Greetings. Welcome to the Orion S.A. Third Quarter 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to Mr. Chris Kapsch, Vice President of Investor Relations. Thank you, Chris. You may begin.

Thank you, Dylan. Good morning, everyone. This is Chris Kapsch, VP of Investor Relations at Orion, and welcome to our discussion. These are our appointees, Chief Executive Officer and John Puckett, our Chief Financial Officer. We issued our third quarter results yesterday after the markets closed, and we have posted a slide presentation to the Investor Relations section of our website. We will be referencing this deck during the call. Before we begin, we are once again obligated to remind you that some of the comments made on today's call are forward-looking statements. These statements are subject to the risks and uncertainties described in the company's filings with the Securities and Exchange Commission, and our actual results may differ from those described during the call. In addition, all forward-looking statements are made as of today, November 5th, 2026. Orion is not obligated to update any forward-looking statements based on new circumstances or revised expectations. Any non-GAAP financial measures discussed during this call are reconciled to the most directly comparable GAAP measures in the tables attached to our press release and or quarterly earnings deck. Any non-GAAP financial measures presented in these materials should not be considered as alternatives to financial measures required by GAAP. With that, I'll turn the call over to Corning.

Good morning, and thank you all for joining us. Cutting right to the chase, on slide three of the deck, We generated $46 million of free cash flow in the third quarter. Upfront, we're flagging a benefit in Q3 results associated with timing of our European emission allowances, which were only finalized and issued during Q3, as we indicated would be the case earlier this year. The delay in recognizing these credits resulted from the EU having missed their own statutory deadline to agree on new industry benchmarks. These are now established and set for the next five years. Because allowance credits are issued on an annual basis, their recognition in Q3 results had an outsized benefit this quarter. It's clear to look at our year-to-date adjusted EBITDA of $171 million, which largely balances out Q3 with the absence of these belated credits earlier in the year. The net of all of this has always been in our full year of 2026 adjusted EBITDA guidance. Importantly, all of this with free cash flow, which was excellent in the and accomplishment considering the elevated oil prices. At quarter's end, our net leverage was 4.1, down 30 basis points from last quarter. Reflecting our performance today, we are increasing the midpoint of our adjusted EBITDA guidance range. We're also reaffirming our full year free cash flow guidance, implying positive free cash flow against what we will represent, what we believe will represent raw earnings in spite of The recent oil price volatility. Looking forward, and though too early to establish formal 2027 guidance, we do expect to deliver higher adjusted EBITDA next year, as well as positive free cash flow. We confidently make this statement based on numerous actions we are taking to improve results, highlighted on slide four of the deck. We view today's uncertain backdrop as creating opportunity for companies that are nimble, and we are leveraging our agility to do just that for Orion. First on this list is safety. We have a deep safety culture at Orion. Through October, we are on track for another year of industry-leading safety performance, including no loss of the Orion organization for their vigilance on this core principle. We're also advancing on quality. and many more. The IACF certification is the gold standard for automotive in verifying quality management systems. In our case, this recognition has also been a catalyst to optimize the customer mix served out of this facility as wire and cable and battery customers are essentially competing for product allocation. More broadly, We have executed on a variety of actions that are improving our regional competitiveness. A procurement initiative focused on feedstocks is a prime example. The tumultuous backdrop with oil price volatility has created many cross currents and relative disparities across a variety of feedstock categories and supply chains. At Orion, we are turning this dynamic into opportunity. We have a sharp regional focus on sourcing, including the qualification of alternative feedstocks, which is yielding not just procurement savings but yield improvements and net productivity as well. These efforts are a growing contributor to our P&L, especially in this time of global supply chain disruption, and we expect to build on this in 2027. Within operations, we know we have significant margin expansion potential. and our Manufacturing Excellence Program continues to expand. We are replicating early successes at select plants to other manufacturing sites globally and anticipate broader efficiency gains to contribute to our profit recovery story. And as mentioned last quarter, improving our overall plant reliability is an enabler for the ongoing structural improvements in our working capital. With these improvements, We still expect positive free cash flow this year in spite of significantly higher oil prices from a year ago. We continue to identify fresh opportunities to improve overall free cash flow, which will be directed towards debt reduction. One lever to improve free cash flow conversion, of course, is capital expenditures, and you should expect further prioritization of our capex spending and reliability at our highest contributing assets. Another lever is working capital. Here, a recalibration of both our payment terms and sustained lower inventory levels have been important factors in driving improvement. We're also taking a fresh look at cash tax optimization. Collectively, all of these efforts are gaining traction, and we expect further impact in 2027. Finally, we continue to evaluate our production network for additional opportunities. Looking at the industry backdrop, tire imports to the U.S. and Europe are down. Today's duties are having an impact and potentially more are coming. For instance, the EU announced incremental duties related to the anti-subsidation investigation of Chinese tires proposed to effect next month. In the U.S., the United Steelworkers Union has petitioned for additional relief from tire imports under Section 201. and even the recent surge in Chinese feedstock and carbon black costs could help these dynamics. But to be clear, we are focused on our self-help measures that we control. With that high-level overview, let me turn the call over to John to discuss Q3 results in more detail.

Thanks, Corning. On slide five, let me call your attention to the takeaway at the bottom of this page. have we as we've reiterated and let me be clear here our entire organization is focused on improving cash flow and our number one financial priority right now is generating cash for the purpose of debt reduction and deleveraging so we are extremely pleased with our 46 million dollars of free cash flow generation in the quarter especially considering full price volatility clearly our working capital improvement initiatives are making a difference and moving the needle and that is evident in these which also improved 4.1 times from 4.4 times last quarter. Back to the top of the slide, adjusted EBITDA was $67 million during Q3, up 16% year over year. As Corning mentioned, our adjusted EBITDA includes the annual EU emission allowances that we received in the third quarter. The nature of the EU emission allowances requires that we recognize the allowances upon receiving them from the EU, rather than accruing for them throughout the year. As this annual allowance is tied directly to our European plant production levels, which is essentially run 24-7, and for which an inherent timing mismatch between . This mismatch approximately $17 million of that benefit to our adjusted EBITDA in Q3. To put the quarterly timing impact in perspective, if the benefit of the annual EU emissions allowances were recognized more evenly throughout the year, our third quarter adjusted EBITDA would have been closer to $50 million, while our first half adjusted EBITDA would have been about $10 million higher. Importantly, our year-to-date adjusted EBITDA of $171 million is not materially affected by this timing difference. Similarly, our implied fourth quarter guidance would be about $5 million higher absent the timing impact associated with the recognition of these allowances. This is purely a P&L timing issue and has no impact on our pre-match flow. On Flexits, our specialty segment adjusted EBITDA of $25 million increased 18% year-over-year in Q3, primarily on favorable mix, with strength from premium grades serving the coatings, and the wire and cable markets, coupled with a combined effect of balance and pass-through effects, especially demand is sequentially decreasing and declined 8% on a year-over-year basis. Western region demand softened, most notably in polymers and distribution channels. We believe customers are destocking in these regions as their procurement priorities have shifted from security of supplies have built in high-cost inventory as the Middle East conflict continues to create volatility in oil-based feedstocks. Year-to-date specialty segment adjusted EBITDA of nearly $92 million is up approximately $25 million, or 37%, compared to the prior year, with favorable mix and the pass-through effect of raw materials representing the largest drivers of year-over-year improvement. Just a little bit of forward-looking commentary here.

We expect modest specialty results in Q4 on more pronounced fourth quarter seasonality and in docking.

We also expect heavier-than-normal turnaround activity and associated costs in Q4 as we move to turnarounds to later in the year to take advantage of demand strength earlier in the year. Regarding 2027, we have several levers to drive specialty segment performance. These include upgrading our product mix, sourcing, and selling our production initiatives. On slide seven, our rubber segments adjusted EBITDA of $41 million, increased 15% year-over-year in Q3. The combined effect of emission allowance timing and the pass-through effect from higher raw materials more than offset lower annual contract pricing and unfavorable regional mix. Rubber volumes declined 4% year-over-year, with slightly higher demand in EMEA, more than offset by declines in both the Americas and APAC. The improvement in MEF was consistent with resilience exhibited in that region's replacement tire market, whereas tire build rates in North America have yet to recover. A bit of additional forward-looking commentary here. We expect subdued rubber segment results in Q4, owing primarily to lower year-over-year contract pricing and more pronounced fourth quarter seasonality as well as turnaround activity and related costs. Regarding 2027, we see multiple areas to drive segment performance, including further improvements in plant reliability, benefits from feedstock sourcing initiatives, and continued strength in the spot market, particularly in North America. Slide 8 summarizes many of the points we've already made on free cash flow, working capital, and our financial position. Capital expenditures were lower significantly in Q3, contributing favorably to our cash flow performance during the quarter. We finished the quarter with net debt of $918 million and a 4.1x leverage ratio based on the trailing 12-month adjusted EBITDA. Total liquidity was $193 million at quarter zone. We further enhanced our liquidity after the third quarter ended when we unwound favorable cross-currency and interest rate swaps related to our European term loans, taking advantage of favorable market conditions and monetized $27 million embedded in the instruments. This decision highlights our proactive approach to risk management and our balance sheet focus.

With that, I'll turn the call back to Warren. Thanks, John. On slide nine, we share updated guidance metrics, including the narrowing of our adjusted EBITDA guidance towards the high end of our previous range. Our free cash flow guidance remains unchanged, although we would have lifted the lower end of that range if not who remain on track for $90 million of capital expenditures in 2026, a $70 million reduction versus last year. Finally, the implied Q4 EBITDA expectations reflects above normal seasonality in both segments. Turning to slide 10, to sum it up, we've delivered $171 million of adjusted EBITDA year to date. We delivered on free cash flow and we did this in spite of the turmoil in the world. We are determined that 2026 will be our trough year and that in 2027 we will return to growth. We're not relying on the market. We are taking action on things we control to drive improvement going forward. We appreciate your interest in joining us today. And with that, Dylan, let's open up the call for Q&A. Thank you.

Thank you. We will now be conducting a question and answer session. We ask that you please limit yourself to one question and one follow-up. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Our first question comes from Josh Spector with UBS. Please go ahead.

Hi, guys. It's Chris Perrella on for Josh. As I think about the fourth quarter there, can you just, you know, is it further destocking in both segments that's driving the weakness, you know, absent the EU credits or... Is pricing also down? Is there margin compression that you're seeing in specialty? Can you just go a little bit deeper there? And then I have a follow up on inventory.

Sure. Yeah. No, it's really just if you put yourself in the shoes of a master batch company or another manufacturer downstream from us, and maybe a lot of your feedstocks are oil based in price, nobody really wants to have a lot of inventory. I mean, what happened the last two days would be great if you had some inventory. Disastrous, excuse me, if you had inventory, right? The price just went down. You bought it when it's expensive. Now it's cheaper. I think people are just very cautious about wanting any inventory, whereas maybe in Q2, people were really worried about supply and what's going to happen and this and that. It's not a margin issue for us. Customers signaling that they are very cautious. all along, giving us very short forecast periods and expressed not a lot of clarity about further out. But our sensitive customers are there pretty cautious about November and where they want to end in December.

Yeah, and Chris, I would just add to that, too, is turnaround timing is a pretty big factor in our fourth quarter as well. And that was intentional on our part. We pushed turnarounds to the end of the year just and just to take advantage of demand strength that was earlier in the year. And so that's, you know, that's a pretty significant impact. And the other element that we've talked about all year is the annual contract pricing and rubber. And that's, you know, consistent with prior quarters. That's about a $10 million impact on price.

Yeah, so there's that margin, but that's like continued. There's nothing new there. And if I take you back to earlier this year, like when you did see a surge in demand when the war began, I think we all had the concern at some point though the consumer is going to run out of gas right so to speak and we wanted to like make the product why the going's good because you know at some point there was a concern that demand would be destroyed so we pushed it back and all in all we feel pretty good about that is the uh is the turnaround impact evenly split between the two segments and then just to follow up on the inventory

How low are they versus normal, and can you move them? I know you're looking to generate cash. Is there more water to be wrung from that sponge?

Yeah, on the turnaround timing, it's more weighted towards specialty than to rubber. It's probably 75 specialty, 25 rubber. and then on the inventory, yeah, that's going to be a little bit mixed geographically. There's some areas of the world where we can take a little more, I don't know, adjust safety stocks down and that's probably in Europe. In the Americas where we've seen a lot of spot demand, we'd probably be a little more cautious there.

Okay, thank you.

Thanks, Chris. Our next question comes from John Roberts with Mizzou. Please go ahead.

Hi, this is Saurabh for John for Roberts. Thanks for taking my question. So I guess first, can you parse out the impact on EBITDA from the raw material pass-through and the EU allowances?

You know, we just spiked out the allowances, and that's about the $17 million. and the split just so you can do it sort of is it's about 30% in specialty and 70% in rubber. And then we've laid out the combined impact. So I think you can parse out the rest of the math from that.

Okay, got it. And on the contract negotiations for next year, like can you provide us some hints and color on like what are you seeing for next year? Any encouragement from the customers?

Yeah, sure. Let me speak to that. So, first of all, it's commercially sensitive, so I can only kind of make high-level comments. Also, let's say if our total rubber sales into the tire industry, we're probably about 50% contracted. Keep in mind, we have one large customer, and there's really no negotiation with them. You might have heard some comments earlier this week from a competitor. talking about tire imports down, manufacturing hasn't moved that much. I want to make it clear, we are not resigned on that subject, and we are not negotiating for next year. We are pushing hard on what's a fair price, the right price. Look at all the spot demand that's under investment. We think from some people in maintenance, this is what the industry needs, and we are pushing hard for that. I'd also say I'm very focused on the companies with whom we can be partners. And in some cases, if our expectations are too far apart, you know what, we can just hold back some and play the spot market. I think that's going to be pretty robust next year.

Thank you. Our next question comes from Daniel Rizzo with Jefferies. Please go ahead.

Hey, thanks for taking the questions. Just to follow up on what you just said, is the spot market in the U.S. relatively large? I thought it was mostly contract, or I should say in North America, really.

You're absolutely right. It is traditionally contracted, but the catch is if somebody has unplanned downtime and they can't fulfill it, then you see people come out. in Europe you see more where there's people who are relying on let's say imported carbon black maybe at the very bottom not really tire manufacturers very bottom you see some of that in the U.S. and so for example when Chinese prices spiked we definitely saw some people you know now looking for new sources of supply but by and large in North America we attribute this to unplanned downtime by others.

Okay and then Given the productivity you've done and, you know, the reliability you've created, how should we think about incremental margins when recovery eventually occurs? Would it be, I mean, how much, I would assume it would be higher, but how much, and also with this all on the same lines, how should we think about mid-cycle margins in both segments, really?

So, I mean, I think our rule of thumb, you know, on incremental, what are incremental margins, and Robert Hrivnak. And then as far as mid-cycle margins, we really think of it as maybe mid-cycle EBITDA. And, you know, we anticipate...

and then if you can get back to a more normalized production level and import level balance in the Americas, you're going to be able to step up significantly and I think that's sized in the neighborhood of $50 to $100 million so you can step up over a period of time.

The key point on mid-cycle also is kind of unique in the tire market in that so much of tire demand is replacement Tire sales in North America, Europe, it's good. Right down a little bit in trucking because of trucking activity, but passenger car, light truck, it's fine. The whole issue has been the level of imports there. So like what we really need in that part is sort of a little bit of reversion towards the norm on that as we move forward from where we are today, rather than like dramatically, you know, replacement tires, that's a consumable and people are driving.

I'm sorry, you broke up a few times. So just with the tariffs in the U.S. and the anti-dumping in the EU, that's having minimal effect as of right now?

Well, it's having an effect in that you can see a drop in the amount of imported tires. Really quite marked. You see that. You don't yet see really a pickup in tire manufacturing. So I would relate that to, look, we're in an inventory drawdown. The comments we said earlier, people are destocking. Nobody wants a lot of inventory. Perhaps in anticipation of expected tariffs or duties, people imported extra earlier. I don't think we're really going to see that at this point until into next year. But you definitely see a reduction in entire imports.

Okay. Thank you very much. Our next question comes from John Roberts with Mizzou Securities. Please go ahead.

Thank you.

Oil prices have come off hard in the last couple of days, both in the spot market and the 12-month Brent futures. Do you think that's going to exacerbate the customer destocking that you highlighted you think is already underway?

I think volatility makes people cautious. You know, at a lower number, maybe people will start buying again, though. But you're absolutely right. Like we started working on this script a couple of days ago. You know, current prices, yesterday's prices, it's a pretty dynamic time. And that's part of our point. You know, it's for the agile to make the most of this. And so when they turn on, fine, we'll be ready for it. And all these cross currents and raw materials and what's better, what's worse, like we're just trying to make the most of that in this pretty dynamic time we're in. But I think if oil prices come down, that's going to be good for the consumer. I think ultimately that would be a positive.

Thank you.

We have reached the end of our question and answer session. I would now like to turn the floor back over to Corning Painter for closing comments.

Well, thank you all for your time and your interest today. We're going to be engaging with investors over the next several weeks. We have an NYSE event coming up and a small cap conference in Dallas. And we look forward to being able to say more about our 2027 and our fourth quarter results call in February. Thanks very much and have a good rest of your day.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.