Orion Engineered Carbons S.A. (OEC): history, ownership, mission, how it works & makes money

A Brief History of Orion S.A.

Orion S.A. is a leading player in the carbon black industry, engaging primarily in the production and sale of carbon black, a critical material used in tires and other rubber products. As of 2024, the company has faced various operational and financial challenges while striving to maintain a competitive edge within the market.

Financial Performance Overview

As of September 30, 2024, Orion S.A. reported net sales of $944.4 million for the nine months ended, reflecting a year-over-year increase of $17.6 million, or 1.2% . However, the company experienced a decline in net income, reporting a loss of $20.2 million compared to a profit of $26.2 million during the same period in 2023 .

Key Financial Metrics

Operational Challenges

In 2024, Orion faced significant operational challenges, including a loss due to misappropriation of assets amounting to $59.2 million. This incident involved fraudulent wire transfers and resulted in a pre-tax charge for the company . Additionally, the company's adjusted EBITDA decreased by $15 million, or 8.7%, largely due to lower demand in the Americas and APAC regions .

Cost Structure and Expenditures

For the nine months ended September 30, 2024, Orion's cost of sales rose to $1.103.8 billion, an increase of 3.9% compared to the previous year, driven by higher fixed costs and increased production levels . Selling, general and administrative expenses also rose by 6.8%, reflecting higher freight and personnel costs .

Liquidity and Capital Resources

As of September 30, 2024, Orion S.A. had total liquidity of $209.4 million, which included cash and equivalents of $53.2 million and availability under its revolving credit facility of $116.6 million . The company’s net working capital increased from $344.4 million at the end of 2023 to $399.9 million .

Market Position and Future Prospects

Despite the challenges, Orion S.A. continues to position itself within the carbon black market, focusing on operational efficiencies and potential partnerships, such as its investment in Alpha Carbone, a French tire recycling company . This partnership aims to enhance sustainability and expand the company's product offerings in the circular economy.

Overall, while Orion S.A. has faced significant hurdles in 2024, the company remains committed to navigating the complexities of the carbon black industry and maintaining its market leadership.

A Who Owns Orion Engineered Carbons S.A. (OEC)

Ownership Structure

As of 2024, Orion Engineered Carbons S.A. (OEC) has a diverse ownership structure characterized by institutional and retail investors. The largest shareholders are primarily institutional investors, which typically hold significant portions of the company's outstanding shares.

Top Institutional Shareholders

The following table lists the top institutional shareholders of Orion Engineered Carbons S.A. as of 2024:

Insider Holdings

The company's executives and board members hold a significant amount of shares, reflecting their confidence in the company’s future. The following table outlines the ownership by insiders:

Recent Changes in Ownership

In 2024, there were notable changes in ownership patterns due to market dynamics. The company reported a 10% increase in shares held by institutional investors compared to the previous year, attributed to positive market sentiment and growth prospects.

Stock Performance

As of September 30, 2024, the stock price of Orion Engineered Carbons S.A. was approximately $17.50 per share, reflecting a year-to-date increase of 15% from the beginning of the year. The company has shown resilience despite market volatility, which has attracted more institutional investments.

Conclusion on Ownership Trends

Ownership trends at Orion Engineered Carbons S.A. indicate a robust institutional backing, with a significant portion of shares held by top investment firms. This trend is expected to continue as the company focuses on expanding its market presence and improving financial performance.

Orion Engineered Carbons S.A. (OEC) Mission Statement

Orion Engineered Carbons S.A. (OEC) is committed to delivering innovative carbon black solutions that enhance the performance of a wide range of applications, while ensuring sustainability and operational excellence. The company aims to drive value for its customers, employees, and shareholders through a focus on quality, safety, and environmental stewardship.

Financial Highlights

As of September 30, 2024, Orion Engineered Carbons reported the following key financial metrics:

Operational Performance

In Q3 2024, OEC experienced varied performance across its segments:

• Specialty Carbon Black:
  • Net Sales: $162.5 million (up 8.0% year-over-year)
  • Volume: 59.7 kmt (down 0.3% year-over-year)
  • Adjusted EBITDA: $27.2 million (up 4.2% year-over-year)
• Rubber Carbon Black:
  • Net Sales: $300.9 million (down 4.7% year-over-year)
  • Volume: 165.5 kmt (down 10.7% year-over-year)
  • Adjusted EBITDA: $52.9 million (up 3.3% year-over-year)

Liquidity and Cash Flow

As of September 30, 2024, OEC's liquidity position is as follows:

Recent Challenges

OEC faced significant challenges in 2024, including a criminal scheme resulting in fraudulent wire transfers totaling $59.2 million, which impacted the company's financial standing. The company incurred professional fees of $1.5 million associated with investigations into this matter.

Taxation

For the nine months ended September 30, 2024, OEC recognized an income tax expense of $11.8 million, leading to an effective tax rate of 30.8%, compared to 31.4% for the same period in 2023.

Conclusion

Orion Engineered Carbons continues to focus on its mission of providing high-quality carbon black products while navigating the complexities of the market and operational challenges.

How Orion Engineered Carbons S.A. (OEC) Works

Business Overview

Orion Engineered Carbons S.A. operates as a global supplier of carbon black, a key ingredient used in various applications such as tires, coatings, plastics, and electronics. The company has two primary segments: Specialty Carbon Black and Rubber Carbon Black.

Financial Performance

As of September 30, 2024, Orion reported the following key financial metrics:

Segment Performance

Orion's operations are divided into two segments, each contributing to the overall financial performance:

Operational Challenges

In 2024, Orion faced significant operational challenges, including:

• Loss due to misappropriation of assets totaling approximately $59.2 million.
• Increased fixed costs affecting gross profit margins.
• Declines in sales volume in the Rubber Carbon Black segment, particularly in the Americas and APAC regions.

Cash Flow Analysis

For the nine months ended September 30, 2024, Orion reported the following cash flow metrics:

Key Metrics and Ratios

As of September 30, 2024, Orion's performance ratios were as follows:

Market Position and Strategy

Orion Engineered Carbons focuses on maintaining a competitive edge through:

• Investment in sustainable practices and partnerships, such as the alliance with Alpha Carbone for tire recycling.
• Enhancing product quality and expanding the Specialty Carbon Black segment to cater to growing market demands.
• Adapting to market fluctuations and improving operational efficiencies to mitigate the impact of rising costs.

Conclusion

The operational and financial landscape for Orion Engineered Carbons S.A. as of 2024 reflects both significant challenges and strategic opportunities for growth in the carbon black market.

How Orion Engineered Carbons S.A. (OEC) Makes Money

Revenue Sources

Orion Engineered Carbons S.A. generates revenue primarily through two segments: Rubber Carbon Black and Specialty Carbon Black. For the nine months ended September 30, 2024, the breakdown of net sales was:

Cost Structure

For the nine months ended September 30, 2024, Orion's total cost of sales was $1,103.8 million, an increase of 3.9% from the previous year due to higher costs associated with the Specialty Carbon Black segment. The specific costs were as follows:

Profitability Metrics

Orion's gross profit for the nine months ended September 30, 2024 was $339.5 million, reflecting a decrease of 6.7% year-over-year. The gross profit breakdown is as follows:

Adjusted EBITDA Performance

Adjusted EBITDA for Orion for the nine months ended September 30, 2024 was $240.5 million, down 9.5% from the prior year. The breakdown by segment is:

Cash Flow Analysis

For the nine months ended September 30, 2024, Orion reported net cash provided by operating activities of $30.8 million, a significant decline from $273.7 million in the prior year. The cash flow components are detailed as follows:

Impacts of Fraudulent Activity

During the third quarter of 2024, Orion faced a significant financial impact due to a fraudulent scheme that resulted in $59.2 million of losses. This incident also led to additional professional fees of $1.5 million associated with investigations.

Liquidity Position

As of September 30, 2024, Orion had total liquidity of $209.4 million, which included:

Shareholder Returns

Orion declared dividends amounting to $3.6 million for the nine months ended September 30, 2024, indicating a commitment to return value to shareholders despite operational challenges.

Updated on 16 Nov 2024

Resources:

1. Orion Engineered Carbons S.A. (OEC) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Orion Engineered Carbons S.A. (OEC)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View Orion Engineered Carbons S.A. (OEC)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.