June 30, 2025 and June 30, 2024, respectively.

The effective tax rate for the six months ended June 30, 2025, was 44.3%, as compared to 32.5% for the six months ended June 30, 2024.

The increase in our effective tax rate for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, was primarily driven by valuation allowances for tax losses.

Adjusted EBITDA (A Non-GAAP Financial Measure)

Adjusted EBITDA decreased by $25.4 million, or 15.8%, from $160.4 million for the six months ended June 30, 2024 to $135.0 million in the six months ended June 30, 2025.

The decrease was primarily due to lower volume in the Specialty Carbon Black segment, unfavorable timing from the pass-through of raw material costs and unfavorable customer and regional mix in the Rubber Carbon Black segment.

Those were partially offset by higher cogeneration.

For the nine months ended September 30, 2025, the Company recognized Loss before earnings in affiliated companies and income taxes of $37.6 million, compared to Income before earnings in affiliated companies and income taxes of $38.3 million in the nine months ended September 30, 2024.

The provision for income taxes was an expense of $13.0 million and $11.8 million for the nine months ended September 30, 2025 and September 30, 2024, respectively.

The effective tax rate for the nine months ended September 30, 2025, was (34.6)%, as compared to 30.8% for the nine months ended September 30, 2024.

The decrease in our effective tax rate for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024, was primarily driven by valuation allowances for tax losses and a non-deductible expense in connection with the goodwill impairment.

The 2024 effective tax rate was impacted by $18.2 million of tax benefit related to Loss due to misappropriation of assets, net.

For more information, refer to Note Q.

Commitments and Contingencies in our Annual Report on Form 10-K for the year ended December 31, 2024.

Management’s Discussion and Analysis of Financial Condition and Results of Operation

Comprehensive Income

Comprehensive income decreased by $16.6 million in the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

Net income decreased by $29.1 million in the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

Comprehensive income decreased by $63.9 million year over year in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.

Net income decreased by $76.0 million year over year in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.

The activities from the components of Other Comprehensive income are discussed below:

• $10.3 million of net favorable impact due to foreign currency translation adjustments, and

• $1.8 million of net unfavorable impacts related to financial derivative instruments primarily driven by net periodic changes in cross currency and interest rate swaps.

Management’s Discussion and Analysis of Financial Condition and Results of Operation

• $2.2 million of net favorable impacts related to financial derivative instruments primarily driven by net periodic changes in cross currency and interest rate swaps.

Adjusted EBITDA (A Non-GAAP Financial Measure)

Adjusted EBITDA decreased by $47.8 million, or 19.9%, year over year from $240.5 million for the nine months ended September 30, 2024 to $192.7 million in the nine months ended September 30, 2025.

The decrease was primarily due to lower volume in the Specialty Carbon Black segment, unfavorable customer and regional mix in the Rubber Carbon Black segment and unfavorable timing from the pass-through effect of raw material costs.

Segment Discussion

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The table below presents our segment results derived from our unaudited Condensed Consolidated Financial Statements for the periods indicated.

Three Months Ended June 30, Six Months Ended June 30,

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

2025 2024 Delta 2025 2024 Delta

4 unchanged sentences

Cost of sales 127.4 125.9 1.5 1.2 373.6 381.1 (7.5) (2.0)

Gross profit $ 32.6 $ 39.5 $ (6.9) (17.5) $ 72.6 $ 81.2 $ (8.6) (10.6)

Segment Gross profit $ 32.6 $ 36.6 $ (4.0) (10.9) $ 105.2 $ 117.8 $ (12.6) (10.7)

Adjusted EBITDA $ 21.6 $ 27.2 $ (5.6) (20.6) $ 66.9 $ 83.1 $ (16.2) (19.5)

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Cost of sales 237.9 230.0 7.9 3.4 739.3 722.7 16.6 2.3

Gross profit $ 65.8 $ 70.3 $ (4.5) (6.4) $ 123.9 $ 150.8 $ (26.9) (17.8)

Segment Gross profit $ 53.0 $ 70.9 $ (17.9) (25.2) $ 176.9 $ 221.7 $ (44.8) (20.2)

Adjusted EBITDA $ 36.1 $ 52.9 $ (16.8) (31.8) $ 125.8 $ 157.4 $ (31.6) (20.1)

Specialty Carbon Black

Volume decreased by 4.9 kmt, or 7.8%, year over year, to 58.0 kmt and by 6.3 kmt, or 5.0% year over year, to 119.9 kmt for the three and six months ended June 30, 2025, respectively, primarily due to lower demand in the Europe, Middle East and Africa, as well as the Americas region.

Net sales decreased by $7.4 million, or 4.5%, year over year, to $158.1 million and by $17.6 million, or 5.2%, year over year, to $318.8 million for the three and six months ended June 30, 2025, respectively, primarily due to lower volume and lower oil prices.

Gross profit decreased by $6.9 million, or 17.5%, year over year, to $32.6 million and by $8.6 million, or 10.6%, year over year, to $72.6 million for the three and six months ended June 30, 2025, respectively, primarily driven by lower volume and unfavorable price and product mix.

Adjusted EBITDA for the three and six months ended June 30, 2025 decreased by $8.1 million, or 28.9%, year over year, to $19.9 million and by $10.6 million, or 19.0%, year over year, to $45.3 million, respectively.

The decrease was primarily due to lower volume and unfavorable price and product mix.

Rubber Carbon Black

Volume increased by 11.8 kmt, or 6.9%, year over year, to 182.0 kmt and increased by 16.5 kmt, or 4.6%, year over year, to 371.8 kmt, for the three and six months ended June 30, 2025, primarily due to higher demand in the Asia Pacific and Americas regions.

Net sales decreased by $3.2 million, or 1.0%, year over year, to $308.3 million and decreased by $18.2 million, or 2.8%, year over year, to $625.3 million for the three and six months ended June 30, 2025, primarily due to the pass-through of lower oil prices, partially offset by higher volume.

Gross profit for the three and six months ended June 30, 2025 decreased by $4.5 million, or 6.4%, year over year, to $65.8 million and decreased by $26.9 million, or 17.8%, year over year, to $123.9 million.

The decrease was primarily due to unfavorable timing from the pass-through of raw material costs.

Adjusted EBITDA increased by $1.8 million, or 3.8%, year over year, to $48.9 million for the three months ended June 30, 2025, driven primarily by lower fixed costs and higher cogeneration, partly offset by unfavorable timing from the pass-through of raw material costs.

Adjusted EBITDA decreased by $14.8 million, or 14.2%, to $89.7 million for the six months ended June 30, 2025, driven primarily by unfavorable timing from the pass-through of raw material costs and unfavorable customer and regional mix.

Volume increased marginally by 1.5 kmt, or 2.5%, year over year to 61.2 kmt for the three months ended September 30, 2025.

Volume decreased by 4.8 kmt, or 2.6%, year over year to 181.1 kmt for the nine months ended September 30, 2025, respectively, primarily due to lower demand in the EMEA as well as the Americas regions in the first half of 2025.

Net sales decreased by $2.5 million, or 1.5%, year over year to $160.0 million, and by $20.1 million, or 4.0%, year over year to $478.8 million for the three and nine months ended September 30, 2025, respectively, primarily due to lower oil prices and lower volume in the first half of 2025.

Gross profit decreased by $4.0 million, or 10.9%, year over year, to $32.6 million and by $12.6 million, or 10.7%, year over year to $105.2 million for the three and nine months ended September 30, 2025, respectively, primarily driven by lower volume, unfavorable price and product mix and higher fixed costs.

Management’s Discussion and Analysis of Financial Condition and Results of Operation

Adjusted EBITDA for the three months ended September 30, 2025 decreased by $5.6 million, or 20.6%, year over year to $21.6 million.

The decrease was primarily due to unfavorable timing from the pass-through effect of raw material costs, product mix and higher fixed costs.

Adjusted EBITDA for the nine months ended September 30, 2025 decreased by $16.2 million, or 19.5%, year over year to $66.9 million.

The decrease was primarily due to lower demand, unfavorable product and regional mix as well as unfavorable impact from the pass-through effect of raw material costs.

Rubber Carbon Black

Volume increased by 10.8 kmt, or 6.5%, year over year to 176.3 kmt and increased by 27.3 kmt, or 5.2%, year over year to 548.1 kmt, for the three and nine months ended September 30, 2025, respectively, primarily due to higher demand in the Asia Pacific and Americas regions.

Net sales decreased by $10.0 million, or 3.3%, year over year to $290.9 million and decreased by $28.2 million, or 3.0%, year over year to $916.2 million for the three and nine months ended September 30, 2025, respectively, primarily due to the pass-through of lower oil prices, partially offset by higher volume.

Gross profit decreased by $17.9 million, or 25.2%, year over year to $53.0 million and decreased by $44.8 million, or 20.2%, year over year to $176.9 million for the three and nine months ended September 30, 2025, respectively.

The decrease was primarily due to higher fixed costs, and unfavorable price and regional customer mix.

Those were partially offset by higher volume.

Adjusted EBITDA decreased by $16.8 million, or 31.8%, year over year to $36.1 million for the three months ended September 30, 2025, driven primarily by the unfavorable impact from the pass-through effect of raw material costs as well as unfavorable customer and regional mix.

Adjusted EBITDA decreased by $31.6 million, or 20.1%, year over year to $125.8 million for the nine months ended September 30, 2025, primarily driven by unfavorable customer and regional mix as well as the unfavorable impact from the pass-through effect of raw material costs.

Liquidity and Capital Resources

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The tables below present our historical cash flows derived from our unaudited Condensed Consolidated Financial Statements for the periods indicated.

Six Months Ended June 30,

Nine Months Ended September 30,

(In millions)

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Net cash used in investing activities (112.3) (135.7)

Net cash provided by financing activities 14.0 23.5

Net cash provided by operating activities during the six months ended June 30, 2025 was $54.1 million.

Net cash provided by (used in) financing activities (5.5) 119.3

Net cash provided by operating activities during the nine months ended September 30, 2025 was $122.9 million.

The cash provided by operating activities primarily reflects changes in working capital.

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Accounts Receivable to the Condensed Consolidated Financial Statements.

Net cash used in investing activities in the six months ended June 30, 2025 amounted to $71.4 million.

Net cash used in investing activities in the nine months ended September 30, 2025 amounted to $112.3 million.

The expenditures were primarily related to safety, maintenance and growth investments.

Net cash provided by financing activities during the six months ended June 30, 2025 amounted to $14.0 million.

These inflows primarily consisted of $17.6 million related to other short-term debt borrowings and $28.0 million, net borrowings under our ancillary credit facilities.

Those were partially offset by scheduled debt repayments, dividend distributions and stock buybacks.

Net cash provided by operating activities for the six months ended June 30, 2024, amounted to $61.7 million.

The cash provided by operating activities primarily reflects changes in working capital.

Management’s Discussion and Analysis of Financial Condition and Results of Operation

Net cash used in financing activities during the nine months ended September 30, 2025 amounted to $5.5 million.

The outflow primarily consisted of scheduled debt repayments, dividend distributions, payments for debt issuance costs and $24.8 million in stock buybacks.

Those were partially offset by inflows primarily consisted of $30.0 million related to other short-term debt borrowings and $1.5 million, net borrowings under our ancillary credit facilities.

Net cash provided by operating activities for the nine months ended September 30, 2024, amounted to $30.8 million.

The cash provided by operating activities primarily reflects changes in working capital, $59.2 million Loss due to misappropriation of assets, net and professional fees of $1.5 million.

Change in working capital includes $323.1 million sale of certain accounts receivables, discussed in Note B.

Accounts Receivable to the Condensed Consolidated Financial Statements.

Net cash used in investing activities for the six months ended June 30, 2024, amounted to $87.8 million.

Net cash used in investing activities for the nine months ended September 30, 2024, amounted to $135.7 million.

These expenditures were composed of a combination of safety and maintenance-related.

Net cash provided by financing activities for the six months ended June 30, 2024, amounted to $23.5 million.

These inflows primarily consisted of $52.7 million related to other short-term debt borrowings, partially offset by $17.7 million, net related to repayment of our ancillary credit facilities.

Net cash provided by financing activities for the nine months ended September 30, 2024, amounted to $119.3 million.

These inflows primarily consisted of $68.7 million related to other short-term debt borrowings and $75.1 million, net borrowings under our ancillary credit facilities.

Those were partially offset by scheduled debt repayments, dividend distributions and stock buybacks.

Sources of Liquidity

Our principal sources of liquidity are the net cash generated (i) from operating activities, primarily driven by our operating results and changes in working capital requirements and (ii) from financing activities, primarily driven by borrowing amounts available under our committed multicurrency, senior secured revolving credit facility (the “RCF”) and related ancillary facilities, various uncommitted local credit lines, and, from time to time, term loan borrowings and Accounts receivable factoring.

Our principal sources of liquidity are the net cash generated (i) from operating activities, primarily driven by our operating results and changes in working capital requirements and (ii) from financing activities, primarily driven by borrowing amounts available under our committed multi-currency, the senior secured revolving credit facility (the “RCF”) and related ancillary facilities, various uncommitted local credit lines, and, from time to time, term loan borrowings and Accounts receivable factoring.

We believe our anticipated future operating cash flows, the capacity under our existing credit facilities and uncommitted bilateral lines of credit, along with access to surety bonds, will be sufficient to finance our planned Capital expenditures, settle our commitments and contingencies and address our normal anticipated working capital needs for the foreseeable future.

As of June 30, 2025, the company had total liquidity of $181.9 million, including cash and equivalents of $42.6 million, $103.5 million availability under our revolving credit facility, including ancillary lines, and $35.8 million of capacity under other available credit lines.

Management’s Discussion and Analysis of Financial Condition and Results of Operation

As of September 30, 2025, the company had total liquidity of $249.2 million, including cash and equivalents of $51.3 million, $165.8 million availability under our RCF, including ancillary lines, and $32.1 million of capacity under other available credit lines.

Net working capital (A Non-GAAP Financial Measure)

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The following table sets forth the principal components of our Net working capital as of the dates indicated.

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

(In millions)

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Conversely, decreases in the cost of raw materials lead to a decrease in our Net working capital requirements over the same period of time.

Our Net working capital increased from $346.1 million as of December 31, 2024, to $382.3 million as of June 30, 2025.

Our Net working capital increased from $346.1 million as of December 31, 2024, to $362.6 million as of September 30, 2025.

The primary working capital change drivers, year over year, were as follows:

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Those increases were partially offset by:

Management’s Discussion and Analysis of Financial Condition and Results of Operation

• Inventories, net —Decrease in production to meet forecasted demand resulted in a reduction in finished goods inventory.

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Off-Balance Sheet Arrangements

As of June 30, 2025, we did not have any off-balance sheet arrangements.

As of September 30, 2025, we did not have any off-balance sheet arrangements.

Cautionary Statement for the Purposes of the “Safe Harbor” Provisions of the Private Securities Litigation Reform Act of 1995

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• the outcome of any in-progress, pending or possible litigation or regulatory proceedings;

• the impact of adoption of ASU 2025-01 on our financial results;

• the impact of adoption of new ASUs on our financial results;

• the sufficiency of our cash on hand, cash provided by operating activities and borrowings to pay our operating expenses, satisfy our debt obligations and fund capital expenditures;

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Factors that could cause our actual results to differ materially from those expressed or implied in such forward-looking statements include those factors detailed under the captions “Cautionary Statement for the Purposes of the “Safe Harbor” Provisions of the Private Securities Litigation Reform Act of 1995” and “Risk Factors” and in “ Note Q.

Commitments and Contingencies” to our audited Consolidated Financial Statements regarding contingent liabilities, including litigation in our Annual Report in Form 10-K for the year ended December 31, 2024 and in our quarterly reports in Form 10-Q and the unaudited Condensed Consolidated Financial Statements contained therein.

Commitments and Contingencies” to our audited Consolidated Financial Statements regarding contingent liabilities, including litigation in our Annual Report on Form 10-K for the year ended December 31, 2024 and in our quarterly reports on Form 10-Q and the unaudited Condensed Consolidated Financial Statements contained therein.

It is not possible for our management to predict all risk factors and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

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Quantitative and Qualitative Disclosures About Market Risk

Information about market risks for the period ended June 30, 2025 does not differ materially from “ Item 7A” in our Annual Report in Form 10-K for the year ended December 31, 2024.

Information about market risks for the period ended September 30, 2025 does not differ materially from “ Item 7A” in our Annual Report on Form 10-K for the year ended December 31, 2024.

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 2. Management’s Discussion and Analysis