UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

Registrant's telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares, no par value	OEC	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, "smaller reporting company" and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	x	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No x

The registrant had ~~60,815,588~~58,866,903 shares of common stock outstanding as of ~~October 31, 2022.~~May 1, 2023.

Orion Engineered Carbons S.A.

TABLE OF CONTENTS


PART I - Financial Information						1
Item 1. Financial Statements and Supplementary Data (Unaudited)						1
Condensed Consolidated Statements of Operations						1
Condensed Consolidated Statements of Comprehensive Income						2
Condensed Consolidated Balance Sheets						3
Condensed Consolidated Statements of Cash Flows						4
Condensed Consolidated Statements of Changes in Stockholders’ Equity						5
Notes to the Condensed Consolidated Financial Statements (Unaudited)						6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations						1715
Item 3. Quantitative and Qualitative Disclosures About Market Risk						2622
Item 4. Controls and Procedures						2622

PART II - Other Information						2623
Item 1. Legal Proceedings						2723
Item 1A. Risk Factors						2723
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds						2823
Item 3. Defaults Upon Senior Securities						2823
Item 4. Mine Safety Disclosures						2824
Item 5. Other						2824
Item 6. Exhibits						2824
Signatures						2925

Orion Engineered Carbons S.A.

PART I - Financial Information

Item 1. Financial Statements and Supplementary Data (Unaudited)

Condensed Consolidated Statements of Operations


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
		(In millions, except share and per share amounts)									(In millions, except share and per share data)
Net sales	Net sales	$	543.1	$	393.0	$	1,568.8	$	1,154.1	Net sales	$	500.7	$	484.5
Cost of sales	Cost of sales	428.7		294.3		1,216.7		842.8		Cost of sales	364.3		366.6
Gross profit	Gross profit	114.4		98.7		352.1		311.3		Gross profit	136.4		117.9

Selling, general and administrative expenses	Selling, general and administrative expenses	56.0		52.9		173.2		160.3		Selling, general and administrative expenses	57.7		57.5
Research and development costs	Research and development costs	4.5		5.7		15.9		16.4		Research and development costs	6.2		5.5
Gain related to litigation settlement		—		—		—		(82.9)

Other (income) expenses, net	Other (income) expenses, net	0.3		(0.2)		1.9		1.9		Other (income) expenses, net	(1.0)		0.3

Income from operations	Income from operations	53.6		40.3		161.1		215.6		Income from operations	73.5		54.6

Interest and other financial expense, net	Interest and other financial expense, net	10.2		11.5		29.1		30.4		Interest and other financial expense, net	15.2		8.4
Reclassification of actuarial losses from AOCI		—		1.2		—		3.6
Reclassification of actuarial gain from AOCI										Reclassification of actuarial gain from AOCI	(2.2)		—
Income before earnings in affiliated companies and income taxes	Income before earnings in affiliated companies and income taxes	43.4		27.6		132.0		181.6		Income before earnings in affiliated companies and income taxes	60.5		46.2

Income tax expense	Income tax expense	11.7		6.7		38.3		48.5		Income tax expense	18.3		13.8
Earnings in affiliated companies, net of tax	Earnings in affiliated companies, net of tax	0.1		0.1		0.3		0.5		Earnings in affiliated companies, net of tax	0.1		0.1
Net income	Net income	$	31.8	$	21.0	$	94.0	$	133.6	Net income	$	42.3	$	32.5

Weighted-average shares outstanding (in thousands):	Weighted-average shares outstanding (in thousands):									Weighted-average shares outstanding (in thousands):
Basic	Basic	60,936		60,740		60,899		60,680		Basic	60,287		60,879
Diluted	Diluted	61,215		60,840		61,314		60,756		Diluted	60,623		61,019
Earnings per share:	Earnings per share:									Earnings per share:
Basic	Basic	$	0.52	$	0.35	$	1.54	$	2.20	Basic	$	0.70	$	0.53
Diluted	Diluted	$	0.52	$	0.35	$	1.53	$	2.20	Diluted	$	0.70	$	0.53

See accompanying Notes to these Condensed Consolidated Financial Statements

Orion Engineered Carbons S.A.

Condensed Consolidated Statements of Comprehensive Income

See accompanying Notes to these Condensed Consolidated Financial Statements

Orion Engineered Carbons S.A.

Condensed Consolidated Balance Sheets

See accompanying Notes to these Condensed Consolidated Financial Statements

Orion Engineered Carbons S.A.

Condensed Consolidated Statements of Cash Flows

See accompanying Notes to these Condensed Consolidated Financial Statements

Orion Engineered Carbons S.A.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

Balance at January 1, 2021 60,487,117 $ 85.3 $ (8.5) $ 68.5 $ 84.4 $ (48.7) $ 181.0
Net income — — — — 23.5 — 23.5
Other comprehensive loss, net of tax — — — — — (2.7) (2.7)
Share based compensation — — — 1.0 — — 1.0
Issuance of stock under equity compensation plans 103,409 — 1.2 (1.2) — — —
Balance at March 31, 2021 60,590,526 85.3 (7.3) 68.3 107.9 (51.4) 202.8
Net loss — — — — 89.1 — 89.1
Other comprehensive income, net of tax — — — — — 9.0 9.0
Share based compensation — — — 1.2 — — 1.2
Balance at June 30, 2021 60,590,526 $ 85.3 $ (7.3) $ 69.5 $ 197.0 $ (42.4) $ 302.1
Net income — — — — 21.0 — 21.0
Other comprehensive loss, net of tax — — — — — (11.5) (11.5)
Share based compensation — — — 1.1 — — 1.1
Issuance of stock under equity compensation plans 42,776 — 0.8 (0.8) — — —
Balance at September 30, 2021 60,633,302 $ 85.3 $ (6.5) $ 69.8 $ 218.0 $ (53.9) $ 312.7




Balance at January 1, 2022			60,656,076	$	85.3	$	(6.3)	$	71.4	$	217.8	$	(48.5)	$	319.7
Net income			—	—		—		—		32.5		—		32.5
Other comprehensive income, net of tax			—	—		—		—		—		24.9		24.9
Dividends	$0.02	per share	—	—		—		—		(1.2)		—		(1.2)

Share based compensation			—	—		—		1.5		—		—		1.5

Balance at March 31, 2022			60,656,076	85.3		(6.3)		72.9		249.1		(23.6)		377.4

See accompanying Notes to these Condensed Consolidated Financial Statements

Orion Engineered Carbons S.A

Notes to the Condensed Consolidated Financial Statement (Unaudited)

Orion Engineered Carbons S.A

Notes to the Condensed Consolidated Financial Statements—(continued)

Note A. Organization, Description of the Business and Summary of Significant Accounting Policies

Orion Engineered Carbons S.A.’s unaudited Condensed Consolidated Financial Statements include Orion Engineered Carbons S.A. and its subsidiaries (“Orion” or the “Company”). The unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for annual financial statements. These financial statements should be read in conjunction with the Consolidated Financial Statements included in our Annual Report in Form 10-K for the year ended December 31, ~~2021.~~2022.

The accompanying unaudited Condensed Consolidated Financial Statements include all adjustments that are necessary for the fair presentation of our results for the interim periods presented. Results for interim periods are not necessarily indicative of results to be expected for the full year.

~~Summary of Significant Accounting Policies~~

~~Adoption of accounting standards~~

~~Government Assistance (Topic 832)—On November 17, 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2021-10,~~ ~~Disclosures by Business Entities About Government Assistance,~~ which requires business entities to provide certain disclosures when they have received government assistance and use a grant or contribution accounting model by analogy to other accounting guidance (e.g., a grant model under IAS 20, ~~Accounting for Government Grants and Disclosure of Government Assistance~~; ~~Assistance; ASC 958-605,~~ ~~Not-for-Profit Entities—Revenue Recognition~~). This ASU creates Accounting Standards Codification (“ASC”) Topic 832 (“ASC 832”). The guidance is effective for financial statements issued for annual periods beginning after December 15, 2021. Entities may apply the ASU’s provisions either (1) prospectively to all transactions within the scope of ASC 832 that are reflected in the financial statements as of the adoption date and all new transactions entered into after the date of adoption or (2) retrospectively.

~~We adopted this standard prospectively on January 1, 2022. The adoption of this standard did not materially impact our Consolidated Financial Statements or related disclosures.~~

Note B. Accounts Receivable

Accounts receivable, net of allowance for credit losses, are as follows:

Inventories, net of reserves, are as follows:

~~Orion Engineered Carbons S.A~~

~~Notes to the Condensed Consolidated Financial Statements—(continued)~~

Note D. Debt and Other Obligations

~~The company’s financing arrangements~~Debt and other obligations are as follows:

a.Revolving credit facility

~~In July 2014, Orion Group Holdings, Inc. (the “Company”) entered in a credit agreement to establish long-term financing (“Term-Loan”) and a multicurrency~~The capacity under our revolving credit facility (“RCF”) ~~for the consolidated group. Subsequent to 2014, we entered into a number of amendments related to Term-Loan and RCF.~~

~~In May 2022, we added €100 million of capacity to our RCF, which expands our facility to~~is €350 million ($~~341.2~~380.6 million).

As ~~part~~ of the RCF, the Company can establish ancillary credit facilities by converting the commitments of select lenders under the €350 million RCF into bilateral credit agreements. Original borrowings under the ancillary credit facilities reduce availability under the RCF. Borrowings under ancillary credit facilities do not count toward debt drawnMarch 31, 2023 and December 31, 2022, borrowing under the RCF ~~for the purposes of determining whether the financial covenant under the Credit Agreement related to the RCF must be tested.~~

~~During the third quarter of 2022, we increased our ancillary facility capacity by €58 million. As of September 30, 2022, the total commitment of €350 million~~ was ~~split between an €82 million RCF tranche and €268 million of bilateral ancillary facilities established directly with several banks under the RCF.~~

~~As of September 30, 2022 and December 31, 2021, committed ancillary credit facilities totaled $261.5~~$54.4 million and ~~$192.5~~$53.3 million, respectively.

~~As of September 30, 2022, $48.7 million was outstanding under the RCF, and there were no borrowings under the RCF as of December 31, 2021.~~ We classify amounts outstanding under the RCF as current in our Condensed Consolidated Balance Sheets as the borrowings are for short-term working capital needs, typically for one-month periods, and based on management’s intention to repay the amounts outstanding within one year from the date of drawing.

~~As of September 30, 2022 and December 31, 2021, availability under the RCF was $130.3 million and $166.7 million, respectively.~~

Orion Engineered Carbons S.A

Notes to the Condensed Consolidated Financial Statements—(continued)

As of March 31, 2023 and December 31, 2022, availability under the RCF was $196.8 million and $165.9 million, respectively.

b.Ancillary Credit Facilities~~Local bank loans and other short-term borrowings~~

~~The local~~—As part of the RCF, the Company can also establish ancillary credit ~~lines in Brazil and Korea are with local banks that are not~~facilities by converting the commitments of select lenders under the €350.0 million RCF into bilateral credit agreements. Original borrowings under ancillary credit facilities reduce availability under the RCF. Borrowings under ancillary credit facilities do not count toward debt drawn under the RCF for the purposes of determining whether the financial covenant under the Credit Agreement related to the RCF must be tested.

As of March 31, 2023 and ~~were negotiated bilaterally.~~December 31, 2022, committed ancillary credit facilities totaled $291.7 million and $286.1 million, respectively.

~~The ancillary facilities (under RCF commitments)~~b.Other Short-Term borrowings and ~~uncommitted lines of credit outstanding~~Obligations

Other short-term debt and obligations are as follows:

September 30, 2022 December 31, 2021
(In millions)
Total ancillary capacity - EUR € 268.3 € 170.0
Total ancillary capacity - U.S. $ $ 261.5 $ 192.5
Ancillary credit facilities
OEC GmbH outstanding borrowings $ 139.6 $ 103.0
OEC LLC outstanding borrowings 17.2 13.4
Uncommitted local lines of credit:
Korea (capacity $40.0 million) 10.1 30.8
Brazil (capacity $3.0 million) 3.0 2.3
Korea working capital loan 7.0 —
Repurchase agreement 33.1 —
RCF 48.7 —
Total of Other short-term debt and obligations $ 258.7 $ 149.5

~~Repurchase Agreement~~—On March 15, 2022, we entered into a repurchase agreement to sell European Emission Allowance (“EUA”) certificates. Under the agreement, we sold 450 thousand EUA certificates for €33.5 million cash to a counterparty. The same counterparty has an obligation to resell, and we have the obligation to purchase, the same or substantially the same EUA certificates on January 27, 2023 for €34.0 million. The difference between the consideration received and the amount of consideration to be paid will be recognized as interest expense. At September 30, 2022, the amount outstanding was $33.1 million. Due to the short maturity, the carrying value approximates the fair value.

~~Bank of China—~~To partially finance our Huaibei facility in China, on March 16, 2022, our wholly owned subsidiary, Orion Engineered Carbons (Huaibei) Co., Ltd. (“OECCL”), entered into a 4.5% fixed interest rate, CNY500 million (approximately $80 million), eight-year term-loan agreement with Bank of China (“BOC Term-Loan”) maturing on December 21, 2029. OECCL is required to repay the BOC Term-Loan principal in semi-annual payments beginning June 2024. Interest is payable quarterly, beginning June 2022. The agreement restricts OECCL’s ability to make external investments or make intercompany loan repayments or dividend distributions. The principal repayments under the agreement are: 2% in 2024, 10% in 2025 and 22% each year thereafter, concluding in June 2029. The BOC Term-Loan is secured with the Huaibei facility’s land, construction in progress, and buildings as collateral.

~~Korea Working Capital Loan—~~For working capital flexibility, in June 2022, we entered in a one year term-loan agreement for ₩10.0 billion Korean won ($7.0 million) with Hana Bank. The interest rate on this loan at inception is 4.3%. For early repayment, we are required to pay a 1% prorated early repayment fee. In the Condensed Consolidated Statements of Cash Flows, this loan is reflected in ~~Cash inflows related to current financial liabilities. Due to the short maturity, the carrying value approximates the fair value.~~


	March 31, 2023		December 31, 2022
	(In millions)
Revolving credit facility	$	54.4	$	53.3

Ancillary credit facilities
OEC GmbH outstanding borrowings	118.1		148.7
OEC LLC outstanding borrowings	5.3		5.4

Uncommitted local lines of credit:
Korea (capacity $44.0 million)	—		—
Brazil (capacity $3.2 million)	—		2.9
China working capital	4.4		1.5
Korea working capital loan	7.7		7.9
Repurchase agreement	38.0		36.3

Total of Other short-term debt and obligations	$	227.9	$	256.0

Supplemental information:
Total ancillary capacity - EUR	€	268.3	€	268.3
Total ancillary capacity - U.S. $	$	291.7	$	286.1

As of ~~September 30, 2022,~~March 31, 2023, we are in compliance with our debt covenants.

Accounts Receivable Factoring Facilities―We entered into agreements with various third-party financial institutions for the sale of certain Accounts receivable. We have concluded that there would generally be no risk of loss to us from non-payment of the sold receivables because:

•The transferred financial assets have been isolated beyond the reach of our creditors, even in bankruptcy or other receivership;

•The party purchasing accounts receivables has the right to pledge and or exchange the transferred assets without restrictions; and

•We do not retain effective control over the transferred financial assets.

In the Condensed Consolidated Statements of Operations, the loss on receivables sale is reflected in Other expenses, net.

As of March 31, 2023, the gross amount of receivables sold was $68.9 million. No sales were made during 2022.

For additional information relating to our debt, see “Note J. Debt and Other Obligations”, included in our Annual Report in Form 10-K for the year ended December 31, ~~2021.~~2022.

Note E. Financial Instruments and Fair Value Measurement

We have policies governing the use of derivative instruments and do not enter into financial instruments for trading or speculative purposes.

By using derivative instruments, we are subject to credit and market risk. To minimize counterparty credit (or repayment) risk, we enter into transactions primarily with investment grade financial institutions. The market risk exposure is not hedged in a manner to completely eliminate the effects of changing market conditions on earnings or cash flow. No significant concentration of credit risk existed as of ~~September 30, 2022~~March 31, 2023 or December 31, ~~2021.~~2022.

Orion Engineered Carbons S.A

Notes to the Condensed Consolidated Financial Statements—(continued)

Fair value measurement

The following table summarizes outstanding financial instruments that are measured at fair value on a recurring basis:

All financial instruments in the table above are classified as Level 2. We present the gross assets and liabilities of our derivative financial instruments in the Condensed Consolidated Balance Sheets.

For financial assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization at the end of each reporting period. There were no transfers of assets measured at fair value between Level 1 and Level 2 and there were no Level 3 investments during ~~2022~~2023 or ~~2021.~~2022.

The following table presents the carrying value and estimated fair value of our financial instruments that are not measured at fair value on a recurring basis for the periods presented. Short-term and ~~long-term~~Long-term debt are recorded at amortized cost in the Condensed Consolidated Balance Sheets.

Term-Loan and China Term ~~Loan~~loan in the table above isare classified as Level 2.

At both ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, the fair values of cash and cash equivalents, accounts receivable, accounts payable, ~~and~~ accrued liabilities, ~~and~~ short term borrowings and variable rate debt approximated their carrying values due to the short-term nature of these instruments.

Orion Engineered Carbons S.A

Notes to the Condensed Consolidated Financial Statements—(continued)

The following tables summarize the pre-tax effect of derivative and non-derivative instruments recorded in Accumulated other comprehensive income (loss) (“AOCI”), the gains (losses) reclassified from AOCI to earnings and additional gains (losses) recognized directly in earnings:

Effect of Financial Instruments
Three Months Ended Sep 30,
Gain (Loss) Recognized in AOCI Gain (Loss) Reclassified from AOCI to Income Income Statement Classification
2022 2021 2022 2021
(In millions)
Derivatives designated as hedges:
Cross currency swaps $ 9.2 $ (3.2) $ 0.4 $ — Interest and other financial expense, net
Interest rate swaps 6.2 0.3 — — Interest and other financial expense, net
Total $ 15.4 $ (2.9) $ 0.4 $ —

Our cross currency swaps and interest rate swaps are designated as cash flow hedges of principal and interest payments related to our ~~Term Loan~~Term-Loan and mature in September 2028. The amount recognized in AOCI related to cash flow hedges that will be reclassified to the Condensed Consolidated Statement of Operations in the next twelve months is approximately ~~$1.6~~$1.7 million.

See “Note K. Financial Instruments and Fair Value Measurement”, included in our Annual Report in Form 10-K for the year ended December 31, ~~2021,~~2022, for additional information relating to our derivatives instruments.

Note F. Employee Benefit Plans

Provisions for pensions are established to cover benefit plans for retirement, disability and surviving dependents’ pensions. The benefit obligations vary depending on the legal, tax and economic circumstances in various countries in which the Company operates. Generally, the level of benefit depends on the length of service and the remuneration.

Net periodic defined benefit pension costs include the following:

Service costs were recorded ~~within~~in Income from operations in Selling, general and administrative expenses and interest ~~cost~~costs were recorded in Interest and other financial expense, net.

The amortization of actuarial (gain) losses, associated with the pension obligations recorded in prior years, in Accumulated other comprehensive income exceeding 10% of the defined benefit obligation are recorded ratably in the Condensed Consolidated Statements of Operations.

Orion Engineered Carbons S.A

Notes to the Condensed Consolidated Financial Statements—(continued)

Note G. Accumulated Other Comprehensive ~~Income/~~Income (Loss)

Changes in each component of AOCI, net of tax, are as follows:

Currency Translation Adjustments Hedging Activities Adjustments Pension and Other Postretirement Benefit Liability Adjustment Total
(In millions)
Balance at January 1, 2022 $ (34.1) $ (10.8) $ (3.6) $ (48.5)
Other comprehensive income 11.2 18.7 — 29.9
Income tax effects 0.6 (6.0) — (5.4)
Currency translation AOCI — 0.3 0.1 0.4
Balance at March 31, 2022 $ (22.3) $ 2.2 $ (3.5) $ (23.6)
Other comprehensive (loss) (18.5) 12.5 — (6.0)
Income tax effects (0.3) (4.0) — (4.3)
Currency translation AOCI — — 0.1 0.1
Balance at June 30, 2022 (41.1) 10.7 (3.4) (33.8)
Other comprehensive income (loss) (8.1) 16.5 — 8.4
Income tax effects 0.4 (5.2) — (4.8)
Currency translation AOCI — (0.7) 0.2 (0.5)
Balance at September 30, 2022 (48.8) 21.3 (3.2) (30.7)


	Currency Translation Adjustments		Hedging Activities Adjustments		Pension and Other Postretirement Benefit Liability Adjustment		Total
	(In millions)
Balance at January 1, 2023	$	(47.5)	$	24.4	$	10.6	$	(12.5)
Other comprehensive income (loss) before reclassifications	(7.8)		(3.3)		—		(11.1)
Income tax effects	0.5		1.0		—		1.5
Amounts reclassified from AOCI	—		0.4		(2.2)		(1.8)
Income tax effects on reclassifications	—		(0.1)		0.7		0.6
Currency translation AOCI	—		0.2		0.1		0.3
Balance at March 31, 2023	$	(54.8)	$	22.6	$	9.2	$	(23.0)

Balance at January 1, 2021 $ (26.5) $ (13.5) $ (8.7) $ (48.7)
Other comprehensive loss before reclassifications (4.7) 0.9 — (3.8)
Income tax effects before reclassifications (0.4) (0.3) — (0.7)
Amounts reclassified from AOCI — — 1.2 1.2
Income tax effects on reclassifications — — (0.4) (0.4)
Currency translation AOCI — 0.6 0.4 1.0
Balance at March 31, 2021 $ (31.6) $ (12.3) $ (7.5) $ (51.4)
Other comprehensive income before reclassifications 7.2 1.1 — 8.3
Income tax effects before reclassifications 0.5 (0.3) — 0.2
Amounts reclassified from AOCI — — 1.2 1.2
Income tax effects on reclassifications — — (0.4) (0.4)
Currency translation AOCI — (0.2) (0.1) (0.3)
Balance at June 30, 2021 (23.9) (11.7) (6.8) (42.4)
Other comprehensive income (loss) before reclassifications (10.4) (3.2) — (13.6)
Income tax effects before reclassifications (0.3) 1.1 — 0.8
Amounts reclassified from AOCI — — 1.2 1.2
Income tax effects on reclassifications — — (0.4) (0.4)
Currency translation AOCI — 0.3 0.2 0.5
Balance at September 30, 2021 $ (34.6) $ (13.5) $ (5.8) $ (53.9)




Balance at January 1, 2022	$	(34.1)	$	(10.8)	$	(3.6)	$	(48.5)
Other comprehensive loss before reclassifications	11.2		18.7		—		29.9
Income tax effects before reclassifications	0.6		(6.0)		—		(5.4)


Currency translation AOCI	—		0.3		0.1		0.4
Balance at March 31, 2022	$	(22.3)	$	2.2	$	(3.5)	$	(23.6)

~~Orion Engineered Carbons S.A~~

~~Notes to the Condensed Consolidated Financial Statements—(continued)~~

Note H. Earnings Per Share

Basic earnings per share (“EPS”) is computed by dividing Net income attributable to Orion by the weighted average number of common stock outstanding during the period. Diluted EPS equals Net income attributable to Orion divided by the weighted average number of common stock outstanding during the period, adjusted for the dilutive effect of our stock–based and other equity compensation awards.

The following table reflects the income and share data used in the basic and diluted EPS computations:

Note I. Income Taxes

The Company records its tax provision or benefit on an interim basis using an estimated annual effective tax rate. This rate is applied to the current period ordinary income to determine the income tax provision or benefit allocated to the interim period. Losses from jurisdictions for which no benefit can be recognized and the income tax effects of unusual and infrequent items are excluded from the estimated annual effective tax rate and are recognized in the impacted interim period as discrete items. Valuation allowances are provided against any future tax benefits that arise from losses in jurisdictions for which no benefit can be recognized. The estimated annual effective tax rate may be significantly impacted by nondeductible expenses and by the Company’s projected earnings mix by tax jurisdiction. Adjustments to the estimated annual effective income tax rate are recognized in the period when such estimates are revised.

Income tax expense for the three months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ were ~~$11.7~~$18.3 million and ~~$6.7~~$13.8 million, respectively.

~~Income tax expense for~~

Orion Engineered Carbons S.A

Notes to the ~~nine months ended September 30, 2022 and 2021 were $38.3 million and $48.5 million, respectively.~~Condensed Consolidated Financial Statements—(continued)

Our effective income tax rates were as follows:

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Effective income tax rates 27.0 % 24.3 % 29.0 % 26.7 %


	Three Months Ended March 31,
	2023		2022
Effective income tax rates	30.2	%	29.8	%

The increase in our effective tax rate for ~~both~~ the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 as compared to the three ~~and nine~~ months ended ~~September 30, 2021 were~~March 31, 2022 was primarily attributable to the projected earnings mix by geography and tax jurisdiction.

Note J. Commitments and Contingencies

Restructuring—In 2016, the Company ceased operations at its plant in Ambes, France as part of the restructuring of its Rubber business segment. Expenses related to the closing include personnel costs, demolition, removal costs and remediation costs. Total estimated and recognized costs and total remaining costs to be paid as of ~~September 30, 2022~~March 31, 2023 are ~~$46.1~~$46.5 million and ~~$4.6~~$3.8 million, respectively. Orion's reserves for the ceased operation at Ambes are reflected in Accrued liabilities on the Condensed Consolidated Balance Sheets. Orion has accrued liabilities for personnel expenses of ~~$2.9~~$3.3 million and ~~$2.6~~$3.2 million, and for ground remediation costs of ~~$1.7~~$0.5 million and ~~$6.7~~$0.6 million, as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively.

~~Environmental Reserves—~~Our accrued liability for future environmental reserves at our current and former plant sites and other sites totaled $4.9 million and $7.8 million as of September 30, 2022 and December 31, 2021, respectively. Environmental-related costs are expected to occur over a number of years and are not concentrated in any single year. In our opinion, it is reasonably possible that losses in excess of the liabilities recorded will be incurred. However, we cannot estimate any amount or range of such possible additional losses. New information about sites, new technology or future developments, such as involvement in investigations by regulatory agencies, could require us to reassess our potential exposure related to environmental matters.

Legal Proceedings—We are subject to various lawsuits and claims including, but not limited to, matters involving contract disputes, environmental damages, personal injury and property damage. We vigorously defend ourselves and prosecute these matters as appropriate. We regularly assess the adequacy of legal accruals based on our professional judgment, experience and the information available regarding our cases.

~~Orion Engineered Carbons S.A~~

~~Notes to the Condensed Consolidated Financial Statements—(continued)~~

Based on a consideration of all relevant facts and circumstances, we do not believe the ultimate outcome of any currently pending lawsuit against us will have a material adverse effect upon our operations, financial condition or Condensed Consolidated Financial Statements.

City of Hürth, Germany (Stadtwerke Hürth/Hürth municipal utilities)—In 2020, one of our wholly-owned subsidiaries and the City of Hürth entered into a long-term steam supply contract. The Hürth municipality financed certain turbines and infrastructure, which are operated by us under a finance lease agreement. In addition, we entered into a long-term supply agreement with the City of Hürth for delivery of heat. Since the fourth quarter of 2020, the City of Hürth has not fully honored the contractually stipulated calculation for heat deliveries, amongst other stipulations. As a result, Orion has open receivables from the City of Hürth totaling $10.8 million and $9.8 million as of March 31, 2023 and December 31, 2022, respectively. The City of Hürth argues it has open claims of approximately $8.2 million and $7.0 million related to lease payments as of March 31, 2023 and December 31, 2022, respectively. Orion is in negotiations with the City of Hürth but is prepared to pursue its rights vigorously through legal enforcement if necessary.

EPA Action—During 2008 and 2009, the U.S. Environmental Protection Agency (“EPA”) contacted all U.S. carbon black producers as part of an industry-wide EPA initiative, requesting extensive and comprehensive information under Section 114 of the U.S. Clean Air Act. The EPA used that information to determine, for each facility, that either: (i) the facility has been in compliance with the Clean Air Act; (ii) violations have occurred, and enforcement litigation may be undertaken; or (iii) violations have occurred, and a settlement of an enforcement case is appropriate. In response to information requests received by the Company’s U.S. facilities, the Company furnished information to the EPA on each of its U.S. facilities. The EPA subsequently sent notices under Section 113(a) of the Clean Air Act in 2010 alleging violations of Prevention of Significant Deterioration (“PSD”) and Title V permitting requirements under the Clean Air Act at the Company’s Belpre (Ohio) facility. In October 2012, the Company received a corresponding notice and finding of violation (a “NOV”) alleging the failure to obtain PSD and Title V permits reflecting Best Available Control Technology (“BACT”) at several units of the Company’s Ivanhoe (Louisiana) facility, and in January 2013, the Company also received an NOV issued by the EPA for its facility in Borger (Texas) alleging the failure to obtain PSD and Title V permits reflecting BACT during the years 1996 to 2008. A comparable NOV for the Company’s U.S. facility in Orange (Texas) was issued by the EPA in February 2013, and the EPA issued an additional NOV in March 2016 alleging more recent non-PSD air emissions violations primarily at the dryers and the incinerator of the Orange facility.

In 2013, Orion began discussions with the EPA and the U.S. Department of Justice (“DOJ”) about a potential settlement to resolve the NOVs received, which ultimately led to a consent decree executed between Orion Engineered Carbons LLC (“Orion LLC” for purposes of this Note J.) and the United States (on behalf of the EPA), as well as the Louisiana Department of Environmental Quality. The consent decree (the “EPA CD”) became effective on June 7, 2018. The EPA CD resolves and settles the EPA’s claims of noncompliance set forth in the NOVs and in a respective complaint filed in court against Orion by the United States immediately prior to the filing of the consent decree.

Under the EPA CD, Orion LLC ~~is installing~~had to install certain pollution control technology in order to further reduce emissions at its four U.S. manufacturing ~~facilities~~facilities. In line therewith, Orion LLC installed emissions control technology to remove SO2, NOx and dust particles from tail gases at its Ivanhoe (Louisiana) facility in ~~Ivanhoe (Louisiana), Belpre (Ohio), Borger (Texas),~~2021 and emissions controls were installed in accordance with the EPA CD at Orion’s facility in Orange (Texas) ~~over approximately five years.~~in 2020. In first quarter of 2023, Orion LLC commissioned emissions control technology to remove SO2, NOx and dust particles from tail gases at its Borger (Texas) facility. The installation of pollution control technology at its fourth and last U.S. manufacturing facility in Belpre (Ohio) has started and is scheduled to complete in 2023, in line with the EPA CD terms. The EPA CD also requires continuous monitoring of emissions reductions that Orion LLC will need to comply with over a number of years. In addition, the EPA CD required Orion LLC to pay a fine of $0.8 million and perform other environmental mitigation projects that are not anticipated to be material. As part of Orion LLC’s compliance plan under the EPA CD, Orion LLC installed SNOXTM emissions control technology to remove SO2, NOx and dust particles from tail gases at the Ivanhoe (Louisiana) facility in 2021. Less stringent emissions controls were installed in accordance with the EPA CD at Orange (Texas) in 2020.

~~We have started installation at the two remaining sites, Belpre and Borger.~~

As of ~~September 30, 2022,~~March 31, 2023, we have spent ~~$264~~$285 million on capital expenditures related to the EPA CD of which approximately $80 million was received as an indemnity payment from Evonik.

For further discussion on EPA Action refer to “Note Q. Commitments and Contingencies”, included in our Annual Report in Form 10-K for the year ended December 31, ~~2021.~~2022.

Pledges and guarantees

The Company has pledged the majority of its assets (amongst others shares in affiliates, bank accounts and receivables) within the different regions excluding China as collateral under the debt agreements. As of ~~September 30, 2022,~~March 31, 2023, the Company had guarantees totaling ~~$13.6~~$25.5 million issued by various financial institutions.

Orion Engineered Carbons S.A

Notes to the Condensed Consolidated Financial Statements—(continued)

Note K. Financial Information by Segment

We disclose the results of each of our operating segments in accordance with ASC 280, Segment Reporting. We manage our business in two operating segments as follows:

•Rubber Carbon Black—Used in the reinforcement of rubber in tires and mechanical rubber ~~goods.~~goods, and

•Specialty Carbon Black ~~Carbon~~—Used for protection, colorization and conductivity in coatings, polymers, batteries, printing and special applications.

Corporate includes income and expenses that cannot be directly allocated to the business segments or that are managed at the corporate ~~level including:~~level. This includes finance income and expenses, taxes and items with less bearing on the underlying core business.

Discrete financial information is available for each of the segments and the Chief Operating Decision Maker (“CODM”) uses operating results of each operating segment for performance evaluation and resource allocation.

Our CODM uses Adjusted EBITDA as the primary measure for reviewing our segment profitability. We define Adjusted EBITDA as Income from operations before depreciation and amortization, share-based compensation, and non-recurring items (such as restructuring expenses, consulting fees related to Company strategy, ~~gain related to~~ legal settlements ~~and includes equity earnings (loss)~~gains, etc.) plus Earnings in affiliated companies, net of tax.

The CODM does not review reportable segment asset or liability information for purposes of assessing performance or allocating resources.

Segment operating results for the three months ended March 31, 2023 and 2022 are as follows:


	Rubber		Specialties		Corporate		Total
	(In millions)
2023
Net sales from external customers	$	338.7	$	162.0	$	—	$	500.7
Depreciation and amortization of intangible assets, right of use assets, and property, plant and equipment	15.8		9.9		—		25.7
Equity in earnings of affiliated companies, net of tax	0.1		—		—		0.1

Interest and other financial expense, net					(15.2)		(15.2)
Reclassification of actuarial gain from AOCI					2.2		2.2


Adjusted EBITDA	63.8		37.3		—		101.1

2022
Net sales from external customers	$	306.9	$	177.6	$	—	$	484.5
Depreciation and amortization of intangible assets, right of use assets, and property, plant and equipment	16.5		10.8		—		27.3
Equity in earnings of affiliated companies, net of tax	0.1		—		—		0.1

Interest and other financial expense, net					(8.4)		(8.4)



Adjusted EBITDA	40.7		42.5		—		83.2

Orion Engineered Carbons S.A

Notes to the Condensed Consolidated Financial Statements—(continued)

~~Segment operating results~~A reconciliation of Income before earnings in affiliated companies and income taxes to Adjusted EBITDA for each of the ~~three months ended September 30, 2022 and 2021 are~~periods presented is as follows:

~~Segment reconciliation for~~Corporate charges include the ~~nine months ended September 30, 2022 and 2021:~~following:

Rubber Specialties Corporate Total Segments
(In millions)
2022
Net sales from external customers $ 1,039.7 $ 529.1 $ — $ 1,568.8
Adjusted EBITDA 128.1 119.0 — 247.1
Corporate charges — — (5.8) (5.8)
Depreciation and amortization of intangible assets, right of use assets, and property, plant and equipment (49.1) (30.8) — (79.9)
Excluding equity in earnings of affiliated companies, net of tax (0.3) — — (0.3)
Interest and other financial expense, net (29.1) (29.1)
Income before earnings in affiliated companies and income taxes $ 132.0
2021
Net sales from external customers $ 703.5 $ 450.6 $ — $ 1,154.1
Adjusted EBITDA 98.0 118.1 — 216.1
Corporate charges — — (8.3) (8.3)
Depreciation and amortization of intangible assets, right of use assets, and property, plant and equipment (41.7) (32.9) — (74.6)
Gain related to litigation settlement 82.9 82.9
Excluding equity in earnings of affiliated companies, net of tax (0.5) — — (0.5)
Interest and other financial expense, net (30.4) (30.4)
Reclassification of actuarial losses from AOCI (3.6) (3.6)
Income before earnings in affiliated companies and income taxes $ 181.6


	Three Months Ended March 31,
	2023		2022
	(In millions)


Long term incentive plan	$	2.1	$	1.5





Other non-operating	(0.3)		(0.3)
Corporate Charges	$	1.8	$	1.2

~~Orion Engineered Carbons S.A~~

~~Notes to the Condensed Consolidated Financial Statements—(continued)~~

~~Expense from operations before income taxes and finance costs of the segment “Corporate”~~ ~~comprises the following:~~

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
(In millions)
Long term incentive plan $ 1.9 $ 1.3 $ 5.0 $ 3.3
Other non-operating (0.3) 0.9 0.8 5.0
Corporate Charges $ 1.6 $ 2.2 $ 5.8 $ 8.3

Orion Engineered Carbons S.A.

Management’s Discussion and Analysis of Financial Condition and Results of Operation

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 nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ and should be read in conjunction with the information included under Item 1. Financial Statements and Supplementary Data (Unaudited) elsewhere in this report. We prepare our financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”).

PRESENTATION OF CERTAIN FINANCIAL AND OTHER INFORMATION

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 ~~which~~ may not be comparable to other similarly titled measures of other companies. For a reconciliation of these non-GAAP financial measures to ~~the most directly~~their nearest comparable GAAP measures, see sectionReconciliation of Non-GAAP Financial Measures below.

These non-GAAP measures ~~are,~~include, but are not limited to, ~~Contribution margin, Contribution margin~~Gross profit per metric ton, ~~(collectively, “Contribution margins”),~~ Adjusted EBITDA, Net ~~working capital~~Working Capital, Capital Expenditures and ~~Capital expenditures.~~ Segment Adjusted EBITDA Margin (in percentage).

We ~~define Contribution margin as revenue less variable costs (such as raw materials, packaging, utilities and distribution costs). We define Contribution margin~~define:

•Gross profit per metric ton ~~as Contribution margin~~—Gross profit divided by volume measured in metric tons. ~~We define~~

•Adjusted EBITDA as —Income from operations before depreciation and amortization, share-based compensation, and non-recurring items (such as, restructuring expenses, consulting fees related to Company strategy, ~~gain related to~~ legal settlement ~~and includes equity earnings (loss)~~gain, 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.

•Segment Adjusted EBITDA Margin (in percentage)—Segment Adjusted EBITDA divided by segment revenue.

Adjusted EBITDA is used by our ~~management~~chief operating decision maker (“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 define Net working capital as inventories plus current trade receivables minus trade payables. We define Capital expenditures as cash paid for the acquisition of intangible assets and property, plant and equipment as shown in the Condensed Consolidated Financial Statements.

~~We also~~ use ~~Segment Adjusted EBITDA margin, which we define as Adjusted EBITDA for the relevant segment divided by the revenue for that segment.~~

~~We use Adjusted EBITDA as an internal~~this measure, ~~of performance to benchmark and compare performance among our own operations. We use these measures,~~ together with other measures of performance under GAAP, to compare the relative performance of operations in planning, budgeting and reviewing ~~the performance of~~ our business. We believe these measures are useful measures of financial performance in addition to ~~consolidated~~ Net income, ~~for the period,~~ Income from operations and other profitability measures under GAAP, because they facilitate operating performance comparisons from period to ~~period and company to company and, with respect to Contribution margin, eliminate volatility in feedstock prices.~~period. By eliminating potential differences in results of operations between periods ~~or companies~~ caused by factors such as depreciation and amortization, ~~methods,~~ 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 being evaluated. For these reasons, EBITDA-based measures are often used by the investment community as a means of comparison of companies in our industry. By deducting variable costs (such as raw materials, packaging, utilities and distribution costs) from revenue,operations. In addition, we believe ~~that Contribution margins can provide a useful basis for comparing the current~~these non-GAAP measures aid investors by providing additional insight into our operational performance ~~of the underlying operations being evaluated by indicating the portion of revenue that is not consumed by these variable costs~~ and ~~therefore contributes to the coverage of all costs and profits.~~help clarify trends affecting our business.

~~Different~~However, other companies and analysts may calculate non-GAAP financial measures ~~based on EBITDA, Contribution margins and working capital~~ differently, so making comparisons among companies on this basis should be done carefully. ~~Adjusted EBITDA, Contribution margins and Net working capital~~Non-GAAP measures are not performance measures ~~of performance~~ under GAAP and should not be considered in isolation or construed as substitutes for ~~revenue, consolidated~~Net sales, Net income, ~~for the period,~~ Income from operations, Gross profit orand other GAAP measures as an indicator of our operations in accordance with GAAP.

Orion Engineered Carbons S.A.

Management’s Discussion and Analysis of Financial Condition and Results of Operation

Reconciliation of Non-GAAP Financial Measures

~~Contribution margin and Contribution margin per metric ton (Non-GAAP Financial Measures)~~The following tables present a reconciliation of each Non-GAAP measure to the most directly comparable GAAP measure:

Reconciliation of ~~Contribution margin and Contribution margin~~Gross profit per metric ~~ton to Gross profit is as follows:~~ton:

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 Delta 2022 2021 Delta
(In millions) % (In millions) %
Revenue $ 543.1 $ 393.0 $ 150.1 38.2 $ 1,568.8 $ 1,154.1 $ 414.7 35.9
Variable costs 382.3 252.5 129.8 51.4 1,069.8 712.9 356.9 50.1
Contribution margin 160.8 140.5 20.3 14.4 499.0 441.2 57.8 13.1
Freight 24.4 23.3 1.1 4.7 77.6 69.8 7.8 11.2
Fixed costs (70.8) (65.1) (5.7) 8.8 (224.5) (199.7) (24.8) 12.4
Gross profit $ 114.4 $ 98.7 $ 15.7 15.9 $ 352.1 $ 311.3 $ 40.8 13.1
Volume (in kmt) 243.3 236.9 6.4 2.7 747.9 741.2 6.7 0.9
Contribution margin per metric ton $ 660.9 $ 593.1 $ 67.8 11.4 $ 667.2 $ 595.3 $ 71.9 12.1
Gross profit per metric ton $ 470.2 $ 416.8 $ 53.4 12.8 $ 470.8 $ 420.0 $ 50.8 12.1

~~Adjusted EBITDA (A Non-GAAP Financial Measure)~~


	Three Months Ended March 31,
	2023		2022		Delta
	(In millions)						%
Net sales	$	500.7	$	484.5	$	16.2	3.3
Cost of sales	(364.3)		(366.6)		2.3		(0.6)
Gross profit	$	136.4	$	117.9	$	18.5	15.7
Volume (in kmt)	233.5		253.2		(19.7)		(7.8)
Gross profit per metric ton	$	584.2	$	465.6	$	118.6	25.5

Reconciliation of ~~Adjusted EBITDA to consolidated~~ Net income ~~is as follows:~~to Adjusted EBITDA:

Orion Engineered Carbons S.A.

Management’s Discussion and Analysis of Financial Condition and Results of Operation

A. Operating Results

~~For the three months ended September 30, 2022 compared to three months ended September 30, 2021~~

The table below presents our historical results derived from our Condensed Consolidated Financial Statements for the periods indicated.

Net sales increased by ~~$150.1~~$16.2 million, or ~~38.2%~~3.3%, in the ~~third~~first quarter of ~~2022~~2023 to ~~$543.1~~$500.7 million, compared to the ~~third~~first quarter of ~~2021,~~2022, primarily driven by ~~passing through higher feedstock costs, pricing, favorable~~strong improvements in 2023 negotiated Rubber carbon black price. Specialty carbon black product mix was favorable. Those gains were partially offset by lower volume.

Volume in both segments ~~and higher volume~~decreased in ~~Rubber Carbon Black segment, partially offset~~aggregate by ~~the impact of unfavorable foreign currency translation and lower volume in Specialty Carbon Black segment.~~

~~Volume increased by 6.4~~19.7 kmt in the ~~third~~first quarter of ~~2022~~2023 to ~~243.3~~233.5 kmt, compared to the ~~third~~first quarter of ~~2021, primarily~~2022. The decrease in Specialty carbon black was due to ~~higher demand~~the economic slowdown in our lower profitability end markets, while a smaller reduction in Rubber ~~Carbon Black segment, partially offset by lower~~carbon black volume ~~in the Specialty Carbon Black segment.~~was due to short-term demand and customer turnarounds.

Cost of sales ~~increased~~decreased by ~~$134.4~~$2.3 million, or ~~45.7%~~0.6%, to ~~$428.7~~$364.3 million in the ~~third~~first quarter of 2023, compared to the first quarter of 2022, ~~compared to the third quarter of 2021,~~ primarily due to ~~higher raw material~~lower volume and production-associated costs.

Gross profit increased by ~~$15.7~~$18.5 million, or ~~15.9%~~15.7%, to ~~$114.4~~$136.4 million and gross profit per metric ton increased by 25.5% to $584.2, year over ~~year,~~year. The increase was primarily ~~due to pricing~~driven by improved contractual Rubber carbon black price and favorable ~~product mix.~~Specialty carbon black mix and timing benefits. Those were partially offset by lower volume in both segments. Higher margins per ton resulted from price increases in Rubber carbon black to recover environmental and reliability-related capital expenditures and an improved mix in Specialty carbon black.

Selling, general and administrative expenses

Selling, general and administrative expenses ~~increased by $3.1 million, or 5.9%, to $56.0 million~~remained flat in the ~~third~~first quarter of ~~2022,~~2023 compared to the ~~third~~first quarter of ~~2021.~~

~~The increase was primarily driven by higher freight and personal costs, partially offset by the impact of unfavorable foreign currency translation.~~2022.

Provision for income taxes

For the three months ended ~~September 30, 2022,~~March 31, 2023, the Company recognized Income before earnings in affiliated companies and income taxes of ~~$43.4~~$60.5 million, compared to ~~$27.6~~$46.2 million in the three months ended ~~September 30, 2021.~~March 31, 2022. The provision for income taxes was an expense of ~~$11.7~~$18.3 million and ~~$6.7~~$13.8 million for the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and September 30, 2021,~~ respectively. The effective tax rate for the three months ended ~~September 30, 2022,~~March 31, 2023, was ~~27%,~~flat, as compared ~~to 24% for the three months ended September 30, 2021. The increase in our effective tax rate for the three months ended September 30, 2022, relative~~ to the three months ended ~~September 30, 2021, was primarily attributable to the projected earnings mix by geography and tax jurisdiction compared to the prior period.~~

~~Contribution margin and Contribution margin per metric ton (Non-GAAP Financial Measures)~~

~~Contribution margin increased in the third quarter of 2022 by $20.3 million, or 14.4%, to $160.8 million, year over year. Contribution~~March 31, 2022.

Orion Engineered Carbons S.A.

Management’s Discussion and Analysis of Financial Condition and Results of Operation

~~margin per metric ton increased by 11.4% to $660.9 per metric ton in the three months ended September 30, 2022.~~

The increase was primarily driven by pricing measures, favorable product mix in both segments and higher volume in Rubber Carbon Black segment, partially offset by lower volume in the Specialty Carbon Black segment and higher selling, general and administrative costs. Higher margins per ton resulted from price increases to recover environmental and reliability-related capital expenditures.

Adjusted EBITDA (A Non-GAAP Financial Measure)

Adjusted EBITDA increased in the ~~third~~first quarter of ~~2022~~2023 by ~~$14.1~~$17.9 million, or ~~21.2%~~21.5%, to ~~$80.5~~$101.1 million, year over year.

The increase was driven by ~~pricing,~~improved Rubber carbon black price and favorable Specialty carbon black product mix, ~~and higher volume in Rubber Carbon Black segment,~~ partially offset by lower volume in both segments.

Comprehensive Income

Comprehensive income decreased by $25.6 million in the first quarter of 2023 compared to the first quarter of 2022. The activities from the components of Comprehensive income are discussed below:

•$19.1 million of net unfavorable impacts of unrealized changes in foreign currency translation adjustments primarily due to the weakening of the U.S. dollar relative to the euro.

•$14.8 million of net unfavorable impacts related to financial derivative instruments primarily driven by net periodic changes in cross currency and interest rate swaps, and

•$1.5 million of net unfavorable changes in defined pension and other post-retirement benefits.

These decreases were partially offset by $9.8 million of higher net income in the first quarter of 2023 compared to the first quarter of 2022.

Our operations are managed through two reportable segments, Specialty carbon black and Rubber carbon black. We use Segment Adjusted EBITDA as the measure of segment performance and profitability.

The table below presents our segment results derived from our unaudited Condensed Consolidated Financial Statements for the periods indicated.


	Three Months Ended March 31,
	2023		2022		Delta
	(In millions)						%
Specialty carbon black
Net sales	$	162.0	$	177.6	$	(15.6)	(8.8)
Cost of sales	109.9		120.0		(10.1)		(8.4)
Gross profit	$	52.1	$	57.6	$	(5.5)	(9.5)
Volume (kmt)	53.0		65.6		(12.6)		(19.2)
Adjusted EBITDA	$	37.3	$	42.5	$	(5.2)	(12.2)
Adjusted EBITDA margin (%)	23.0		23.9		(0.9)		(3.8)

Rubber carbon black
Net sales	$	338.7	$	306.9	$	31.8	10.4
Cost of sales	254.4		246.6		7.8		3.2
Gross profit	$	84.3	$	60.3	$	24.0	39.8
Volume (kmt)	180.5		187.6		(7.1)		(3.8)
Adjusted EBITDA	$	63.8	$	40.7	$	23.1	56.8
Adjusted EBITDA margin (%)	18.8		13.3		5.5		41.4

Specialty Carbon Black ~~segment and higher selling, general and administrative costs.~~

~~For the nine months ended September 30, 2022 compared to nine months ended September 30, 2021~~

Condensed Consolidated Statement of Operations Data Nine Months Ended September 30, Year-Over Year
2022 2021 Delta
(In millions) %
Net sales $ 1,568.8 $ 1,154.1 $ 414.7 35.9
Cost of sales 1,216.7 842.8 373.9 44.4
Gross profit 352.1 311.3 40.8 13.1
Selling, general and administrative expenses 173.2 160.3 12.9 8.0
Research and development costs 15.9 16.4 (0.5) (3.0)
Gain related to litigation settlement — (82.9) 82.9 (100.0)
Other (income) expenses, net 1.9 1.9 — —
Income from operations 161.1 215.6 (54.5) (25.3)
Interest and other financial expense, net 29.1 30.4 (1.3) (4.3)
Reclassification of actuarial losses from AOCI — 3.6 (3.6) (100.0)
Income before earnings in affiliated companies and income taxes 132.0 181.6 (49.6) (27.3)
Income tax expense 38.3 48.5 (10.2) (21.0)
Earnings in affiliated companies, net of tax 0.3 0.5 (0.2) (40.0)
Net income $ 94.0 $ 133.6 $ (39.6) (29.6)

Net sales ~~increased~~decreased by ~~$414.7~~$15.6 million, or ~~35.9%~~8.8%, ~~in the nine months ended September 30, 2022 to $1,568.8 million,~~ year over year, to $162.0 million for the three months ended March 31, 2023. The net sales decrease was primarily driven ~~primarily~~ by ~~passing through higher feedstock costs, pricing, favorable product mix, and higher~~reduced sales volume in ~~Rubber Carbon Black segment,~~low end markets, partially offset by ~~unfavorable impact of foreign currency translation and lower volume in the Specialty Carbon Black segment.~~favorable product mix.

Volume ~~increased~~decreased by ~~6.7~~12.6 kmt, or 19.2%, year over year, to ~~747.9~~53.0 kmt ~~compared to~~for the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2023. Volumes were lower primarily due to ~~higher demand~~the economic slowdown in ~~Rubber Carbon Black segment,~~all major ends markets and price competition.

Gross profit, for the three months ended March 31, 2023, decreased by $5.5 million, or 9.5%, year over year, to $52.1 million, primarily due to improved price, favorable timing benefits and product mix, partially offset by lower ~~demand in~~sales volume.


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
		(In millions, except share amounts)					(In millions, except share data)
ASSETS	ASSETS					ASSETS
Current assets	Current assets					Current assets
Cash and cash equivalents	Cash and cash equivalents	$	43.1	$	65.7	Cash and cash equivalents	$	76.8	$	60.8
Accounts receivable, net	Accounts receivable, net	403.7		288.9		Accounts receivable, net	335.2		367.8

Inventories, net	Inventories, net	266.7		229.8		Inventories, net	271.0		277.9
Income tax receivables	Income tax receivables	6.9		12.1		Income tax receivables	13.0		5.2
Prepaid expenses and other current assets	Prepaid expenses and other current assets	70.3		68.5		Prepaid expenses and other current assets	61.3		66.8
Total current assets	Total current assets	790.7		665.0		Total current assets	757.3		778.5
Property, plant and equipment, net	Property, plant and equipment, net	732.1		707.9		Property, plant and equipment, net	832.2		818.5
Right-of-use assets	Right-of-use assets	93.3		84.6		Right-of-use assets	99.1		97.6
Goodwill	Goodwill	67.1		78.0		Goodwill	74.9		73.4
Intangible assets, net	Intangible assets, net	26.9		36.3		Intangible assets, net	27.3		27.8
Investment in equity method affiliates	Investment in equity method affiliates	4.4		5.3		Investment in equity method affiliates	5.2		5.0
Deferred income tax assets	Deferred income tax assets	57.8		50.4		Deferred income tax assets	41.1		29.1

Other assets	Other assets	71.1		3.5		Other assets	51.7		58.8
Total non-current assets	Total non-current assets	1,052.7		966.0		Total non-current assets	1,131.5		1,110.2
Total assets	Total assets	$	1,843.4	$	1,631.0	Total assets	$	1,888.8	$	1,888.7

LIABILITIES AND STOCKHOLDERS' EQUITY	LIABILITIES AND STOCKHOLDERS' EQUITY					LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities	Current liabilities					Current liabilities
Accounts payable	Accounts payable	$	178.1	$	195.1	Accounts payable	$	184.4	$	184.1
Current portion of long term debt and other financial liabilities	Current portion of long term debt and other financial liabilities	261.0		151.7		Current portion of long term debt and other financial liabilities	230.2		258.3

Accrued liabilities	Accrued liabilities	43.6		50.9		Accrued liabilities	32.7		44.7
Income taxes payable	Income taxes payable	22.6		16.9		Income taxes payable	36.8		31.3
Other current liabilities	Other current liabilities	42.6		34.1		Other current liabilities	46.7		34.4
Total current liabilities	Total current liabilities	547.9		448.7		Total current liabilities	530.8		552.8
Long-term debt, net	Long-term debt, net	618.2		631.2		Long-term debt, net	664.6		657.0
Employee benefit plan obligation	Employee benefit plan obligation	64.6		74.4		Employee benefit plan obligation	51.6		50.0
Deferred income tax liabilities	Deferred income tax liabilities	86.9		61.8		Deferred income tax liabilities	80.2		70.0
Other liabilities	Other liabilities	95.1		95.2		Other liabilities	100.6		99.5
Total non-current liabilities	Total non-current liabilities	864.8		862.6		Total non-current liabilities	897.0		876.5
Commitments and contingencies	Commitments and contingencies					Commitments and contingencies
Stockholders' equity	Stockholders' equity					Stockholders' equity
Common stock	Common stock					Common stock
Authorized: 65,035,579 and 65,035,579 shares with no par value	Authorized: 65,035,579 and 65,035,579 shares with no par value					Authorized: 65,035,579 and 65,035,579 shares with no par value
Issued – 60,992,259 and 60,992,259 shares with no par value	Issued – 60,992,259 and 60,992,259 shares with no par value					Issued – 60,992,259 and 60,992,259 shares with no par value
Outstanding – 60,815,588 and 60,656,076 shares		85.3		85.3
Treasury stock, at cost, 176,671 and 336,183		(4.7)		(6.3)
Outstanding – 59,416,191 and 60,571,556 shares						Outstanding – 59,416,191 and 60,571,556 shares	85.3		85.3
Treasury stock, at cost, 1,576,068 and 420,703						Treasury stock, at cost, 1,576,068 and 420,703	(35.2)		(8.8)
Additional paid-in capital	Additional paid-in capital	74.0		71.4		Additional paid-in capital	73.9		76.4
Retained earnings	Retained earnings	306.8		217.8		Retained earnings	360.0		319.0
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(30.7)		(48.5)		Accumulated other comprehensive loss	(23.0)		(12.5)
Total stockholders' equity	Total stockholders' equity	430.7		319.7		Total stockholders' equity	461.0		459.4
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	1,843.4	$	1,631.0	Total liabilities and stockholders' equity	$	1,888.8	$	1,888.7


		Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021			2023		2022
		(In millions)					(In millions)
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	94.0	$	133.6	Net income	$	42.3	$	32.5
Adjustments to reconcile Net income to Net cash provided by (used in) operating activities:
Adjustments to reconcile net income to net cash provided by (used in) operating activities:						Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation of property, plant and equipment and amortization of intangible assets and right of use assets	Depreciation of property, plant and equipment and amortization of intangible assets and right of use assets	79.9		74.6		Depreciation of property, plant and equipment and amortization of intangible assets and right of use assets	25.7		27.3

Amortization of debt issuance costs	Amortization of debt issuance costs	1.4		3.8		Amortization of debt issuance costs	0.6		0.4
Share-based incentive compensation	Share-based incentive compensation	5.0		3.3		Share-based incentive compensation	2.1		1.5
Deferred tax (benefit) provision		2.8		(2.7)
Deferred tax provision						Deferred tax provision	1.1		2.6

Foreign currency transactions	Foreign currency transactions	(13.8)		(9.0)		Foreign currency transactions	0.8		(5.6)
Reclassification of actuarial losses from AOCI		—		3.6
Other operating non-cash items, net		(0.7)		(2.4)
Reclassification of actuarial gain from AOCI						Reclassification of actuarial gain from AOCI	(2.2)		—

Changes in operating assets and liabilities, net:	Changes in operating assets and liabilities, net:					Changes in operating assets and liabilities, net:
Trade receivables	Trade receivables	(149.2)		(75.7)		Trade receivables	35.4		(83.6)
Inventories	Inventories	(65.3)		(58.0)		Inventories	5.7		(25.6)
Trade payables	Trade payables	20.0		12.6		Trade payables	1.4		20.7
Other provisions	Other provisions	(2.0)		6.5		Other provisions	(12.7)		(13.7)
Income tax liabilities	Income tax liabilities	13.6		30.9		Income tax liabilities	(4.1)		6.2
Other assets and liabilities, net	Other assets and liabilities, net	(2.4)		0.2		Other assets and liabilities, net	12.0		9.5
Net cash (used in)/provided by operating activities		(16.7)		121.3
Net cash provided by (used in) operating activities						Net cash provided by (used in) operating activities	108.1		(27.8)
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Acquisition of intangible assets and property, plant and equipment		(167.1)		(113.7)
Acquisition of property, plant and equipment						Acquisition of property, plant and equipment	(30.5)		(48.8)

Net cash used in investing activities	Net cash used in investing activities	(167.1)		(113.7)		Net cash used in investing activities	(30.5)		(48.8)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Proceeds from long-term debt borrowings	Proceeds from long-term debt borrowings	35.3		213.4		Proceeds from long-term debt borrowings	1.8		0.9
Repayments of long-term debt	Repayments of long-term debt	(2.3)		(212.3)		Repayments of long-term debt	(0.8)		(0.8)
Payments for debt issue costs		(1.5)		(2.8)

Cash inflows related to current financial liabilities	Cash inflows related to current financial liabilities	201.6		81.4		Cash inflows related to current financial liabilities	30.8		90.4
Cash outflows related to current financial liabilities	Cash outflows related to current financial liabilities	(61.7)		(87.3)		Cash outflows related to current financial liabilities	(63.7)		(37.9)
Dividends paid to shareholders	Dividends paid to shareholders	(3.8)		—		Dividends paid to shareholders	(1.3)		(1.2)
Other financing activities		(0.2)		—
Repurchase of common stock under Stock Repurchase Program						Repurchase of common stock under Stock Repurchase Program	(29.3)		—

Net cash provided by (used in) financing activities	Net cash provided by (used in) financing activities	167.4		(7.6)		Net cash provided by (used in) financing activities	(62.5)		51.4
Increase (decrease) in cash, cash equivalents and restricted cash	Increase (decrease) in cash, cash equivalents and restricted cash	(16.4)		—		Increase (decrease) in cash, cash equivalents and restricted cash	15.1		(25.2)
Cash, cash equivalents and restricted cash at the beginning of the period	Cash, cash equivalents and restricted cash at the beginning of the period	68.5		67.9		Cash, cash equivalents and restricted cash at the beginning of the period	63.4		68.5
Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	(5.5)		(2.8)		Effect of exchange rate changes on cash	0.9		0.7
Cash, cash equivalents and restricted cash at the end of the period	Cash, cash equivalents and restricted cash at the end of the period	46.6		65.1		Cash, cash equivalents and restricted cash at the end of the period	79.4		44.0
Less restricted cash at the end of the period	Less restricted cash at the end of the period	3.5		2.8		Less restricted cash at the end of the period	2.6		2.7
Cash and cash equivalents at the end of the period	Cash and cash equivalents at the end of the period	$	43.1	$	62.3	Cash and cash equivalents at the end of the period	$	76.8	$	41.3


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
		(In millions)					(In millions)
Accounts receivable	Accounts receivable	$	406.2	$	291.5	Accounts receivable	$	338.1	$	370.4
Expected credit losses	Expected credit losses	(2.5)		(2.6)		Expected credit losses	(2.9)		(2.6)
Accounts receivable, net		$	403.7	$	288.9
Accounts receivable, net of expected credit losses						Accounts receivable, net of expected credit losses	$	335.2	$	367.8


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
		(In millions)					(In millions)
Raw materials, consumables and supplies, net	Raw materials, consumables and supplies, net	$	113.3	$	97.1	Raw materials, consumables and supplies, net	$	103.9	$	108.3
Work in process		0.6		0.2

Finished goods, net	Finished goods, net	152.8		132.5		Finished goods, net	167.1		169.6
Total		$	266.7	$	229.8
Inventories, net						Inventories, net	$	271.0	$	277.9


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
		(In millions)					(In millions)
Current	Current					Current
Current portion of Term-Loan	Current portion of Term-Loan	$	3.0	$	3.0	Current portion of Term-Loan	$	3.0	$	3.0
Deferred debt issuance costs - Term-Loan	Deferred debt issuance costs - Term-Loan	(0.7)		(0.8)		Deferred debt issuance costs - Term-Loan	(0.7)		(0.7)
Other short-term debt and obligations	Other short-term debt and obligations	258.7		149.5		Other short-term debt and obligations	227.9		256.0
Current portion of long-term debt and other financial liabilities	Current portion of long-term debt and other financial liabilities	261.0		151.7		Current portion of long-term debt and other financial liabilities	230.2		258.3
Non-current	Non-current					Non-current
Term-Loan	Term-Loan	586.5		636.0		Term-Loan	618.7		613.2
Deferred debt issuance costs - Term Loan		(3.6)		(4.8)
BOC Term-loan		35.3		—
Deferred debt issuance costs - Term-Loan						Deferred debt issuance costs - Term-Loan	(3.6)		(3.7)
China Term loan						China Term loan	49.5		47.5

Long-term debt, net	Long-term debt, net	618.2		631.2		Long-term debt, net	664.6		657.0
Total	Total	$	879.2	$	782.9	Total	$	894.8	$	915.3


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


				Common stock			Treasury shares				Additional paid-in capital		Retained earnings		Accumulated other comprehensive loss				Total									Common stock											Total
(In millions, except per share amounts)				Number	Amount
Balance at January 1, 2022				60,656,076	$	85.3			$	(6.3)			$	71.4			$	217.8					$	(48.5)		$	319.7
Net income				—	—		—				—		32.5		—				32.5
Other comprehensive income, net of tax				—	—		—				—		—		24.9				24.9
Dividends		$0.02	per share	—	—		—				—		(1.2)		—				(1.2)

Share based compensation				—	—		—				1.5		—		—				1.5

Balance at March 31, 2022				60,656,076	85.3		(6.3)				72.9		249.1		(23.6)				377.4
(In millions, except share and per share amounts)																					(In millions, except share and per share amounts)							Number	Amount		Treasury shares		Additional paid-in capital		Retained earnings		Accumulated other comprehensive loss		Total
Balance at January 1, 2023																					Balance at January 1, 2023							60,571,556	$	85.3	$	(8.8)	$	76.4	$	319.0	$	(12.5)
Net income	Net income			—	—		—				—		29.7		—				29.7		Net income							—	—		—		—		42.3		—		42.3
Other comprehensive loss, net of tax	Other comprehensive loss, net of tax			—	—		—				—		—		(10.2)				(10.2)		Other comprehensive loss, net of tax							—	—		—		—		—		(10.5)		(10.5)
Dividends	Dividends	$0.04	per share	—	—		—				—		(2.5)		—				(2.5)		Dividends	$0.02			per share			—	—		—		—		(1.3)		—		(1.3)

Repurchases of Common stock																					Repurchases of Common stock							(1,286,915)	—		(29.3)		—		—		—		(29.3)
Share based compensation	Share based compensation			—	—		—				1.6		—		—				1.6		Share based compensation							—	—		—		2.1		—		—		2.1
Issuance of stock under equity compensation plans	Issuance of stock under equity compensation plans			93,189	—		1.6				(2.4)		—		—				(0.8)		Issuance of stock under equity compensation plans							131,550	—		2.9		(4.6)		—		—		(1.7)
Balance at June 30, 2022				60,749,265	$	85.3	$	(4.7)			$	72.1	$	276.3	$	(33.8)			$	395.2
Net income				—	—		—				—		31.8		—				31.8
Other comprehensive income, net of tax				—	—		—				—		—		3.1				3.1
Dividends		$0.02	per share	—	—		—				—		(1.3)		—				(1.3)
Balance at March 31, 2023																					Balance at March 31, 2023							59,416,191	85.3		(35.2)		73.9		360.0		(23.0)		461.0

Share based compensation				—	—		—				1.9		—		—				1.9
Issuance of stock under equity compensation plans				66,323	—		—				—		—		—				—
Balance at September 30, 2022				60,815,588	$	85.3	$	(4.7)			$	74.0	$	306.8	$	(30.7)			$	430.7




Balance at January 1, 2021	60,487,117	$	85.3	$	(8.5)	$	68.5	$	84.4	$	(48.7)	$	181.0
Net income	—	—		—		—		23.5		—		23.5
Other comprehensive loss, net of tax	—	—		—		—		—		(2.7)		(2.7)


Share based compensation	—	—		—		1.0		—		—		1.0
Issuance of stock under equity compensation plans	103,409	—		1.2		(1.2)		—		—		—
Balance at March 31, 2021	60,590,526	85.3		(7.3)		68.3		107.9		(51.4)		202.8
Net loss	—	—		—		—		89.1		—		89.1
Other comprehensive income, net of tax	—	—		—		—		—		9.0		9.0


Share based compensation	—	—		—		1.2		—		—		1.2

Balance at June 30, 2021	60,590,526	$	85.3	$	(7.3)	$	69.5	$	197.0	$	(42.4)	$	302.1
Net income	—	—		—		—		21.0		—		21.0
Other comprehensive loss, net of tax	—	—		—		—		—		(11.5)		(11.5)


Share based compensation	—	—		—		1.1		—		—		1.1
Issuance of stock under equity compensation plans	42,776	—		0.8		(0.8)		—		—		—
Balance at September 30, 2021	60,633,302	$	85.3	$	(6.5)	$	69.8	$	218.0	$	(53.9)	$	312.7


Table of Contents—Notes
Note A.	Organization, Description of the Business and Summary of Significant Accounting Policies	7
Note B.	Accounts Receivable	7
Note C.	Inventories	7
Note D.	Debt and Other Obligations	87
Note E.	Financial Instruments and Fair Value Measurement	98
Note F.	Employee Benefit Plans	1110
Note G.	Accumulated Other Comprehensive Income (Loss)	1211
Note H.	Earnings Per Share	1311
Note I.	Income Taxes	1311
Note J.	Commitments and Contingencies	1312
Note K.	Financial Information by Segment	1413


		September 30, 2022				December 31, 2021				Balance Sheet Classification		March 31, 2023				December 31, 2022				Balance Sheet Classification
		Notional Amount		Fair Value		Notional Amount		Fair Value				Notional Amount		Fair Value		Notional Amount		Fair Value
		(In millions)										(In millions)
Assets	Assets										Assets
Derivatives designated as hedges:	Derivatives designated as hedges:										Derivatives designated as hedges:
Cross currency swaps	Cross currency swaps	$	197.0	$	59.8	$	197.0	$	4.3	Other financial assets (non-current)	Cross currency swaps	$	197.0	$	40.9	$	197.0	$	46.6	Other financial assets (non-current)
Interest rate swaps	Interest rate swaps	268.1		7.5		—		—		Other financial assets (non-current)	Interest rate swaps	299.1		8.7		293.3		9.6		Other financial assets (non-current)
Total	Total	$	465.1	$	67.3	$	197.0	$	4.3		Total	$	496.1	$	49.6	$	490.3	$	56.2

Liabilities
Derivatives designated as hedges:

Interest rate swaps		—		—		311.5		8.6		Other liabilities (non-current)
Total		$	—	$	—	$	311.5	$	8.6


	Effect of Financial Instruments
	Three Months Ended Sep 30,
	Gain (Loss) Recognized in AOCI				Gain (Loss) Reclassified from AOCI to Income				Income Statement Classification
	2022		2021		2022		2021
	(In millions)
Derivatives designated as hedges:
Cross currency swaps	$	9.2	$	(3.2)	$	0.4	$	—	Interest and other financial expense, net
Interest rate swaps	6.2		0.3		—		—		Interest and other financial expense, net

Total	$	15.4	$	(2.9)	$	0.4	$	—




Balance at January 1, 2021	$	(26.5)	$	(13.5)	$	(8.7)	$	(48.7)
Other comprehensive loss before reclassifications	(4.7)		0.9		—		(3.8)
Income tax effects before reclassifications	(0.4)		(0.3)		—		(0.7)
Amounts reclassified from AOCI	—		—		1.2		1.2
Income tax effects on reclassifications	—		—		(0.4)		(0.4)
Currency translation AOCI	—		0.6		0.4		1.0
Balance at March 31, 2021	$	(31.6)	$	(12.3)	$	(7.5)	$	(51.4)
Other comprehensive income before reclassifications	7.2		1.1		—		8.3
Income tax effects before reclassifications	0.5		(0.3)		—		0.2
Amounts reclassified from AOCI	—		—		1.2		1.2
Income tax effects on reclassifications	—		—		(0.4)		(0.4)
Currency translation AOCI	—		(0.2)		(0.1)		(0.3)
Balance at June 30, 2021	(23.9)		(11.7)		(6.8)		(42.4)
Other comprehensive income (loss) before reclassifications	(10.4)		(3.2)		—		(13.6)
Income tax effects before reclassifications	(0.3)		1.1		—		0.8
Amounts reclassified from AOCI	—		—		1.2		1.2
Income tax effects on reclassifications	—		—		(0.4)		(0.4)
Currency translation AOCI	—		0.3		0.2		0.5
Balance at September 30, 2021	$	(34.6)	$	(13.5)	$	(5.8)	$	(53.9)


Condensed Consolidated Statement of Operations Data		Three Months Ended September 30,				Year-Over Year
										Three Months Ended March 31,				Year-Over Year
		2022		2021		Delta				2023		2022		Delta
		(In millions)						%		(In millions)						%
Net sales	Net sales	$	543.1	$	393.0	$	150.1	38.2	Net sales	$	500.7	$	484.5	$	16.2	3.3
Cost of sales	Cost of sales	428.7		294.3		134.4		45.7	Cost of sales	364.3		366.6		(2.3)		(0.6)
Gross profit	Gross profit	114.4		98.7		15.7		15.9	Gross profit	136.4		117.9		18.5		15.7
Selling, general and administrative expenses	Selling, general and administrative expenses	56.0		52.9		3.1		5.9	Selling, general and administrative expenses	57.7		57.5		0.2		0.3
Research and development costs	Research and development costs	4.5		5.7		(1.2)		(21.1)	Research and development costs	6.2		5.5		0.7		12.7

Other (income) expenses, net	Other (income) expenses, net	0.3		(0.2)		0.5		(250.0)	Other (income) expenses, net	(1.0)		0.3		(1.3)		(433.3)

Income from operations	Income from operations	53.6		40.3		13.3		33.0	Income from operations	73.5		54.6		18.9		34.6
Interest and other financial expense, net	Interest and other financial expense, net	10.2		11.5		(1.3)		(11.3)	Interest and other financial expense, net	15.2		8.4		6.8		81.0
Reclassification of actuarial losses from AOCI		—		1.2		(1.2)		(100.0)
Reclassification of actuarial gain from AOCI									Reclassification of actuarial gain from AOCI	(2.2)		—		(2.2)		N/A
Income before earnings in affiliated companies and income taxes	Income before earnings in affiliated companies and income taxes	43.4		27.6		15.8		57.2	Income before earnings in affiliated companies and income taxes	60.5		46.2		14.3		31.0
Income tax expense	Income tax expense	11.7		6.7		5.0		74.6	Income tax expense	18.3		13.8		4.5		32.6
Earnings in affiliated companies, net of tax	Earnings in affiliated companies, net of tax	0.1		0.1		—		—	Earnings in affiliated companies, net of tax	0.1		0.1		—		—
Net income	Net income	$	31.8	$	21.0	$	10.8	51.4	Net income	42.3		32.5		9.8		30.2
Other comprehensive income (loss), net of tax									Other comprehensive income (loss), net of tax
Foreign currency translation adjustments									Foreign currency translation adjustments	(7.3)		11.8		(19.1)		(161.9)
Net gains (losses) on derivatives									Net gains (losses) on derivatives	(1.8)		13.0		(14.8)		(113.8)
Defined benefit plans, net									Defined benefit plans, net	(1.4)		0.1		(1.5)		(1,500.0)
Total other comprehensive (loss) income, net of tax									Total other comprehensive (loss) income, net of tax	(10.5)		24.9		(35.4)		(142.2)
Comprehensive income									Comprehensive income	$	31.8	$	57.4	$	(25.6)	(44.6)


Issuer Purchases of Equity Securities
Period	Total number of stock purchased	Average price paid per stock		Total dollar value of stocks purchased as part of publicly announced plans ($ in millions)		Maximum approximate dollar value of stocks yet be purchased ($ in millions)



January 1 — 31, 2023	411,351	$	19.34	$	8.0
February 1 — 28, 2023	251,177	22.69		5.7
March 1 — 31, 2023	624,387	25.09		15.6
Total	1,286,915			$	29.3	$	16.4


Exhibit Number		Description

10.1	†	Orion Engineered Carbons S.A. 2023 Omnibus Incentive Compensation Plan (incorporated by reference to Exhibit A to the Definitive Proxy Statement on Schedule 14A filed on March 27, 2023).

10.2	†	Orion Engineered Carbons S.A. 2023 Non-Employee Director Plan (incorporated by reference to Exhibit B to the Definitive Proxy Statement on Schedule 14A filed on March 27, 2023).

31.1	*	Certification of Principal Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act.

31.2	*	Certification of Principal Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act.

32.1	**	Certification of the Principal Executive Officer pursuant to 18 U.S.C. Section 1350.

32.2	**	Certification of the Principal Financial Officer pursuant to 18 U.S.C. Section 1350.

101.INS		Inline XBRL Instance Document.

101.SCH		Inline XBRL Taxonomy Extension Schema.

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase.

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase.

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase.

101.DEF		Inline XBRL Taxonomy Extension Definition Document.

104.0		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

*	Filed herewith
**	Furnished herewith
†	Management compensatory arrangement


	ORION ENGINEERED CARBONS S.A.

~~November 3, 2022~~May 4, 2023	By	/s/ Jeffrey Glajch
		Name: Jeffrey Glajch
		Title: Chief Financial Officer