Orion S.A. (OEC)

Item 2. 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, 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 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”).

Unless otherwise indicated, the “Company,” “we,” “us,” “our” or similar words are used to refer to Orion S.A. 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:

Operating Results Discussion

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

Net sales

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 June 30, 2026 increased by $39.9 million, or 11%, year over year to $407.9 million, mainly due to

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

Gross profit

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 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

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.

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

Net sales

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

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. Income tax

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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; and

•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.

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Non-GAAP Financial Measures

We present certain financial measures that are not prepared in accordance with GAAP or the accounting standards of any other jurisdiction and may not be comparable to other similarly titled measures of other companies. 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, Net Working Capital, Capital Expenditures and Free Cash Flow.

We define:

•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.

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

•Capital Expenditures—Cash paid for the acquisition of property, plant and equipment.

•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”), who is our chief operating decision maker (“CODM”). Adjusted EBITDA is used by our CODM to evaluate our operating performance and to make decisions reg

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Item 7. 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 years ended December 31, 2025 and 2024, and should be read in conjunction with the information included under Item 1. Business and Item 8. Financial Statements and Supplementary Data included elsewhere in this Annual Report. We prepare our financial statements in accordance with accounting principles generally accepted in the United States (“GAAP” or “U.S. GAAP”) and in U.S. dollars.

This section discusses year-to-year comparisons between 2025 and 2024. For discussions on year-to-year comparison between 2024 and 2023 refer to Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our 2024 Annual Report in Form 10-K filed with the United States Securities and Exchange Commission (“SEC”) on February 19, 2025 (the “Prior Annual Report”).

Key Factors Affecting Our Results of Operations

We believe certain factors had, and will continue to have, a material effect on our results of operations and financial condition. As many of these factors are beyond our control, and certain of these factors have historically been volatile, past performance will not necessarily be indicative of future performance, and it is difficult to predict future performance with any degree of certainty. In addition, important factors that could cause our actual results of operations or financial conditions to differ materially from those expressed or implied below, include, but are not limited to, factors indicated under “Item 1A. Risk Factors” and “Cautionary Statement for the Purposes of the “Safe Harbor” Provisions of the Private Securities Litigation Reform Act of 1995” elsewhere in this Annual Report.

Operating Results

2025 Compared to 2024

Operating results for the periods discussed are as follows:

Net sales

Volume increased marginally by 13.8 kmt, or 1.5%, year-over-year to 948.6 kmt, primarily due to higher Rubber Carbon Black segment volume, partially offset by lower Specialty Carbon Black segment volume.

Net sales decreased by $70.8 million, or 3.8%, from $1,877.5 million in 2024 to $1,806.7 million in 2025, driven primarily by the pass-through effect of lower oil prices, partially offset by higher volume in the Rubber Carbon Black segment and a favorable foreign exchange rate impact.

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Cost of sales

Cost of sales decreased marginally by $1.8 million, or 0.1%, from $1,448.7 million in 2024 to $1,446.9 million in 2025.

Gross profit

Gross profit decreased by $69.0 million or 16.1%, from $428.8 million in 2024 to $359.8 million in 2025.

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

Selling, general and administrative expenses

Selling, general and administrative expenses decreased by $7.1 million, or 3.0%, from $237.8 million in 2024 to $230.7 million in 2025 driven primarily by impact of cost saving measures initiated by us and lower distribution costs. Those were partially offset by unfavorable foreign exchange rate impact.

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 $55.7 million, net of recoveries. In addition, we incurred $3.6 million of professional fees in connection with our investigations.

During 2025, we recovered $9.2 million (€7.9 million) and incurred $2.3 million of professional fees, which was reported in Loss (recovery) due to misappropriation of assets, net in our Consolidated Statements of Operations.

For more information, refer to Note Q. Commitments and Contingencies to the Consolidated Financial Statements.

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 assessments 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, which impaired all of our existing goodwill. For more information, refer to Note H. Goodwill and Intangible Assets to the Consolidated Financial Statements.

Income tax expense

Income tax expense was $35.8 million and $9.7 million in 2025 and 2024, respectively.

The 2025 effective income tax rate was (104.4)% compared with 18.0% in 2024. The increase in the effective tax rate was mainly driven by the negative tax effects from the goodwill impairment and valuation allowances. Those were partially offset by US tax refunds and tax-free income.

The 2025 effective tax rate was particularly impacted by:

•the $18.5 million tax effect from the non-tax deductible goodwill impairment charge, and

•valuation allowances of $10.6 million.

For further details, see Note P. Income Taxes in Item 8. Financial Statements and Supplementary Data, to the accompanying Consolidated Financial Statements.

Comprehensive income (loss)

2025 vs 2024―Comprehensive income (loss) decreased by $86.7 million, from Comprehensive income of $14.2 million to Comprehensive loss of $72.5 million, primarily due to a decrease in Net income. The activities from the remaining components of Comprehensive income are discussed below.

•$19.8 million favorable foreign currency translation adjustments due to weakening of U.S. dollar versus euro,

•$5.7 million related to net favorable fair value changes in defined pension and other post-retirement benefits and

•$2.1 million related to net favorable impacts related to financial derivative instruments primarily driven by net periodic changes in cross currency swaps.

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General Economic Conditions, Cyclicality and Seasonality

We believe carbon black feedstock and production costs are or may be influenced by a variety of geopolitical developments and macroeconomic considerations, including but not limited to the current U.S. administration’s evolving tariff policy, the European Union’s (“EU”) climate policies, the result of the EU’s anti-dumping investigation into Chinese tire imports, market prices of carbon emission certificates (“CO2”) in the EU, and the ongoing Russian-Ukraine war. To mitigate energy-related cost volatility risks, we have incorporated, where possible, raw material and regulatory cost pass-through provisions in our supply agreements, and we are continually focused on diversifying our global feedstocks sources.

Revolving credit facility—In February 2026, we entered into the Fifteenth Amendment to the Credit Agreement, which amended and restated our revolving credit facility (the “RCF”). See Note J. Debt and Other Obligations to our accompanying Consolidated Financial Statements for further discussion.

Non-GAAP Financial Measures

We present certain financial measures that are not prepared in accordance with GAAP or the accounting standards of any other jurisdiction and may not be comparable to other similarly titled measures of other companies. 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, Net Working Capital and Capital Expenditures.

We define:

•EBITDA—Income from operations before depreciation and amortization.

•Adjusted EBITDA—Income from operations before depreciation and amortization, stock-based compensation, and non-recurring items (such as, restructuring expenses, Loss (recovery) due to misappropriation of assets, net, Goodwill impairment, 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.

•Capital Expenditures—Cash paid for the acquisition of property, plant and equipment.

•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”). Adjusted EBITDA is used by 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. We use this measure, together with other measures of performance under GAAP, to compare the relative performance of operations in planning, budgeting and reviewing our business. We believe these measures are useful metrics of financial performance in addition to Net income, Income from operations and other profitability measures under GAAP, because they facilitate operating performance comparisons from period to period. By eliminating potential differences in results of operations between periods caused by factors such as depreciation and amortization, historic cost and age of assets, financing and capital structures and taxation positions or regimes, we believe that Adjusted EBITDA provides a useful additional basis for evaluating and comparing the current performance of the underlying operations. In addition, we believe these non-GAAP measures aid investors by providing add

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