Orion 2025 Q1 Earnings Misses Targets as Net Income Falls 65.9%

Orion (OEC) reported its fiscal 2025 Q1 earnings on May 07th, 2025. Orion's earnings fell short of expectations, with adjusted EPS landing at $0.22 compared to the anticipated $0.53. The company revised its guidance, projecting adjusted EBITDA of $270-310 million and adjusted EPS of $1.20-$1.70, maintaining its free cash flow guidance between $40-70 million. The Specialty Carbon Black segment saw a decline, while Rubber Carbon Black showed an increase in volume, reflecting mixed performance across segments.

Revenue

Orion's total revenue decreased by 5.0% to $477.70 million in 2025 Q1, down from $502.90 million in 2024 Q1. The Specialty Carbon Black segment experienced a decrease to $160.7 million, while the Rubber Carbon Black segment reported revenue of $317.0 million, reflecting the varied performance within Orion's business segments.

Earnings/Net Income

Orion's EPS declined 65.2% to $0.16 in 2025 Q1 from $0.46 in 2024 Q1. Meanwhile, the company's net income declined to $9.10 million in 2025 Q1, down 65.9% from $26.70 million reported in 2024 Q1. The EPS performance indicates significant challenges for Orion.

Price Action

The stock price of Orion has dropped 3.11% during the latest trading day, has dropped 6.73% during the most recent full trading week, and has edged down 2.09% month-to-date.

Post-Earnings Price Action Review

Over the past five years, the strategy of acquiring Orion (OEC) shares following a quarter of increased revenue and holding for 30 days has produced a return of 7.41%, significantly underperforming the benchmark by 76.68%. Despite a compound annual growth rate (CAGR) of 1.45%, the strategy experienced a maximum drawdown of -14.05% and a Sharpe ratio of 0.17, indicating modest risk-adjusted returns and considerable volatility. This suggests that while the strategy has yielded positive returns, it has been fraught with substantial risk and volatility, failing to match broader market performance.

CEO Commentary

“First quarter results were affected by costs from unplanned plant downtime, as well as timing items including raw material pass-throughs. Collectively, these factors masked an otherwise much stronger underlying business performance. The normalization of timing items coupled with ongoing operational improvements set up for a sequentially better second quarter, absent any pronounced deterioration in the macro backdrop,” said Corning Painter, Chief Executive Officer. Painter also highlighted the expected net benefit from auto sector tariffs on imported replacement tires, while cautioning that broader tariffs could lead to a global economic slowdown, emphasizing the company's readiness to navigate the situation.

Guidance

We are adjusting our guidance ranges slightly, to factor in first quarter results. Our revised Adjusted EBITDA range is $270 million – $310 million and the corresponding Adjusted EPS range is $1.20 – $1.70. We are reaffirming our prior free cash flow guidance range at $40 million – $70 million.

Additional News

Orion S.A. has declared an interim quarterly dividend for Q3 2025, with a payment of $0.0207 per common share scheduled for July 2, 2025, to shareholders of record as of June 11, 2025. Additionally, Orion signed a long-term supply agreement with Contec S.A. for tire pyrolysis oil to produce circular carbon black, diversifying its TPO sources. Orion was also recognized by the European Commission's 'Innovation Radar' for producing circular carbon black from 100% pyrolysis oil, highlighting its commitment to sustainable manufacturing practices.