Orion Engineered Carbons S.A. (NYSE: OEC), a global supplier of
specialty and high-performance carbon black, today updated its
previously announced Adjusted EBITDA guidance for the fourth
quarter of $44 million to $55 million that was included within its
third quarter earnings presentation on November 5, 2020. Updated
Adjusted EBITDA guidance for the fourth quarter is now in the range
of $64 million to $67 million.
“Our adjusted guidance is predominantly attributable to our
specialty carbon black business unit, driven by considerably higher
volumes, which rose low-double digits sequentially. We also
experienced slightly less seasonality than anticipated in our
rubber carbon black business where volumes declined mid-single
digits sequentially. We believe both of these trends are an
indication that our customers restocked their inventories, to some
degree during the quarter, to better manage their supply chains.
The temporary nature of restocking combined with broader
uncertainties in the economy make it difficult to forecast how
demand will develop from here. However, our current order book
indicates a strong January and we expect robust demand as the
global economy recovers. I want to thank our customers for their
partnership and the Orion team for taking quick action in the face
of a dynamic market,” said Corning Painter, Orion’s chief executive
officer.
The company expects to provide further information regarding its
fourth quarter and full year 2020 results after the market closes
on February 18, 2021. A press release announcing conference call
details will be distributed on January 11, 2021.
About Orion Engineered Carbons
Orion is a worldwide supplier of carbon black. We produce a
broad range of carbon blacks that include high-performance
specialty gas blacks, acetylene blacks, furnace blacks, lamp
blacks, thermal blacks and other carbon blacks that tint, colorize
and enhance the performance of polymers, plastics, paints and
coatings, inks and toners, textile fibers, adhesives and sealants,
tires, and mechanical rubber goods such as automotive belts and
hoses. Orion operates 14 global production sites and has
approximately 1,425 employees worldwide. For more information,
please visit our website www.orioncarbons.com.
Forward Looking Statements
This document contains and refers to certain forward-looking
statements with respect to our financial condition, results of
operations and business. These statements constitute
forward-looking statements within the meaning of Section 21E of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Forward-looking statements are statements of future expectations
that are based on management’s current expectations and assumptions
and involve known and unknown risks and uncertainties that could
cause actual results, performance or events to differ materially
from those expressed or implied in these statements.
Forward-looking statements are typically identified by words such
as “anticipate,” "assume," “assure,” “believe,” “confident,”
“could,” “estimate,” “expect,” “intend,” “may,” “plan,”
“objectives,” “outlook,” “probably,” “project,” “will,” “seek,”
“target” “to be,” and other words of similar meaning.
Forward-looking statements include, among others, statements
concerning the potential exposure to market risks, statements
expressing management’s expectations, beliefs, estimates,
forecasts, projections and assumptions and statements that are not
limited to statements of historical or present facts or conditions,
including statements about the following matters: our strategies
for (i) mitigating the impacts of the global outbreak of the
coronavirus, (ii) strengthening our position in specialty carbon
blacks and rubber carbon blacks, (iii) increasing our rubber carbon
black margins and (iv) strengthening the competitiveness of our
operations; the ability to pay dividends at historical dividend
levels or at all; cash flow projections; the installation of
pollution control technology in our U.S. manufacturing facilities
pursuant to the EPA consent decree; the outcome of any in-progress,
pending or possible litigation or regulatory proceedings; and our
expectation that the markets we serve will continue to grow. The
COVID-19 pandemic has had and could continue to have an adverse
effect on our business and results of operations, including as a
result of disruptions to our supply chain, disruptions and
restrictions on the ability of many of our employees to work
effectively because of illness, quarantines, government actions,
facility closures and other restrictions, as well as temporary
closures of certain of our facilities and those of certain of our
customers and suppliers. If we experience operational or supply
chain disruptions, or such disruptions are exacerbated or prolonged
in the future, our business, results of operations and liquidity
may be adversely impacted. In addition, we have experienced
significant and unpredictable reductions in the demand for our
products as a result of the COVID-19 pandemic. You should not place
undue reliance on forward looking statements.
All these forward-looking statements are based on estimates and
assumptions that, although believed to be reasonable, are
inherently uncertain. Therefore, undue reliance should not be
placed upon any forward-looking statements. There are important
factors that could cause actual results to differ materially from
those contemplated by such forward-looking statements. These
factors include, among others: the effects of the COVID-19 pandemic
on our business and results of operations; negative or uncertain
worldwide economic conditions; volatility and cyclicality in the
industries in which we operate; operational risks inherent in
chemicals manufacturing, including disruptions as a result of
severe weather conditions and natural disasters and as a result of
the COVID-19 pandemic; our dependence on major customers and
suppliers; our ability to compete in the industries and markets in
which we operate; our ability to address changes in the nature of
future transportation and mobility concepts which may impact our
customers and our business; our ability to develop new products and
technologies successfully and the availability of substitutes for
our products; our ability to implement our business strategies;
volatility in the costs and availability of raw materials
(including but not limited to any and all effects from restrictions
imposed by the MARPOL convention and respective International
Maritime Organization (IMO) regulations in particular to reduce
sulfur oxides (SOx) emissions from ships) and energy; our ability
to respond to changes in feedstock prices and quality; our ability
to realize benefits from investments, joint ventures, acquisitions
or alliances; our ability to realize benefits from planned plant
capacity expansions and site development projects and the potential
delays to such expansions and projects; information technology
systems failures, network disruptions and breaches of data
security; our relationships with our workforce, including
negotiations with labor unions, strikes and work stoppages; our
ability to recruit or retain key management and personnel; our
exposure to political or country risks inherent in doing business
in some countries; geopolitical events in the European Union, and
in particular the ultimate future relations between the European
Union and the United Kingdom resulting from the “Brexit” which may
impact the Euro; environmental, health and safety regulations,
including nanomaterial and greenhouse gas emissions regulations,
and the related costs of maintaining compliance and addressing
liabilities; possible future investigations and enforcement actions
by governmental or supranational agencies; our operations as a
company in the chemical sector, including the related risks of
leaks, fires and toxic releases; market and regulatory changes that
may affect our ability to sell or otherwise benefit from
co-generated energy; litigation or legal proceedings, including
product liability and environmental claims; our ability to protect
our intellectual property rights and know-how; our ability to
generate the funds required to service our debt and finance our
operations; fluctuations in foreign currency exchange and interest
rates; the availability and efficiency of hedging; changes in
international and local economic conditions, including with regard
to the Euro, dislocations in credit and capital markets and
inflation or deflation; potential impairments or write-offs of
certain assets; required increases in our pension fund
contributions; the adequacy of our insurance coverage; changes in
our jurisdictional earnings mix or in the tax laws or accepted
interpretations of tax laws in those jurisdictions; our indemnities
to and from Evonik; challenges to our decisions and assumptions in
assessing and complying with our tax obligations; and potential
difficulty in obtaining or enforcing judgments or bringing actions
against us in the United States.
You should not place undue reliance on forward-looking
statements. We present certain financial measures that are not
prepared in accordance with U.S. GAAP or the accounting standards
of any other jurisdiction and may not be comparable to other
similarly titled measures of other companies. These non-U.S. GAAP
measures are Contribution Margin, Contribution Margin per Metric
Ton, Adjusted EBITDA, Adjusted EPS, Net Working Capital and Capital
Expenditures. Adjusted EBITDA, Adjusted EPS, Contribution Margins
and Net Working Capital are not measures of performance under U.S.
GAAP and should not be considered in isolation or construed as
substitutes for net sales, consolidated profit (loss) for the
period, operating result (EBIT), gross profit or other U.S. GAAP
measures as an indicator of our operations in accordance with U.S.
GAAP. For a reconciliation of these non-U.S. GAAP financial
measures to the most directly comparable U.S. GAAP measures, see
Appendix.
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 “Note Regarding
Forward-Looking Statements” and “Risk Factors” in our Annual Report
on Form 10-K for the year ended December 31, 2019, our Quarterly
Reports on Form 10-Q and in Note R. to our audited consolidated
financial statements regarding contingent liabilities, including
litigation. You should not place undue reliance on forward-looking
statements. Each forward-looking statement speaks only as of the
date of the particular statement. New risk factors and
uncertainties emerge from time to time and 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. We undertake no obligation to publicly
update or revise any forward-looking statement - including those in
the “2020 Outlook” and “Quarterly Business Segment Results”
sections above - as a result of new information, future events or
other information, other than as required by applicable law.
Reconciliation of Non-GAAP Financial Measures
In this release we refer to Adjusted EBITDA which is a financial
measure that has not been prepared in accordance with U.S. GAAP or
the accounting standards of any other jurisdiction and may not be
comparable to other similarly titled measures of other companies.
We refer to this measure as a “non-GAAP” financial measure.
Adjusted EBITDA is defined as operating result (EBIT) before
depreciation and amortization, adjusted for acquisition related
expenses, restructuring expenses, consulting fees related to group
strategy, share of profit or loss of joint venture and certain
other items. Adjusted EBITDA is used by our management to evaluate
our operating performance and make decisions regarding allocation
of capital because it excludes the effects of certain items that
have less bearing on the performance of our underlying core
business. Our use of Adjusted EBITDA has limitations as an
analytical tool, and you should not consider it in isolation or as
a substitute for analysis of our financial results as reported
under U.S. GAAP. Some of these limitations are: (a) although
Adjusted EBITDA excludes the impact of depreciation and
amortization, the assets being depreciated and amortized may have
to be replaced in the future and thus the cost of replacing assets
or acquiring new assets, which will affect our operating results
over time, is not reflected; (b) Adjusted EBITDA does not reflect
interest or certain other costs that we will continue to incur over
time and will adversely affect our profit or loss, which is the
ultimate measure of our financial performance and (c) other
companies, including companies in our industry, may calculate
Adjusted EBITDA or similarly titled measures differently. Because
of these and other limitations, you should consider Adjusted EBITDA
alongside our other U.S. GAAP-based financial performance measures,
such as net income or loss for the period.
We have not provided a reconciliation of forward-looking
Adjusted EBITDA to the most comparable GAAP measure of net income.
Providing net income guidance is potentially misleading and not
practical given the difficulty of projecting event-driven
transactions and other non-core operating items that are included
in net income.
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INVESTOR CONTACT: Wendy Wilson Investor Relations +1
281-974-0155
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