Orion S.A. (NYSE: OEC) Reports Fourth Quarter and Full Year 2024 Financial Results
Orion S.A. (NYSE: OEC), a specialty chemical company, today announced financial results for the fourth quarter and full year of 2024. Despite facing challenging market conditions, Orion demonstrated resilience and strategic progress, particularly in its Specialty Carbon Black segment. The company’s focus on maintaining profitability and driving long-term growth is evident in its financial performance and operational adjustments.
Fourth Quarter 2024 Financial Highlights
Revenue and Profitability
- Net sales for the fourth quarter of 2024 were $434.2 million, down $34.0 million compared to the same period in 2023.
- Net income improved to $17.2 million, an increase of $12.3 million year over year.
- Diluted EPS reached $0.30, up $0.22 from the previous year.
- Adjusted Diluted EPS was $0.35, marking a $0.18 increase from 2023.
- Adjusted EBITDA stood at $61.7 million, a slight decline of $4.9 million from the prior year.
Volume and Market Conditions
- Volume increased marginally by 1.9 kmt (or 0.8%) year over year, primarily driven by higher volume in the Specialty Carbon Black segment.
- Net sales decreased by $34.0 million (or 7.3%) due to the pass-through effect of lower oil prices, lower Rubber Carbon Black segment volume, and unfavorable foreign currency translation, partially offset by a broad-based recovery in the Specialty Carbon Black segment.
Segment Performance
Specialty Carbon Black
- Volume increased by 5.0 kmt (or 9.1%) year over year, reflecting growth across all regions.
- Net sales decreased by $1.3 million (or 0.9%) to $147.4 million.
- Adjusted EBITDA rose by $7.6 million (or 43.7%) to $25.0 million, primarily due to higher volume, partially offset by less favorable product mix.
Rubber Carbon Black
- Volume declined by 3.1 kmt (or 1.8%) year over year, primarily due to lower demand in the Americas region.
- Net sales decreased by $32.7 million (or 10.2%) to $286.8 million, driven by lower volume and the pass-through effect of lower oil prices.
- Adjusted EBITDA fell by $12.5 million (or 25.4%) to $36.7 million, largely due to lower demand in the Americas region, lower cogeneration, higher fixed costs, and increased selling, general, and administrative expenses.
Full Year 2024 Financial Highlights
Overall Performance
- Net sales for the full year of 2024 were $1,877.5 million, down $16.4 million from 2023.
- Net income decreased to $44.2 million, a decline of $59.3 million year over year.
- Diluted EPS dropped to $0.76, down $0.97 from 2023.
- Adjusted Diluted EPS was $1.76, a reduction of $0.16 from the previous year.
- Adjusted EBITDA stood at $302.2 million, a decline of $30.1 million from 2023.
Segment Performance
Specialty Carbon Black
- Volume increased by 24.4 kmt (or 11.0%) to 245.8 kmt, primarily due to demand recovery across all regions and end markets.
- Net sales grew by $35.7 million (or 5.8%) to $646.3 million, driven by higher volume across all regions, partially offset by unfavorable product mix and foreign currency translation.
- Adjusted EBITDA decreased by $2.6 million (or 2.3%) to $108.1 million, due to higher fixed costs and lower cogeneration, partially offset by higher volume.
Rubber Carbon Black
- Volume decreased by 21.7 kmt (or 3.1%) to 689.0 kmt, primarily due to lower demand in the Americas region.
- Net sales fell by $52.1 million (or 4.1%) to $1,231.2 million, driven by lower volume and the pass-through effect of lower oil prices, partially offset by favorable price.
- Adjusted EBITDA declined by $27.5 million (or 12.4%) to $194.1 million, largely due to lower volume in the Americas region, lower cogeneration, and higher fixed costs, partially offset by favorable price.
Strategic Initiatives and Outlook
Addressing Market Challenges
Corning Painter, Orion’s Chief Executive Officer, commented on the company’s performance: “Orion delivered more than $300 million of Adjusted EBITDA for the third consecutive year in 2024, but we are not satisfied with these results. Soft Western tire production levels—and consequently lower than expected Rubber demand—was Orion’s single largest obstacle in 2024, and we addressed this partly through commercial strategy coming into 2025. This will blunt the impact from the distorted tire industry trade flows, should they persist.”
Future Prospects
Painter added, “Despite lingering end-market softness, foreign exchange headwinds reflecting the Dollar’s recent strength, and uncertainty around the new administration’s broader policies, we expect growth in 2025 on a constant currency basis, underpinned by new Rubber supply agreements, debottlenecked Specialty production lines, and other factors in our control.”
Cash Flow and Share Repurchases
Jeff Glajch, Orion’s Chief Financial Officer, noted, “We finished 2024 with net leverage down modestly from the third quarter, even as we continued buybacks at a sensible pace during the fourth quarter. In just over two years, we have reduced our net outstanding shares by approximately 6%, including nearly $20 million of repurchases in the second half of 2024. At the end of December, we still had nearly 5 million shares on our current authorization.”
Improving Cash Flow
Painter highlighted the multi-year inflection in free cash flow generation. “Higher Adjusted EBITDA and reduced capex are key levers here. With available capacity in Rubber and premium Specialty products, we are positioned to achieve higher earnings levels over several years without additional growth capital. Considering the improving cash flow and our stock’s current valuation, we continue to see opportunistic share repurchases as an attractive allocation of capital.”
