Orion Engineered Carbons S.A. (NYSE: OEC), a global supplier of
specialty and high-performance carbon black, today announced its
fourth quarter and full year 2020 financial results.
Fourth Quarter 2020
Highlights
- Net sales of $315.7 million, down $6.7 million, year over
year.
- Net Income of $8.9 million, down $10.1 million, year over
year.
- Basic EPS of $0.15, down $0.17, year over year.
- Adjusted EPS1 of $0.40, down $0.02, year over
year.
- Adjusted EBITDA1 of $66.0 million, up $2.8 million, year
over year.
- Adjusted EBITDA margin of 20.9%, highest level since Q2
2018.
Full Year 2020
Highlights
- Net sales of $1,136.4 million, down $340.0 million, year
over year.
- Net Income of $18.2 million, down $68.8 million, year over
year.
- Basic EPS of $0.30, down $1.15, year over year.
- Adjusted EPS1 of $1.04, down $0.83, year over year.
- Adjusted EBITDA1 of $200.0 million, down $67.3 million, year
over year; Adjusted EBITDA margins of 17.6%, reflecting strong
trough-level profitability levels.
- Successfully protected employees, maintained agile
production, managed costs, demonstrated business resilience and
financial wherewithal amid severe economic downturn.
- Advanced sustainability initiatives across multiple
dimensions, including commissioning new air emissions controls at
our Orange, Texas facility, upgrading co-generation facilities at
our Qingdao, China and Borger, Texas facilities and partnering with
leading companies across the value chain to drive a circular
economy and sustainable solutions via the BlackCycle
consortium.
- Achieved strong year-end financial standing with net
leverage of 3.4x and liquidity of $341.6 million.
- Enhanced board independence and diversity.
1 See below for a reconciliation of non-GAAP financial measures
to the most directly comparable U.S. GAAP measures
“The year 2020 represented an enormous test for the global Orion
team and our business. We met the challenge with fortitude and
resilience. Our team's disciplined adherence to our COVID-19
protocols resulted in no workplace transmissions. They were also
nimble, improving customer response times while managing through
demand swings. We advanced our ESG efforts by stepping up community
support, upgrading co-generation, and increasing board independence
and diversity. We successfully navigated 2020 and finished strong,
with fourth quarter Adjusted EBITDA exceeding prior year levels and
reflecting strong profitability levels. This performance was led by
strong specialty volume trends and a solid quarter in our rubber
business,” said Corning Painter, Orion’s chief executive
officer.
Mr. Painter continued, “When demand was low, we took the
opportunity to invest in the reliability of our facilities to
ensure that we emerge from this period a stronger company.
Throughout the year, we also supported the communities we are
privileged to operate within by donating materials to help with
pandemic-related needs, and supporting those team members affected
by hurricanes in the U.S. These actions in concert with advancing
our sustainability strategy are core to our values. In 2021, we
will maintain a focus on driving shareholder value through
continuing to be responsive to our customers’ needs, advancing our
sustainability business goals and investing in select, high-return
strategic initiatives to bolster our short and longer-term earnings
growth potential.”
Fourth Quarter 2020 Overview
ORION ENGINEERED
CARBONS
($ in millions, except per share data or
stated otherwise)
Q4 2020
Q4 2019
Y/Y Change in %
Volume (kmt)
237.8
233.5
1.8
Net sales
315.7
322.4
(2.1)
Income from Operations (EBIT)
25.6
32.6
(21.6)
Net Income
8.9
19.0
(53.0)
Contribution Margin
139.5
125.6
11.1
Contribution Margin per metric ton
586.8
538.0
9.1
Adjusted EBITDA
66.0
63.2
4.4
Basic EPS (1)
$0.15
$0.32
$(0.17)
Adjusted EPS (2)
$0.40
$0.42
$(0.02)
Notes:
(1)
Basic EPS calculated using Net Income and weighted number of
shares outstanding in the respective quarter.
(2)
Adjusted EPS is calculated by dividing Adjusted Net Income by
the weighted average number of shares outstanding in the respective
quarter. Adjusted Net income excludes certain non-cash items such
as foreign exchange rate impacts and long-term incentive plan
expenses, and non-recurring items which we do not believe are
indicative of our core operating performance such as restructuring
and EPA-related expenses. The reconciliation of Adjusted EPS is
provided in the Reconciliation of Non-GAAP Financial Measures of
the Press Release.
Volumes increased by 1.8%, year over year, on strong demand in
the Specialty Carbon Black (“Specialties”) segment driven by the
EMEA and Asia regions partially offset by lower Rubber Carbon Black
(“Rubber”) volumes.
Net sales declined by $6.7 million, or 2.1%, to $315.7 million,
year over year, driven primarily by the effects of passing through
lower feedstock costs to customers partially offset by increased
volumes and base prices.
Income from operations declined by $7.0 million, or 21.6%, to
$25.6 million, year over year, primarily due to restructuring
expenses partially offset by the continued recovery of end market
demand and favorable product mix in the Specialties business.
Restructuring costs reflected a higher reserve related to post
closure costs associated with the site of our former rubber
manufacturing facility in Ambes, France.
Net Income declined $10.1 million to $8.9 million from $19.0
million in the fourth quarter of 2019 principally due to the
combination of higher restructuring costs, foreign exchange, and
pension-related costs, year over year.
Contribution Margin improved by $13.9 million, or 11.1%, to
$139.5 million, year over year, primarily driven by Specialties
volume strength and higher Rubber base pricing partially offset by
the effects of passing lower feedstock costs through to
customers.
Adjusted EBITDA increased by $2.8 million, or 4.4% to $66.0
million, year over year, primarily due to improvements in volumes
and base pricing partially offset by higher fixed costs and the
impact of lower feedstock costs.
Quarterly Business Segment Results
SPECIALTY CARBON BLACK
($ in millions, except per share data or
stated otherwise)
Q4 2020
Q4 2019
Y/Y Change in %
Volume (kmt)
65.4
56.8
15.0
Net sales
127.4
114.8
11.0
Gross Profit
47.7
43.2
10.2
Gross Profit/metric ton
728.9
760.7
(4.2)
Adjusted EBITDA
38.9
31.8
22.4
Adjusted EBITDA/metric ton
594.8
559.0
6.4
Adjusted EBITDA Margin (%)
30.5
27.7
280bps
Specialties volumes increased by 15.0%, year over year,
primarily in EMEA and Asia, and rose 11.3%, sequentially,
reflecting the continuation of a broad-based recovery across most
end markets, with polymers particularly strong.
Net sales improved by $12.7 million, or 11.0%, to $127.4
million, year over year, and rose 22.9% sequentially, driven by
higher volumes and favorable product mix partially offset by the
effects of lower feedstock costs passed through to customers.
Specialty Adjusted EBITDA rose by $7.1 million, or 22.4%, to
$38.9 million, year over year, and rose by $12.4 million, or 46.9%,
sequentially, driven by improved volume and favorable mix,
partially offset by higher fixed costs.
RUBBER CARBON BLACK
($ in millions, except per share data or
stated otherwise)
Q4 2020
Q4 2019
Y/Y Change in %
Volume (kmt)
172.4
176.7
(2.4)
Net sales
188.3
207.7
(9.3)
Gross Profit
41.4
45.8
(9.6)
Gross Profit/metric ton
240.0
259.0
(7.3)
Adjusted EBITDA
27.1
31.4
(13.8)
Adjusted EBITDA/metric ton
157.0
177.8
(11.7)
Adjusted EBITDA Margin (%)
14.4
15.1
(-70)bps
Rubber Carbon Black volumes declined by 2.4%, year over year,
primarily due to the continued global economic impact on demand
from tire customers resulting from COVID-19. The year over year
volume decline also includes the impact of our 2019 commercial
strategy which emphasized raising price over volume.
Net sales declined by $19.4 million, or 9.3%, to $188.3 million,
year over year, primarily due to passing through lower feedstock
costs to customers and, to a lesser extent, lower volumes,
partially offset by base price increases.
Rubber Adjusted EBITDA decreased by $4.3 million, or 13.8%, to
$27.1 million, year over year, driven by higher fixed costs and the
impact of lower feedstock costs.
Balance Sheet and Liquidity
As of December 31, 2020, the company had liquidity of $341.6
million, including cash and equivalents of $64.9 million, $236.5
million of our revolving credit facility capacity, including
ancillary lines, and $40.2 million of capacity under other
available credit lines. Net debt was $678.8 million and net
leverage was 3.39x.
Cash Flow
Cash inflows from operating activities for the twelve months
ended December 31, 2020 were $125.3 million, down $106.2 million,
year over year, primarily driven by lower profitability levels.
Cash outflows from investing activities for the twelve months
ended December 31, 2020 were $144.9 million, down $10.9 million,
year over year, driven by the timing of related payments and was
comprised of capital investments to advance safety, continuity,
sustainability and growth initiatives.
Cash inflows from financing activities for the twelve months
ended December 31, 2020 were $13.5 million, up $82.2 million, year
over year, primarily driven by a net $26.8 million draw down on
credit facilities and lower dividend payments.
2021 Outlook
Mr. Painter concluded, “Given the uncertainty regarding
COVID-19, with vaccinations underway but also highly contagious
strains emerging, we don't think it is appropriate to issue EBITDA
guidance. Our 2021 planning scenario assumes that COVID-19 does not
functionally end until 2022, with 2021 Specialty and Rubber volumes
roughly resembling second-half 2020 run-rates. Most important to us
is to always be improving our agility, to never sit still, but
build on 2020 and push ourselves so we can respond even better to
any demand scenario.”
Additional projected financial metrics for 2021 include shares
outstanding of 60.6 million, an effective tax rate in the range of
30% to 31% and depreciation and amortization in the range of $95 to
$100 million. Capital expenditures are expected to approximate $170
million, of which EPA related spending is expected to approximate
$55 million and growth and productivity capital is expected to
approximate $45 million.
Conference Call
As previously announced, Orion will hold a conference call
tomorrow, Friday, February 19th 2020, at 8:30 a.m. (EST). The
dial-in details for the live conference call are as follow:
U.S. Toll Free:
1-877-407-4018
International:
1-201-689-8471
A replay of the conference call may be accessed by phone at the
following numbers through February 27th, 2020:
U.S. Toll Free:
1-844-512-2921
International:
1-412-317-6671
Conference ID:
13714486
Additionally, an archived webcast of the conference call will be
available on the Investor Relations section of the company’s
website at www.orioncarbons.com, where
we regularly post information including notification of events,
news, financial performance, investor presentations and webcasts,
non-GAAP reconciliations, SEC filings and other information
regarding our company, its businesses and the markets it
serves.
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, including those in the “2021
Outlook" and “Quarterly Business Segment Results” sections.
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 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. You should not place undue reliance on
forward looking 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.
These forward-looking statements include, without limitation,
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.
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; • 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 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 “2021 Outlook” and “Quarterly
Business Segment Results” sections - 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, Contribution
Margin, Adjusted Net Income/(Loss) and Adjusted EPS, which are
financial measures that have 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 these measures as “non-GAAP” financial
measures. 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 consolidated profit or loss for the period.
Contribution Margin is calculated by subtracting variable costs
(such as raw materials, packaging, utilities and distribution
costs) from our net sales. We believe that Contribution Margin and
Contribution Margin per Metric Ton are useful because we see these
measures as indicating the portion of net sales that is not
consumed by such variable costs and therefore contributes to the
coverage of all other costs and profits.
Adjusted Net Income/(Loss) is defined as profit or loss for the
period adjusted for acquisition related expenses, restructuring
expenses, consulting fees related to group strategy, certain other
items (such as amortization expenses related to intangible assets
acquired from our predecessor and foreign currency revaluation
impacts) and assumed taxes and Adjusted EPS is defined as Adjusted
Net Income divided by the weighted number of shares outstanding.
Adjusted Net Income/(Loss) and Adjusted EPS provide guidance with
respect to our underlying business performance without regard to
the effects of (a) foreign currency fluctuations, (b) the
amortization of intangible assets which other companies may record
as goodwill having an indefinite lifetime and thus no amortization
and (c) our start-up and initial public offering costs. Other
companies may use a similarly titled financial measure that is
calculated differently from the way we calculate Adjusted Net
Income/(Loss) and Adjusted EPS.
We define Net Working Capital as the total of inventories and
current trade receivables, less trade payables. Net Working Capital
is as well a non-GAAP financial measure, and other companies may
use a similarly titled financial measure that is calculated
differently from the way we calculate Net Working Capital.
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. Reconciliations of this non-GAAP measure with the
most comparable GAAP measure for historic periods are indicative of
the reconciliation that will be presented upon completion of the
periods covered by the non-GAAP guidance.
The following tables present a reconciliation of each of
Adjusted EBITDA and Adjusted EPS to the most directly comparable
GAAP measure:
Reconciliation of profit or
(loss)
Fourth Quarter
Fiscal Year
(In thousands)
2020
2019
2020
2019
Net income
$
8,906
$
18,965
$
18,156
$
86,920
Add back income tax expense
4,126
6,701
8,132
33,216
Add back equity in earnings of affiliated
companies, net of tax
(67
)
(134
)
(493
)
(558
)
Income from operations before income
taxes and equity in earnings of affiliated companies
12,966
25,533
25,795
119,579
Add back interest and other financial
expense, net
10,014
7,063
38,671
27,572
Reclassification of actuarial losses from
AOCI
2,591
—
9,916
—
Earnings before income taxes and
finance income/costs
25,571
32,596
74,382
147,151
Add back depreciation, amortization and
impairment of intangible assets and property, plant and
equipment
26,805
25,223
96,526
96,713
EBITDA
52,375
57,818
170,908
243,863
Equity in earnings of affiliated
companies, net of tax
67
134
493
558
Restructuring expenses/(income)(1)
7,559
(205
)
7,559
3,628
Consulting fees related to Company
strategy (2)
—
449
—
1,280
Extraordinary expense items related to
COVID-19 (3)
318
—
3,866
—
Long term incentive plan
3,191
2,301
4,434
9,438
EPA-related expenses
176
1,035
5,228
3,992
Other adjustments (4)
2,273
1,656
7,556
4,578
Adjusted EBITDA
$
65,959
$
63,188
$
200,043
$
267,337
(1) Restructuring expenses for the periods ended December 31,
2020 and 2019 were related to the strategic restructuring of our
worldwide Rubber footprint
(2) Consulting fees related to the Orion strategy include
external consulting for establishing and executing Company
strategies relating to Rubber footprint realignment, conversion to
U.S. dollar and U.S. GAAP, and costs relating to our assessment of
feasibility for inclusion in certain U.S. indices.
(3) Extraordinary expense items related to COVID-19 reflect
costs incurred to address impacts associated with the global
coronavirus pandemic. These items include select production costs,
expenses related to providing personal protection equipment and
costs related to protective measures carried out at our facilities
to ensure the safety of our employees, among other
expenditures.
(4) Other adjustments (from items with less bearing on the
underlying performance of the Company’s core business) for the
quarters ended December 31, 2020 and 2019 and periods ended
December 31, 2020 and 2019 primarily relate to amounts of
non-income tax expense incurred during the construction phase of an
asset, disaster related preparedness costs and legal fees
associated with a dispute concerning intellectual property.
The following table reconciles Contribution Margin and
Contribution Margin per Metric Ton to gross profit:
unaudited
(in millions, unless otherwise
indicated)
Fourth Quarter
Year Ended Fiscal Year
2020
2019
2020
2019
Net Sales(1)
$
315.7
$
322.4
$
1,136.4
$
1,476.4
Variable costs(2)
(176.2
)
(196.8
)
(672.5
)
(935.7
)
Contribution margin
139.5
125.6
463.9
540.7
Freight
20.1
18.0
68.8
79.0
Fixed Costs(3)
(70.6
)
(54.6
)
(240.4
)
(229.8
)
Gross profit (1)
$
89.0
$
89.0
$
292.3
$
389.9
Volume (in kmt)
237.8
233.5
866.8
1,023.2
Contribution Margin per Metric Ton
$
586.8
$
538.0
$
535.1
$
528.5
Gross Profit per Metric Ton
$
374.4
$
381.1
$
337.3
$
380.9
(1) Separate line item in audited Consolidated Financial
Statements.
(2) Includes costs such as raw materials, packaging, utilities
and distribution.
(3) Includes costs such as depreciation, amortization and
impairment of intangible assets and property, plant and equipment,
personnel and other production related costs.
Adjusted EPS
Fourth Quarter
Fiscal Year
(In thousands, except per share
amounts)
2020
2019
2020
2019
Net Income
$
8,906
$
18,965
$
18,156
$
86,920
add back long term incentive plan
expenses
3,191
2,301
4,434
9,438
add back restructuring income/expenses,
net
7,559
(205
)
7,559
3,628
add back consulting fees related to
Company strategy
—
449
—
1,280
add back EPA-related expenses
176
1,035
5,228
3,992
add back extraordinary expense items
related COVID-19
318
—
3,866
—
add back other adjustment items
2,273
1,656
7,556
4,578
add back reclassification of actuarial
losses from AOCI
2,591
—
9,916
—
add back amortization
2,007
1,357
7,653
7,548
add back foreign exchange rate impacts
2,847
2,433
15,227
3,640
add back amortization of transaction
costs
539
480
2,071
2,082
Tax effect on add back items at estimated
tax rate
(6,450
)
(2,852
)
(19,053
)
(10,856
)
Adjusted Net Income
$
23,957
$
25,619
$
62,612
$
112,250
Total add back items
$
15,051
$
6,654
$
44,456
$
25,330
Impact add back items per share
$
0.25
$
0.10
$
0.74
$
0.42
Earnings per share (basic)
$
0.15
$
0.32
$
0.30
$
1.45
Adjusted EPS
$
0.40
$
0.42
$
1.04
$
1.87
Consolidated Statements of Operations
of Orion Engineered Carbons S.A. for the three months and fiscal
years ended December 31, 2020 and 2019
Three Months Ended December
31,
Years Ended December 31,
(In thousands, except per share
amounts)
2020
2019
2020
2019
Net sales
$
315,692
$
322,428
$
1,136,383
$
1,476,353
Cost of sales
226,662
233,440
844,034
1,086,644
Gross profit
89,030
88,987
292,348
389,708
Selling, general and administrative
expenses
49,919
49,556
176,140
206,886
Research and development costs
3,444
5,038
20,201
19,874
Other expenses, net
2,537
2,002
14,066
12,169
Restructuring expenses
7,559
(205
)
7,559
3,628
Income from operations
25,571
32,596
74,382
147,151
Interest and other financial expense,
net
10,014
7,063
38,671
27,572
Reclassification of actuarial losses from
AOCI
2,591
—
9,916
—
Income from operations before income
tax expense and equity in earnings of affiliated companies
12,966
25,533
25,795
119,579
Income tax expense
4,126
6,701
8,132
33,216
Equity in earnings of affiliated
companies, net of tax
67
134
493
558
Net income
$
8,906
$
18,965
$
18,156
$
86,920
Weighted-average shares outstanding (in
thousands of shares):
Basic
60,487
60,221
60,430
59,986
Diluted
61,731
61,490
61,407
61,300
Earnings per share:
Basic
$
0.15
$
0.32
$
0.30
$
1.45
Diluted
$
0.15
$
0.31
$
0.30
$
1.42
Consolidated Balance Sheets of Orion
Engineered Carbons S.A. as at December 31, 2020 and 2019
December 31,
(In thousands, except share amounts)
2020
2019
Current assets
Cash and cash equivalents
$
64,869
$
63,726
Accounts receivable, net of
expected credit losses of $5,794 and 6,632
234,796
212,565
Other current financial assets
3,630
11,347
Inventories, net
141,461
164,799
Income tax receivables
11,249
17,924
Prepaid expenses and other current
assets
44,452
37,358
Total current assets
500,456
507,718
Property, plant and equipment, net
610,530
534,054
Operating lease right-of-use assets
85,639
27,532
Goodwill
84,480
77,341
Intangible assets, net
46,772
50,596
Investment in equity method affiliates
5,637
5,232
Deferred income tax assets
52,563
48,720
Other financial assets
761
2,501
Other assets
2,956
3,701
Total non-current assets
889,337
749,676
Total assets
$
1,389,793
$
1,257,394
Current liabilities
Accounts payable
$
131,250
$
156,298
Current portion of long term debt and
other financial liabilities
82,618
36,410
Current portion of employee benefit plan
obligation
1,118
908
Accrued liabilities
49,176
44,931
Income taxes payable
23,906
14,154
Other current liabilities
36,676
32,509
Total current liabilities
324,745
285,211
Long-term debt, net
655,826
630,261
Employee benefit plan obligation
83,310
71,901
Deferred income tax liabilities
38,770
43,308
Other liabilities
106,131
40,701
Total non-current liabilities
884,036
786,171
Commitments and contingencies
Stockholders' equity
Common stock
Authorized: 65,035,579 and 65,035,579
shares with no par value
Issued – 60,992,259 and 60,729,289 shares
with no par value
Outstanding – 60,487,117 and 60,224,147
shares
85,323
85,032
Less 505,142 and 505,142 shares of common
treasury stock, at cost
(8,515
)
(8,515
)
Additional paid-in capital
68,502
65,562
Retained earnings
84,407
78,296
Accumulated other comprehensive loss
(48,705
)
(34,362
)
Total stockholders' equity
181,013
186,013
Total liabilities and stockholders'
equity
$
1,389,793
$
1,257,394
Consolidated Statements of Cash Flows
of Orion Engineered Carbons S.A.
Years Ended December 31,
(In thousands)
2020
2019
2018
Cash flows from operating
activities:
Net income
$
18,156
$
86,920
$
121,310
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation of property, plant and
equipment and amortization of intangible assets
96,526
96,713
98,156
Amortization of debt issuance costs
2,071
2,082
2,220
Share-based incentive compensation
4,434
9,438
13,919
Deferred tax (benefit)/provision
(12,146
)
15,826
(3,634
)
Foreign currency transactions
(4,900
)
1,052
2,782
Reclassification of actuarial losses from
AOCI
9,916
—
—
Other operating non-cash items
118
1,813
1,165
Changes in operating assets and
liabilities, net of effects of businesses acquired:
(Increase)/decrease in trade
receivables
(16,501
)
45,412
(39,680
)
(Increase)/decrease in inventories
29,951
16,413
(31,406
)
Increase/(decrease) in trade payables
(18,732
)
(12,036
)
5,444
Increase/(decrease) in provisions
2,308
(10,375
)
(4,427
)
Increase/(decrease) in tax liabilities
16,398
(7,254
)
4,843
Increase/(decrease) in other assets and
liabilities
(2,320
)
(14,497
)
(48,707
)
Net cash provided by operating
activities
$
125,278
$
231,507
$
121,985
Cash flows from investing
activities:
Cash paid for the acquisition of
intangible assets and property, plant and equipment
$
(144,939
)
$
(155,848
)
$
(116,157
)
Acquisition of businesses, net of cash and
cash equivalents acquired
—
—
(36,571
)
Cash received from the disposal of
intangible assets and property, plant and equipment
—
—
64,672
Net cash used in investing
activities
$
(144,939
)
$
(155,848
)
$
(88,056
)
Cash flows from financing
activities:
Payments for debt issue costs
—
(1,721
)
(741
)
Repayments of long-term debt
(8,190
)
(8,036
)
(8,288
)
Cash inflows related to current financial
liabilities
206,076
96,956
48,963
Cash outflows related to current financial
liabilities
(171,095
)
(101,303
)
(26,370
)
Dividends paid to shareholders
(12,045
)
(48,033
)
(47,665
)
Repurchase of common stock
—
—
(4,926
)
Taxes paid for shares issued under net
settlement feature
(1,202
)
(6,475
)
(4,741
)
Net cash from (used in) financing
activities
$
13,543
$
(68,612
)
$
(43,768
)
Increase (decrease) in cash, cash
equivalents and restricted cash
$
(6,118
)
$
7,047
$
(9,839
)
Cash, cash equivalents and restricted cash
at the beginning of the period
68,231
61,604
75,213
Effect of exchange rate changes on
cash
5,753
(420
)
(3,770
)
Cash, cash equivalents and restricted
cash at the end of the period
$
67,865
$
68,231
$
61,604
Less restricted cash at the end of the
period
2,996
4,505
4,588
Cash and cash equivalents at the end of
the period
$
64,869
$
63,726
$
57,016
Cash paid for interest, net
$
(20,769
)
$
(20,399
)
$
(24,367
)
Cash paid for income taxes
$
(7,930
)
$
(24,106
)
$
(60,228
)
Supplemental disclosure of non-cash
activity:
Liabilities under build-to-suit lease
$
—
$
—
$
28,657
Liabilities for leasing - current
$
14,005
$
6,254
$
—
Liabilities for leasing - non-current
$
52,593
$
26,280
$
—
The accompanying notes are an integral part of
these consolidated financial statements.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210218006009/en/
INVESTOR CONTACT: Wendy Wilson Investor Relations +1
281-974-0155
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