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Item 2. Management’s Discussion and Analysis

2026-08-05 compared with 2026-05-06 · 127 added, 93 removed, 183 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 months ended March 31, 2026 and 2025 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 six months ended June 30, 2026 and 2025 and should be read in conjunction with the information included under Item 1.

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

Results for the three month periods ended March 31, 2026 is not necessarily indicative of results that may be expected for the entire year.

Results for the three and six month periods ended June 30, 2026 are not necessarily indicative of results that may be expected for the entire year.

We prepare our financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”).

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

Key Factors Affecting Our Results of Operations

This section should be read in conjunction with the discussion under Drivers of Demand , in Part 1, Item 1.

Business in our Annual Report in Form 10-K for the year ended December 31, 2025, for drivers and factors that are likely to have an impact on our operating results.

For segment drivers, refer to Segment Discussion elsewhere in this document.

Operating Results

Operating results for the periods discussed as follows:

Three Months Ended March 31,

2026 2025 Delta

(In millions, except volume) %

Volume (in kmt) 256.5 251.7 4.8 1.9

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

2026 2025 Delta 2026 2025 Delta

(In millions) % (In millions) %

Net sales $ 500.9 $ 466.4 $ 34.5 7 $ 960.4 $ 944.1 $ 16.3 2

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Interest and other financial expense, net 16.3 19.1 (2.8) (15) 31.0 32.8 (1.8) (5)

Income (loss) before earnings in affiliated companies and income taxes (3.3) 17.5 (20.8) (118.9)

Income before earnings in affiliated companies and income taxes 5.0 13.0 (8.0) (62) 1.7 30.5 (28.8) (94)

Income tax expense 3.4 4.6 (1.2) (26) 10.1 13.5 (3.4) (25)

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Other comprehensive income (loss), net of tax

Foreign currency translation adjustments 3.6 2.6 1.0 38.5

Net gains (losses) on derivatives 1.7 (1.5) 3.2 (213.3)

Foreign currency translation adjustments 0.6 (2.6) 3.2 (123) 4.2 — 4.2 N/A

Net losses on derivatives (2.2) (2.0) (0.2) 10 (0.5) (3.5) 3.0 (86)

Defined benefit plans, net — (0.1) 0.1 (100) (0.1) (0.2) 0.1 (50)

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Operating Results Discussion

For the three months ended March 31, 2026 compared to three months ended March 31, 2025

Volume for the three months ended March 31, 2026 increased by 4.8 kmt, year over year, to 256.5 kmt, primarily due to higher demand in Europe, Middle East and Africa (“EMEA”) and Asia Pacific (“APAC”) regions in both segments, partially offset by lower demand in the Americas.

Net sales for the three months ended March 31, 2026 decreased by $18.2 million, or 3.8%, year over year to $459.5 million, primarily due to the pass-through effect of lower year-over-year oil prices, as well as unfavorable price and product mix.

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

For the three months ended June 30, 2026 compared to three months ended June 30, 2025

Net sales for the three months ended June 30, 2026 increased by $34.5 million, or 7%, year over year to $500.9 million, primarily due to a 9% favorable pass-through effect of higher year-over-year oil prices driven by the conflict in the Middle East and 2% favorable foreign exchange rate impact due to weakening of U.S.

dollar versus the euro and other major currencies.

The favorable variances were partially offset by unfavorable pricing of 2%, owing primarily to annual contract agreements in the Rubber Carbon Black segment and 1% lower volumes primarily driven by lower tire production rates in the Americas as well as softer year-over-year original equipment (“OE”) manufacturer demand in the Americas and Asia Pacific regions.

Cost of sales

Cost of sales for the three months ended March 31, 2026 increased marginally by $0.7 million, or 0.2%, year over year to $380.3 million.

Gross profit for the three months ended March 31, 2026 decreased by $18.9 million, or 19.3%, year over year to $79.2 million.

Cost of sales for the three months ended June 30, 2026 increased by $39.9 million, or 11%, year over year to $407.9 million, mainly due to

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

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

feedstocks linked to higher oil costs driven by the Middle East conflict.

Gross profit for the three months ended June 30, 2026 decreased by $5.4 million, or 5%, year over year to $93.0 million.

The decrease was primarily driven by an unfavorable pricing impact of 11%, owing primarily to annual contract agreements in the Rubber Carbon Black segment, partially offset by a 4% favorable volume impact and 3% favorable foreign exchange rate impact.

Selling, general and administrative expenses

Selling, general and administrative expenses for the three months ended March 31, 2026 increased marginally by $0.7 million, or 1.2%, year over year to $59.1 million.

Selling, general and administrative expenses for the three months ended June 30, 2026 increased by $5.0 million, or 9%, year over year to $62.7 million.

The increase was driven 4% due to higher freight and distribution expenses and 3% higher variable compensation.

Provision for income taxes

For the three months ended March 31, 2026, we recognized a Loss before earnings in affiliated companies and income taxes of $3.3 million, compared to Income before earnings in affiliated companies and income taxes of $17.5 million for the three months ended March 31, 2025.

Income tax expense for the three months ended March 31, 2026 and 2025 were $6.7 million and $8.9 million, respectively.

Income tax expense is primarily determined based on projected pre-tax income mix in countries with varying statutory tax rates and valuation allowances on tax losses.

Comprehensive Income (loss) and Net Income (loss)

Comprehensive loss decreased in the first quarter of 2026 by $14.8 million year over year to $4.7 million.

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

Net income decreased by $19.0 million in the first quarter of 2026 compared to the first quarter of 2025 as discussed above.

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

Income before earnings in affiliated companies and income taxes for the three months ended June 30, 2026 decreased by $8.0 million, or 62%, year over year to $5.0 million.

Income tax expense for the three months ended June 30, 2026 and 2025 was $3.4 million and $4.6 million, respectively.

Income tax expense is primarily determined based on the projected pre-tax income mix in countries with varying statutory tax rates and the impact of valuation allowances on tax losses.

Comprehensive Income and Net Income

Comprehensive income for the three months ended June 30, 2026 decreased by $4.1 million, or 95%, year over year to $0.2 million.

The components of Comprehensive income are discussed below:

Net income for the three months ended June 30, 2026 decreased by $7.2 million, or 80%, year over year to $1.8 million as discussed above.

The activities from the components of Other comprehensive income (loss) are discussed below:

• $3.2 million of net favorable impact due to change in foreign currency translation adjustments as a result of the weakening of the U.S.

dollar versus euro, and

• $3.2 million of net favorable impact related to financial derivative instruments, primarily driven by net periodic changes in cross currency and interest rate swaps.

dollar versus euro.

For the six months ended June 30, 2026 compared to six months ended June 30, 2025

Net sales increased by $16.3 million, or 2%, year over year in the six months ended June 30, 2026 to $960.4 million, primarily driven by 4% favorable foreign exchange rate impact due to weakening of the U.S.

dollar versus the euro and other major currencies, partially offset by 3% unfavorable pricing, including lower year-over-year oil pass-through effects and lower annual contract agreements in our Rubber Carbon Black segment.

Cost of sales

Cost of sales increased by $40.6 million, or 5%, year over year to $788.2 million in the six months ended June 30, 2026 compared to the six months ended June 30, 2025, mainly due to feedstocks linked to higher oil costs driven by the Middle East conflict.

Gross profit decreased by $24.3 million, or 12%, year over year to $172.2 million.

The decrease was primarily driven by an unfavorable pricing impact of 11%, primarily from annual contract agreements in our Rubber Carbon Black segment, a 4% effect from unfavorable product and regional mix and a 3% unfavorable timing effect from the pass-through of raw material costs, partially offset by 5% favorable foreign exchange rate impact.

Selling, general and administrative expenses

Selling, general and administrative expenses increased by $5.7 million, or 5%, year over year to $121.8 million in the six months ended June 30, 2026 compared to the six months ended June 30, 2025.

The increase was primarily driven by 4% higher freight and distribution expenses.

Provision for income taxes

Income before earnings in affiliated companies and income taxes for the six months ended June 30, 2026 decreased by $28.8 million, or 94%, year over year to $1.7 million.

Income tax expense for the six months ended June 30, 2026 and 2025 was $10.1 million and $13.5 million, respectively.

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

expense is primarily determined based on projected pre-tax income mix in countries with varying statutory tax rates and the impact of valuation allowances on tax losses.

Comprehensive Income (Loss)

Comprehensive loss was $4.5 million for the six months ended June 30, 2026 compared to Comprehensive income of $14.4 million for the six months ended June 30, 2025.

Net loss was $8.1 million for the six months ended June 30, 2026 compared to Net income of $18.1 million for the six months ended June 30, 2025.

The activities from the components of Other comprehensive income (loss) are discussed below:

• $4.2 million of net favorable impact due to foreign currency translation adjustments, and

• $3.0 million of net favorable impacts related to financial derivative instruments primarily driven by net periodic changes in cross currency and interest rate swaps.

Sensitivities Analysis

We monitor certain sensitivities impacting our Earnings before interest, taxes, depreciation and amortization (“EBITDA”) and Inventories, net plus Accounts receivable, net minus Accounts payable (“Net Working Capital”) as follows:

• A $10 per barrel change in feedstock costs

◦ Estimated impact on Net Working Capital is between $25 million to $30 million, over 3-4 months;

◦ Estimated fiscal year impact on EBITDA is between $7 million to $10 million;

• A one percent (1%) change in foreign currency exchange rates (euro vs U.S.

dollar)— Estimated fiscal year impact on EBITDA is approximately $2 million.

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

Non-GAAP Financial Measures

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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, EBITDA, Adjusted EBITDA, Segment Gross Profit, Net Working Capital, Capital Expenditures and Free Cash Flow.

These non-GAAP measures include, but are not limited to, EBITDA, Adjusted EBITDA, Net Working Capital, Capital Expenditures and Free Cash Flow.

• 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, loss (recovery) due to assets misappropriation, net, etc.) plus Earnings in affiliated companies, net of tax.

• Segment Gross Profit —Segment Net sales minus segment Cost of sales.

• Net Working Capital —Inventories, net plus Accounts receivable, net minus Accounts payable.

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• Free Cash Flow —Net cash provided by operating activities less Net cash used in investing activities.

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

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

Adjusted EBITDA is used by our CODM to evaluate our operating performance and to make decisions regarding allocation of capital, because it excludes the effects of items that have less bearing on the performance of our underlying core business.

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

Three Months Ended March 31,

2026 2025 Delta

(In millions) %

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

2026 2025 Delta 2026 2025 Delta

(In millions) % (In millions) %

Net income (loss) $ 1.8 $ 9.0 $ (7.2) (80) $ (8.1) $ 18.1 $ (26.2) (145)

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Add back Equity in earnings of affiliated companies, net of tax (0.2) (0.6) 0.4 (67) (0.3) (1.1) 0.8 (73)

Income (loss) before earnings in affiliated companies and income taxes (3.3) 17.5 (20.8) (118.9)

Income before earnings in affiliated companies and income taxes 5.0 13.0 (8.0) (62) 1.7 30.5 (28.8) (94)

Add back Interest and other financial expense, net 16.3 19.1 (2.8) (15) 31.0 32.8 (1.8) (6)

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Adjusted EBITDA (A Non-GAAP Financial Measure)

Adjusted EBITDA decreased in the first quarter of 2026 by $20.1 million, or 30.4%, to $46.1 million, year over year.

The decrease was driven by unfavorable timing of the pass-through effect of raw material costs, lower contractual pricing, unfavorable product and regional mix in our Rubber Carbon Black segment and higher production costs.

These were partially offset by a favorable foreign exchange rate impact in both segments.

For the quarter ending June 30, 2026 , Adjusted EBITDA decreased $10.6 million, or 15%, year over year to $58.2 million.

The decrease was driven by a 16% unfavorable pricing from lower annual contract agreements and a 4% effect from unfavorable product and regional mix in our Rubber Carbon Black segment, which was partially offset by favorable volume and product mix in our Specialty Carbon Black segment.

Additionally, foreign exchange rate impact was favorable by 4%.

For the six months ended June 30, 2026, Adjusted EBITDA decreased $30.7 million, or 23%, year over year to $104.3 million.

The decrease was primarily due to a 16% unfavorable effect from lower annual contract agreements in our Rubber Carbon Black segment, a 5% effect from unfavorable product and regional mix in our Rubber Carbon Black segment, partially offset by favorable volume and product mix in Specialty Carbon Black segment.

Foreign currency exchange rate impact was favorable by 6%.

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

Segment Discussion

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Specialty Carbon Black

Three Months Ended March 31,

2026 2025 Delta

(In millions, except volume) %

Volume (kmt) 64.0 61.9 2.1 3.4

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

2026 2025 Delta 2026 2025 Delta

(In millions) % (In millions) %

Net sales $ 184.8 $ 158.1 $ 26.7 17 $ 354.5 $ 318.8 $ 35.7 11

Cost of sales 126.5 120.7 5.8 4.8

Segment Gross profit $ 43.2 $ 40.0 $ 3.2 8.0

Adjusted EBITDA $ 39.0 $ 19.9 $ 19.1 96 $ 66.1 $ 45.3 $ 20.8 46

Specialty segment demand picked up considerably late in the first quarter, as the surge in oil prices precipitated channel restocking across most end-markets.

Segment volumes increased 3.4% year over year, led by growth in the Americas, in particular, as well as our Europe, Middle East and Africa (“EMEA”) regions more than offsetting slightly lower year-over-year demand in the Asia Pacific (“APAC”) region.

Net sales increased by $9.0 million, or 5.6%, year over year to $169.7 million, for the three months ended March 31, 2026, driven primarily by higher volume in Americas and EMEA regions, foreign exchange rate impact, favorable product mix, those were partially offset by unfavorable price.

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

Gross profit increased by $3.2 million, or 8.0%, year over year, to $43.2 million for the three months ended March 31, 2026, primarily driven by the higher volume and favorable product mix.

Adjusted EBITDA for the three months ended March 31, 2026 increased by $1.7 million, or 6.7%, year over year to $27.1 million.

The increase drive primarily by higher volume, favorable product mix and favorable foreign currency translation impact, partially offset by higher production costs.

The Middle East conflict influenced our second quarter business performance.

Our proactive pricing actions and surcharges enabled us to largely mitigate volatility in oil prices and associated feedstock costs.

Additionally, we saw broad end market participation in Europe, Middle East and Africa (“EMEA”) and Americas regions, beyond customer restocking activity.

For the three months ended June 30, 2026 compared to three months ended June 30, 2025

Net sales increased by $26.7 million, or 17%, year over year to $184.8 million, for the three months ended June 30, 2026, driven primarily by 8% higher pricing, mainly on higher year-over-year oil prices, 4% favorable product mix, 3% benefit from higher volumes in our Americas and EMEA regions and a 2% favorable foreign exchange rate impact.

Adjusted EBITDA increased by $19.1 million, or 96%, year over year to $39.0 million for the three months ended June 30, 2026.

The increase was driven 52% by beneficial pricing across most products and regions, supported by higher oil prices, a 22% effect from higher volumes, a 19% benefit from favorable product mix and a 4% favorable foreign exchange rate impact.

For the six months ended June 30, 2026 compared to six months ended June 30, 2025

Net sales increased by $35.7 million, or 11%, year over year to $354.5 million for the six months ended June 30, 2026, driven primarily by a 4% favorable foreign exchange rate impact, 4% favorable product mix and 3% higher volumes, driven by higher demand in our Americas and EMEA regions.

Adjusted EBITDA increased by $20.8 million, or 46%, year over year to $66.1 million for the six months ended June 30, 2026.

The increase was driven primarily by a 16% favorable effect from higher volumes, a 15% effect from favorable product mix and an 9% favorable foreign exchange rate impact.

Rubber Carbon Black

Three Months Ended March 31,

2026 2025 Delta

(In millions, except volume) %

Volume (kmt) 192.5 189.8 2.7 1.4

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

2026 2025 Delta 2026 2025 Delta

(In millions) % (In millions) %

Net sales $ 316.1 $ 308.3 $ 7.8 3 $ 605.9 $ 625.3 $ (19.4) (3)

Cost of sales 253.8 258.9 (5.1) (2.0)

Segment Gross profit $ 36.0 $ 58.1 $ (22.1) (38.0)

Adjusted EBITDA $ 19.2 $ 48.9 $ (29.7) (61) $ 38.2 $ 89.7 $ (51.5) (57)

Volume increased by 2.7 kmt, or 1.4%, year over year to 192.5 kmt for the three months ended March 31, 2026, primarily due to higher demand in the EMEA and APAC regions.

Net sales decreased by $27.2 million, or 8.6%, year over year to $289.8 million for the three months ended March 31, 2026, primarily due to lower pricing, pass-through effect of lower year over year oil prices, and adverse regional customer mix, those were offset by higher volumes and favorable foreign currency translation impact.

Gross profit decreased by $22.1 million, or 38.0%, year over year to $36.0 million for the three months ended March 31, 2026.

The decrease was primarily due to unfavorable impact from the pass-through effect of raw material costs, lower contractual price and regional customer mix.

Adjusted EBITDA decreased by $21.8 million, or 53.4%, year over year to $19.0 million for the three months ended March 31, 2026, driven primarily by the unfavorable impact from the pass-through effect of raw material costs, lower contractual price and unfavorable regional mix, those were partially offset by higher volumes and favorable foreign currency translation impact.

Despite creating volatility in oil-derived feedstock costs, along with concerns about input availability, the conflict in the Middle East did not materially impact fundamental demand trends in the key markets addressed by our Rubber Carbon Black segment during the second quarter of 2026.

Demand for replacement tires in the Americas remained down year over year in the second quarter for both passenger car and truck and bus categories, while sales of OE passenger car tires improved slightly and OE truck and bus tire demand decreased.

tire production rates were lower year over year.

In Europe, passenger car tire sales, both replacement and OE, were down slightly on a year-over-year basis during the second quarter, while truck and bus tire sales were higher.

For the three months ended June 30, 2026 compared to three months ended June 30, 2025

Net sales increased by $7.8 million, or 3%, year over year to $316.1 million for the three months ended June 30, 2026, primarily due to a positive 9% pass-through effect from higher year-over-year oil prices and 3% favorable foreign exchange rate impact, partially offset by unfavorable pricing of 4%, owing primarily to annual contract agreements in the Rubber Carbon Black segment, 3% lower volume and 3% adverse customer and regional mix.

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

Adjusted EBITDA decreased by $29.7 million, or 61%, year over year to $19.2 million for the three months ended June 30, 2026, driven primarily by a unfavorable pricing of 22%, owing primarily to annual contract agreements in the Rubber Carbon Black segment, a 20% unfavorable pass-through effect of raw material costs and a 14% unfavorable regional mix.

Those were partially offset by a 4% favorable foreign exchange rate impact.

For the six months ended June 30, 2026 compared to six months ended June 30, 2025

Net sales decreased by $19.4 million, or 3%, year over year to $605.9 million for the six months ended June 30, 2026, primarily due to 3% unfavorable regional customer mix, 2% pass-through effect from lower year-over-year oil prices and unfavorable pricing of 2%, owing primarily to annual contract agreements in the Rubber Carbon Black segment, partially offset by 4% favorable foreign exchange rate impact.

Adjusted EBITDA decreased by $51.5 million, or 57%, year over year, to $38.2 million for the six months ended June 30, 2026, driven primarily by unfavorable pricing of 23%, owing primarily to annual contract agreements in the Rubber Carbon Black segment, a 16% effect from unfavorable regional mix and 15% unfavorable pass-through effect from raw material costs.

Foreign exchange rate impact was favorable by 4%.

Liquidity and Capital Resources

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Risk Factors in Part II of this Quarterly Report on Form 10-Q.

As of March 31, 2026, the company had total liquidity of $192.3 million, including cash and equivalents of $50.5 million, and $141.8 million availability under our RCF, including ancillary lines.

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

As of June 30, 2026, the company had total liquidity of $178.3 million, including cash and equivalents of $50.8 million, and $127.5 million availability under our RCF, including ancillary lines.

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

Three Months Ended March 31,

Six Months Ended June 30,

(In millions)

1 Net cash provided by (used in) operating activities $ (12.4) $ 0.4

1 Net cash provided by operating activities $ 14.9 $ 54.1

2 Net cash used in investing activities (61.5) (71.4)

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Other companies and analysts may calculate this non-GAAP financial measures differently.

Net cash used in operating activities during the three months ended March 31, 2026 was $12.4 million.

The cash used in operating activities primarily reflects changes in working capital.

Net cash provided by operating activities during the six months ended June 30, 2026 was $14.9 million.

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

Change in working capital includes $197.3 million sale of certain accounts receivable, discussed in Note B.

Accounts Receivable to the Condensed Consolidated Financial Statements.

Net cash used in investing activities in the three months ended March 31, 2026 amounted to $36.1 million.

The expenditures were primarily related to safety, maintenance and growth investments (primarily for construction of our new conductive manufacturing plant at La Porte).

Net cash provided by financing activities during the three months ended March 31, 2026 amounted to $39.6 million.

The inflows primarily consists of borrowing under our RCF facilities of $81.5 million and $27.6 million, net borrowings under our ancillary credit facilities.

Net cash used in investing activities in the six months ended June 30, 2026 amounted to $61.5 million.

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

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

Net cash provided by financing activities during the six months ended June 30, 2026 amounted to $37.4 million.

The inflows primarily consist of borrowing under our RCF facilities of $66.5 million.

The outflow primarily consisted of scheduled debt repayments, dividend distributions and payments for debt issuance costs.

Net cash provided by operating activities for the three months ended March 31, 2025, amounted to $0.4 million.

Net cash provided by operating activities for the six months ended June 30, 2025, amounted to $54.1 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 for the three months ended March 31, 2025, amounted to $29.2 million.

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

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

Net cash provided by financing activities for the three months ended March 31, 2025, amounted to $21.8 million.

The inflows primarily consisted of $24.5 million borrowing under our RFC facility, and $19.1 million, net borrowings under our ancillary credit facilities.

The outflows primarily consists of scheduled debt repayments, dividend distributions and stock buybacks.

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

The 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 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.

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

(In millions)

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These increases are partially offset by related increases in trade payables.

Due to the quantity of carbon black oil that we typically keep in stock, such increases in Net working capital occur gradually over a period of two to three months.

Due to the quantity of carbon black oil that we typically keep in stock, such increases in Net working capital occur over a period of two to three months.

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

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

Our Net working capital increased from $293.9 million as of December 31, 2025, to $353.5 million as of March 31, 2026.

Our Net working capital increased from $293.9 million as of December 31, 2025, to $357.9 million as of June 30, 2026.

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

• Accounts receivable, net —This increase was primarily due to higher demand in the first quarter of 2026 compared to the fourth quarter of 2025 and the timing of payments.

• Accounts receivable, net —This increase was primarily due to higher demand in 2026 compared to 2025 and the timing of payments.

Refer Note B.

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Those increases were partially offset by:

• Inventories, net —The higher demand in the first quarter of 2026 resulted in a reduction in finished goods inventory.

The value of Inventory, net was also impacted by foreign exchange rate;

• Accounts payable —Increase in accounts payable was primarily due to the timing of payments.

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We plan to finance our Capital expenditures with cash generated by our operating activities and/or by utilizing existing debt capacity.

We currently do not have any material commitments to make Capital expenditures, except for the under-construction facility at La Porte, Texas.

We do not plan to make material Capital expenditures outside the ordinary course of our business.

In 2025 December, we adjusted the construction timeline of the La Porte facility to better reflect end market conditions, including a protracted domestic adoption rate of electric vehicles.

For further discussion refer to Note F.

Property, Plant and Equipment in the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2025.

Off-Balance Sheet Arrangements

As of March 31, 2026, we did not have any off-balance sheet arrangements.

As of June 30, 2026, 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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Conflict”) and geopolitical tension in the Middle East, the Russia-Ukraine war and the growing tension between China and Taiwan;

• disruptions in the supply of carbon black oil feedstock and natural gas (including due to geopolitical conflicts), which could adversely affect our production volumes, margins and results of operations;

• disruptions in the supply and the volatility of the pricing of carbon black oil feedstock and natural gas (including due to geopolitical conflicts), which could adversely affect our production volumes, margins and results of operations;

• our capital needs and ability to obtain required financing for our operations and working capital needs, particularly in the short term;

• the operational risks inherent in chemicals manufacturing, including but not limited to disruptions due to technical difficulties, severe weather conditions, natural disasters, pandemics (such as COVID-19), or otherwise;

• unanticipated impacts of our plans and strategies, including possible future decisions to discontinue or reduce production at certain facilities;

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• rapidly changing geopolitical environment, conflicts, growing tension between U.S.

and other countries, and/or any other escalations may impact energy costs, raw material availability or other economic disruptions;

and other countries, and/or any other escalations that may impact energy costs, raw material availability or other economic disruptions;

• our ability to comply with complex environmental, health and safety laws and regulations, and current and any possible future investigations and enforcement actions by governmental, supranational agencies or other organizations;

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or elsewhere outside Luxembourg;

• the difference between Luxembourg & European insolvency and bankruptcy laws from U.S.

• the difference between Luxembourg & European insolvency laws from U.S.

insolvency laws;

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Quantitative and Qualitative Disclosures About Market Risk

Information about market risks for the period ended March 31, 2026 does not differ materially from “ Item 7A” in our Annual Report on Form 10-K for the year ended December 31, 2025.

Information about market risks for the period ended June 30, 2026 does not differ materially from “ Item 7A” in our Annual Report on Form 10-K for the year ended December 31, 2025.

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