34
April 2017 €611m Equivalent Term Loan B Public Lender Presentation
April 2017
€611m Equivalent Term Loan B
Public Lender Presentation
2
Disclaimer
This presentation has been prepared solely for informational purposes from information supplied by or on behalf of Orion Engineered Carbons S.A. (the "Company"), and is being furnished by Goldman Sachs Bank USA (“Goldman Sachs” or the "Arranger") to you in your capacity as a prospective lender (the "Recipient") in considering the proposed transactions described in the presentation (the "Facilities"). As used herein "Evaluation Material" refers to this presentation and any other information regarding the Company or the Facilities furnished or communicated to the Recipient by or on behalf of the Company in connection with the Facilities (whether prepared or communicated by the Arranger or the Company, their respective advisors or otherwise). The Recipient acknowledges that the Evaluation Material may be confidential, sensitive and proprietary information of the Company and agrees for the benefit of the Company that it shall use the Evaluation Materials solely for the purposes of considering its possible participation in the Facilities and that it shall keep the Evaluation Material confidential in accordance with the Credit Agreement (to the extent Recipient is party thereto) and any other confidentiality arrangement previously entered into between the Recipient and the Company (including any click-through agreements). This presentation may contain forward-looking statements with respect to our financial condition, results of operations and business. Forward-looking statements are statements of future expectations and are based on management's current expectations and assumptions believed by the Company to be reasonable at the time made (it being recognized by the Recipients that such forward-looking statements are not to be viewed as facts and are subject to significant uncertainties and contingencies many of which are beyond the Company’s control, that no assurance can be given that any particular forward-looking statements or projections will be realized, that actual results may differ from projected results and that such differences may be material). Forward-looking statements may include, among others, statements concerning the potential exposure to market risks, statements expressing management's expectations, beliefs, estimates, forecasts, projections and assumptions and statements that are not limited to statements of historical or present facts or conditions. We present certain financial measures that are not recognized by International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”). These non-IFRS measures are Contribution Margin, Contribution Margin per Metric Ton, Adjusted EBITDA, Net Working Capital and Capital Expenditures. Adjusted EBITDA, Contribution Margins and Net Working Capital are not measures of performance under IFRS and should not be considered in isolation or construed as substitutes for revenue, consolidated profit (loss) for the period, operating result (EBIT), gross profit and other IFRS measures as an indicator of our operations in accordance with IFRS. For a reconciliation of these non-IFRS financial measures to the most directly comparable IFRS measures, see the Company’s public filings. The Recipient acknowledges and agrees that (i) the Evaluation Material is provided to the Recipient for informational purposes only, (ii) the Arranger, the Company, the Company’s direct and indirect equity holders and their respective affiliates and their respective partners, directors, officers, employees, agents, counsel, auditors, advisors and other representatives (collectively, "Representatives") bear no responsibility (and shall not be liable) for the accuracy or completeness (or lack thereof) of the Evaluation Material, any information contained therein or any related marketing materials, (iii) no representation regarding the Evaluation Material is made by the Arranger or any of its affiliates, (iv) neither the Arranger nor any of its affiliates has made any independent verification as to the accuracy or completeness of the Evaluation Material, (v) the Arranger, the Company, the company’s direct and indirect equity holders and their respective affiliates and Representatives shall have no obligation to update or supplement any Evaluation Material or otherwise provide additional information and (vi) the Arranger, the Company, the Company’s direct and indirect equity holders and their respective affiliates and Representatives shall not have any liability related to the use of the Evaluation Material or any related marketing materials by any Recipient or any of its Representatives. The sole purpose of this presentation is to provide background information to assist prospective lenders in obtaining a general understanding of the business of the Company and its subsidiaries and the outlook of the Company and its subsidiaries. This presentation contains only summary information and does not purport to and is not intended to contain all of the information that may be required to evaluate, and should not be relied upon in connection with, any potential transaction. It is not intended to be (and should not be used as) the sole basis of any credit analysis or other evaluation, and it should not be considered as a recommendation by any person for you to participate in any potential transaction. Neither the Company nor Goldman Sachs undertakes, or expects, to update, correct or otherwise revise this document at any time. Any proposed terms in this document are indicative only and remain subject to contract. This presentation is not intended to create legal relations and is not an offer or commitment with respect to any loans, securities or other financing and creates no obligation or liability on Goldman Sachs to underwrite, arrange, sell, buy, participate in or syndicate any loans, securities or other financing. Neither the Company nor Goldman Sachs provide legal, accounting or tax advice and you are strongly advised to consult your own independent advisers on any legal, tax or accounting issues relating to the Evaluation Materials. Goldman Sachs is not acting as the Recipient’s financial adviser nor in a fiduciary capacity in respect of the proposed transaction or any other transaction with the Recipient. Goldman Sachs may from time to time have positions in, and buy or sell, securities and investments identical or related to those mentioned in this presentation and may possess or have access to non-public information relating to matters referred to in this presentation which Goldman Sachs does not intend to disclose. No person shall be treated as a client of Goldman Sachs, or be entitled to the protections afforded to clients of Goldman Sachs, solely by virtue of having received this document.
3
Table of Contents
I. Transaction Overview
II. Introduction to Orion
III. Investment Highlights
IV. Historical Financials
V. 1Q17 and FY 2017 Guidance
Transaction Overview
5
Orion Engineered Carbons (“Orion” or the “Company”) is a leading global producer of carbon black products
— Operating segments include Specialty Carbon Black and Rubber Carbon Black
— The Company reported FY 2016 Net Sales and Adjusted EBITDA of €1,030m and €223m, respectively
The Company is seeking to reduce the applicable margin on the existing USD and EUR Term Loan B tranches
(currently at E/L+300, 0.75% floor):
— E+300, 0% floor, 99.875-par
— L+275, 0% floor, 99.875-par
The Company has consistently delivered strong performance each year since the carve-out in 2011 and has continued
this performance since closing the refinancing transaction in August 2014
— The Company has delevered from Total Net Debt of 3.2x at TLB issuance to under 2.5x at FY 2016 (versus 2.7x
at the time of the last repricing off Q2 2016 EBITDA)
— The Company is currently rated BB- (Positive) / Ba3 (Stable)
In parallel, the Company is seeking bank commitments to increase the RCF in size to up to €175m, and extend
maturity to April 2021
Transaction Overview
6
Pro Forma
€ million Amount Leverage Amount Leverage Pricing
LIBOR /
EURIBOR Floor
(%) Maturity
Cash1 (54.3) - (54.3) -
RCF (Up to €175m) - - - - E + 275 0% April 2021
Term Loan B (EUR) 1 334.0 - - - E + 300 0.75% July 2021
Term Loan B (USD) 1,2 277.0 - - - L + 300 0.75% July 2021
Repriced Term Loan B (EUR) 1 - - 334.0 - E + 300 0% July 2021
Repriced Term Loan B (USD) 1,2 - - 277.0 - E + 275 0% July 2021
Total Debt 611.0 2.74x 611.0 2.74x
Total Net Debt 556.7 2.50x 556.7 2.50x
FY 2016 Adj. EBITDA 223
Pro Forma Capitalization
1 PF for Jan-17 €20m equivalent repayment 2 USD tranche converted at an exchange rate of €1.00 = $1.0541 (December-16 rate)
7
Orion Engineered Carbons GmbH and OEC Finance US LLC
Term Loan B
€611m equivalent (EUR and USD)1
Ba3 / BB-
July 2021
First priority security interest in certain current and hereinafter acquired material assets of each subsidiary of
Orion Engineered Carbons S.A., with the exception of (i) the shares of any Portuguese subsidiary, Japanese
subsidiary, Chinese subsidiary and Singaporean subsidiary, (ii) real estate (save for real estate owned by the
German subsidiaries and the Swedish subsidiaries), (iii) the customer receivables of the Korean subsidiaries, (iv)
any assets owned by any Portuguese subsidiary, Japanese subsidiary, Chinese subsidiary, Singaporean
subsidiary, Brazilian subsidiary or South African subsidiary and (v) any intellectual property (same as existing)
E + 300 L + 275
0% 0%
99.875 - par 99.875 - par
1.0% p.a. (same as existing)
RCF only (same as existing)
Reset soft call protection for 6 months following the transaction effective date at 101
TLB Summary Term Sheet
Borrowers
Amount
Issue Rating
Maturity
Security
Financial Covenants
Floor
Amortization
OID
Call Protection
1 USD tranche converted at an exchange rate of €1.00 = $1.0541 (December-16 rate).
Instrument
Margin
8
TLB Transaction Timeline
Date Key Milestones
18 April Transaction Announcement
19 April Lender Call
26 April Commitments Due
27 April Pricing and Allocations
April 2017
M T W T F S S
1 2
3 4 5 6 7 8 9
10 11 12 13 14 15 16
17 18 19 20 21 22 23
24 25 26 27 28 29 30
Key Milestone
9
Current Situation
Business
Update
Orion has grown FY 16 Adjusted EBITDA by 13.8% from €196m based on Q1 2014 to €223m based on Q4 2016
— Specialty Black has grown volumes by 16.9% from 50.9kmt in Q1 2014 to 59.5kmt in Q4 2016
— Rubber Black has grown volumes by 11.4% from 198.4kmt in Q1 2014 to 221.1kmt in Q4 2016
Adjusted EBITDA margins have increased from 15.1% in Q1 2014 to 20.1% in Q4 2016
— Specialty Black Adjusted EBITDA margins have increased from 25.3% to 31.5%
— Rubber Black Adjusted EBITDA margins have increased from 10.3% to 14.1%
Orion has demonstrated strong cash conversion of 65-75% since Q1 20141
The Company has delevered from 3.2x in Q1 2014 to 2.5x in Q4 2016
Strong
Market
Positions
Orion continues to be one of the largest global producers of specialty and rubber carbon black
— Specialty Carbon Black – estimated share of global industry sales of ~26% measured by volume in kmt. The Company
participates heavily in high value applications, with market share by revenue greater than 25%. The estimated market
share for this segment has been growing over the past three years (from ~23% in 2013)
— Rubber Carbon Black - estimated share of global industry sales of ~8% measured by volume in kmt, with industry
sales shares by volume equal to or exceeding 16% in each of our major operating regions. The estimated market
share for this segment has remained relatively stable over the past three years
Strong
Outlook
Well positioned to continue its strong financial and operational performance. Orion’s primary geographies continue to perform in line with expectations and Orion is well positioned to execute its strategy of growing both Specialty and Rubber Carbon Black businesses and improving Rubber Carbon Black margins through efficiency, while driving robust cash flows
Improved profitability in Q4 2016 in period of significant oil price declines demonstrates strong ability to achieve profitability targets, despite the pass-through of these oil price decreases to customers via selling price reductions
Strong cash flow to fund pipeline of internal improvement projects via capex
Since the Company listed in July 2014 they have committed to a robust financial policy and a long run net leverage target of under 2.5x highlighted by the positive ratings trajectory to current ratings of BB- (Positive) / Ba3 (Stable)
Business Developments
1 Based on LTM group cash conversion for every quarter, calculated as (LTM EBITDA – LTM Capex) / LTM EBITDA
Introduction to Orion Engineered
Carbons
11
Leading position in the global Carbon Black market
Operating in two distinct businesses
— Specialty Carbon Black
— Rubber Carbon Black
lncorporated in 2011 after acquiring the Carbon Black
business line of Evonik lndustries AG
Publicly Listed on July 24, 2014
Over 75 years of innovation / experience and а
longstanding reputation within the Carbon Black industry for
industry leading applications knowledge and technical
expertise
Comprehensive global network
— 14 global production sites and four applied technology
centers
— Commercial presence in more than 90 countries
— Primarily direct sales to customers
— 1,460 employees world wide
Leading global producer of highly customized and diverse carbon black products
Overview – A Leader in the Carbon Black Industry
Virtually pure elemental carbon in the form of colloidal
particles
Physical appearance is blасk in either pellets or powder
Produced by thermal decomposition of gaseous or liquid
hydrocarbons under highly controlled conditions
Used in tires, other rubber and plastic products, printing inks,
coatings and various other applications e.g. batteries
Performance is related to properties of specific surface area,
particle size and structure, conductivity and color
Company Overview What is Carbon Black?
12
Orion – Meeting Customer Needs with a Balanced
and Comprehensive Product Portfolio
Specialty Carbon Black Rubber Carbon Black
High quality durable pigmentation
Enhancing characteristics including UV protection, viscosity control and electrical conductivity
Uses
Reinforcement and performance agent in rubber compounds
Improves resilience, tear-strength, conductivity and other physical properties
€386m / €137m (~35% Margin) FY 2016 Sales / Adj.
EBITDA €644m / €86m (~13% Margin)
242kmt Sales Volume
(FY2016) 886kmt
Geographic Mix
(Volume by Location (2) )
Extensive portfolio of products that are highly customized to meet specific and
evolving performance demands
~26% by volume (1) / One of the largest global producers Share of Global Industry
Sales / Position
~8% by volume / #3 (at least 17% market share in each key
region except China)
Coatings, polymers, printing and special applications Key End Applications Tires and mechanical rubber goods
Global market
Typically customized, high value products, cost effective to ship globally
Long approval processes and testing periods
Key Market
Characteristics
Mostly global customers, but served regionally
High transportation cost relative to sales price
Long approval processes and testing periods
1 OEC FY 2014 – Form 20-F.
2 FY 2016.
Europe: 33%
NAFTA: 28%
Korea: 19%
Brazil: 8%
China: 7% Other: 1%
Africa: 4%
Investment Highlights
14
Key Investment Highlights
Leading Industry
Positions in Growing
Markets
Innovation Leader with
One of the Broadest
Technology and
Product Offerings
Global, Well Invested
Flexible Product Network
Allowing For Sustainable
Value Creation
Long Standing
Relationship with Blue-
Chip Customer Base
Strong Operating
Earnings, Growth
and Cash
Generation
Seasoned Industry
Management Team
1
5
6
2
3 4
15
Leading Industry Positions in Growing Specialty and Rubber Carbon Black Markets
1
Orion is the world’s largest specialty producer and a strong player in major regional
rubber markets throughout the world
4.2%
The largest global producer of specialty carbon black
Broadest industry product mix and extensive global sales and technical support network
Orion’s estimated share by revenue is higher since our product portfolio is weighted toward high-priced premium grades
5.6%
One of the largest global producers of rubber carbon black
One of only three globally based suppliers maintaining a carbon black production network serving key accounts across regions with a complete and balanced portfolio
Orion’s estimated share by volume equals or exceeds 17% in each of our major operating regions with the exception of China where we have recently acquired our initial local production
Specialty Carbon Black Rubber Carbon Black
Global Market Growth
(2013-16 CAGR)
Industry Shares (1)
26% 23%
17%
Global Top 3 Specialty Carbon Black Producers
14% 13%
8%
Global Top 3 Rubber Carbon Black Producers
1 Specialty carbon black and rubber carbon black based on volumes.
16
Furnace Black Gas Black Lamp Black Thermal Black After Treatment
Process
Methodology
Most common process in large scale Carbon Black production
Continuous method using liquid and gaseous hydrocarbon as feedstock and fuel
Orion proprietary method
Vaporised oils used as feedstock in reactors
Primarily used for Specialty applications
Reaction of specialized feedstocks in proprietary reactors
Primarily used for Specialty applications
Special applications in both Rubber and Specialty markets
Natural gas used as feedstock
Treats Carbon Black surface by oxidative agents
Enhances desired physical characteristics
Benefits
High flexibility
Wide product range
Efficient
Unique product structure
High color and dispersion advantages for coatings and printing
Unique product structure
Easy to disperse
Medium color
Unique product structure
High loading
Low color
Can be applied to all carbon blacks
Improves product dispersion and color performance
Competitor
Access to
Technology
Widespread Very Limited Very Limited Very Limited Limited
Production Processes
Leading Technology… 2
The broadest array of production and surface treatment technologies support one of
the largest product offerings in the industry
17
Industry-leading integrated R&D / Innovation platform with close customer collaborations
Orion is a preferred R&D partner to many of its customers
Efforts driven by state-of-the-art innovation center in Cologne, Germany (established in 2012, which integrated previous R&D efforts)
supported by regional technical centers in China, Korea and the U.S.
Significant increase in the innovation pipeline with new products already hitting the market
… and Innovation Platform
Selected Innovation Initiatives
Continue Strengthening Our
Leadership Position in Specialty
Carbon Black
Strengthening Competitiveness of
Operations
Continue to Increase Rubber Carbon
Black Margins While Growing
Globally
Growth in Conductive Additives Increase Feedstock Yield Improving Tire Performance
Emerging opportunity for carbon
black in lithium ion batteries
Expanding role for carbon black in
advanced lead-acid batteries
Established supplier to battery
markets with numerous innovations
underway
Optimizing feedstock yield has the
greatest impact to operating cost
reduction
Developing and implementing
variable cost optimization and next
generation production process
programs
Truck tires demand improved wear
resistance without compromises
New product technology developed in
collaboration with key customers
balancing fuel economy, mileage,
and wet grip
Proprietary technology and reaction
processes
2
18
Plants
Technical Center
Administration / HQ
Purchase Carbon Black oil from
more than 30 different suppliers to
limit dependence on individual
suppliers
Well positioned to serve
emerging markets Reduces average transportation
costs
Ability to supply customers
with the full range of grades
and particle sizes from
multiple locations
Geographic diversity of our
operations also lowers our
dependency on any particular
region
Ability to quickly establish
credentials with customers in new
locations with globally coordinated
and led technical support
3
Interregional capabilities in Specialty
Carbon Black
Offer customers backup supply
capabilities in the event of supply
disruptions or unexpected peaks in
demand
Significant recent investments in strategic sites and the 2015 acquisition of Qingdao,
China plant have increased capacity, efficiency and flexibility of production platform
Global, Well Invested, Flexible Production Network
*
* Ambès plant closed in December 2016
19
… Allowing For Sustainable Value Creation 3
Our operational efficiency, flexibility and reliability give us a competitive foundation
for continuing and sustainable value creation
Optimizing feedstock selection, energy purchasing and pricing methods
Exploiting alternative feedstock sources to increase yield and optimize variable cost
Gaining further knowledge on value of current and alternative feed stocks
Procurement
Excellence
Higher efficiency “Orion Design” reactors increase yield, reliability and flexibility
Recently installed additional "Orion Design" reactors in the U.S., Asia and South Africa
Using Orion technology to further capture waste energy
“Orion Design”
Reactors and
Energy
Recovery
Net headcount reduction of 70 (-4,6%) due to closed plant in Ambès
Overall headcount included the hiring of approximately 100 higher-qualified personnel to
drive Orion forward
Continued focus on production footprint optimization
High
Performance
Organization
Initiative and
Cultural
Transformation
Demonstrated Achievements to Improve Operational Competitiveness
20
Supplier to more than 1,000 customers across 90 countries with a core blue-chip
customer base
Long-Standing, Deep Relationships with Blue-Chip Customer Base
4
Strong relationships with global customer base for over 30 years
Recognized strength with Global Key Account management
Rigorous testing and approval processes in both Specialty Carbon Black and Rubber
Carbon Black segments
High degree of customization for a number of Orion’s products
21
88 82 84 89 92 92 95 98 100 101 101 100 102 106 107 115 121 130 135 137
88 99 98 99
92 86 89 93 96 99 102
108 109
106 100 94 88
81 83 86
176 181 182 188 183
178
184 191 196 200 203 208 212 212
206 209 209 211 218 223
23.5% 22.0% 21.5% 22.3% 22.8% 23.3% 24.1%
25.1% 25.3% 25.5% 25.4% 24.8% 25.8%
27.1% 27.8%
30.1% 31.8%
33.9% 35.3% 35.4%
8.8% 9.7% 9.8% 9.9% 9.3% 8.9% 9.3% 9.8% 10.3% 10.7% 11.1% 11.8%
12.4% 12.8% 12.7% 12.8% 12.8% 12.4%
13.1% 13.4%
Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16
Cash
Conversion¹ NA NA NA 62% 56% 52% 55% 60% 67% 71% 72% 69% 67% 64% 67% 75% 71%
FCF2 106 114 108 163
72% 73%
135
71%
118
109 109 110
113
103
110 109
108 110
103
77
55 64
51 45 35 47
47 51
Track Record of Earnings Growth and
Cash Conversion
Stable Adj. EBITDA growth and strong cash conversion despite volatile feedstock markets are key characteristics of Orion’s
financial track record
Specialty business – Outstanding performance, improving its LTM Adj. EBITDA record for the last eight consecutive
quarters
Rubber business – Remarkable profitability improvement since 2012, with price surcharges delivering Adj. EBITDA upside
and a further increase in Adj. EBITDA driven by internal improvements, e.g., closure of the French plant
Source: OEC’s 20-F and 6-K reports, OEC’s IPO prospectus (Jul-2014 F1 form), OEC’s quarterly trading updates, Bloomberg
1. Refers to group and defined as (LTM Adj. EBITDA - LTM Capex) / LTM Adj. EBITDA.
2. Refers to group and defined as yearly cash flow from operations (before interest payments) minus capex (excluding OECQ acquisition).
LTM Adj. EBITDA (€m), LTM Adj. EBITDA Margin, and Cash Conversion1
Specialty LTM Adj. EBITDA Rubber LTM Adj. EBITDA
Specialty LTM Adj. EBITDA Margin Rubber LTM Adj. EBITDA Margin
Average Brent Crude Oil Price per Quarter ($Bbl)
5
22
Erik Thiry
Senior Vice President
Rubber Carbon Black
David Deters
Senior Vice President
Innovation
Strengthened leadership team driving an improved, lean and focused organization
Seasoned Industry Management Team
Jack Clem
Chief Executive Officer
Management Team
Significantly strengthened leadership talent with globally experienced executives to complement continuity in key senior management roles
Reduced headcount in order to eliminate low performers and make room for hires with Orion cultural DNA
Positioning business to build on success and continue growth as Management team populates additional layers
Company Culture
Best-in-class management practices based on continuous improvement principles
Enterprise driven but organized to extract the best of regional talent
Data-driven, disciplined, collaborative decision making
Focus on performance and commitment to customers
Entrepreneurial drive
Jeffrey Malenky
Senior Vice President
Global Human Resources
Michael Reers
Vice President and
Group Controller
Christian Eggert
General Counsel and
Head of Group Legal
Charles Herlinger
Chief Financial Officer
Mark Peters
Senior Vice President and
GM Americas Region
Lixing Min
Senior Vice President and
GM Asia-Pacific Region
Claudine Mollenkopf
Senior Vice President
Specialty Carbon Black
6
Historical Financials
Q4 2016
24
4Q 2016 Highlights
4Q16
4Q15
Y-o-Y
Comparison
Total volume
(kmt) 280.6 263.5 6.5%
Adjusted EBITDA
(EUR/Millions) 55.6 50.9 9.4%
Net Income (Loss)
(EUR/Millions) 18.6 1.5
€17.1
EPS
(EUR) 0.31 0.02 €0.30
Strong volume and adjusted EBITDA gains in both
Specialty and Rubber businesses
Adjusted EBITDA positively impacted by above
market growth, with favorable price management
Large net income gain partly a function of reduced
interest expense and other financial impacts
Leverage reduced to 2.50x
25
4Q15
FY 2016 Highlights
4Q16
Volume Mix Adjusted EBITDA
0%
20%
40%
60%
80%
100%
4Q16
Volume By
Producing Location
Other 1%
Africa 4%
China 7%
Brazil 8%
Korea 19%
NAFTA 28%
Europe 33%
Rubber
Carbon
Black (1)
79.5%
Specialty
Carbon
Black
20.5%
Specialty
Carbon
Black
21.2%
Rubber
Carbon
Black (1)
78.8%
4Q15
4Q16
Rubber
Carbon
Black
€22.4M
Specialty
Carbon
Black
€28.4M
Specialty
Carbon
Black
€30.3M
Rubber
Carbon
Black
€25.3M
Specialty Carbon Black and Technical Rubber Carbon Black Grades
Continue To Expand as a Percentage of Mix
(1) 34.0% of 4Q16 Rubber Carbon Black volume, including OECQ, comprises technical grade products versus 33.1% for 4Q15. Technical
grade products, which include MRG, are those products that require special technology or support and carry higher margins.
0%
20%
40%
60%
80%
100%
4Q15
Other 1%
Africa 4%
China 4%
Brazil 6%
Korea 19%
NAFTA 31%
Europe 35%
26
Specialty Carbon Black Business
4Q16 4Q15 Y-o-Y
Comparison
Volume (kmt) 59.5 54.1 +10.0%
Revenue (EUR/Millions) 96.1 91.5 +5.0%
Gross Profit (EUR/Millions) 39.9 38.7 +3.2%
Gross Profit/ton (EUR) 670.6 714.2 -6.1%
Adjusted EBITDA
(EUR/Millions) 30.3 28.4 +6.7%
Adjusted EBITDA/ton (EUR) 509.0 524.8 -3.0%
Adjusted EBITDA Margin 31.5% 31.1% +40bps
Above industry volume growth driven by market
penetration and strong execution in underserved
markets
Impact of previous addition of sales and technical
resources yielding sustainable results with new and
established customers supported by new products
and product extensions
Gross profit improved with volume offsetting the
impact of higher feedstock costs
Adjusted EBITDA/ton reflects volume growth with
some margin compression from higher feedstock
costs
Gains in Volume and Profit Due to Strong Sales Execution Across All Regions
27
Rubber Carbon Black Business
4Q16 4Q15 Y-o-Y
Comparison
Volume (kmt) 221.1 209.4 +5.6%
Revenue (EUR/Millions) 180.2 168.9 +6.7%
Gross Profit (EUR/Millions) 47.1 39.8 +18.4%
Gross Profit/ton (EUR) 213.1 190.0 +12.2%
Adjusted EBITDA
(EUR/Millions) 25.3 22.4 +12.9%
Adjusted EBITDA/ton (EUR) 114.6 107.2 +6.9%
Adjusted EBITDA Margin 14.1% 13.3% +80bps
Profit Improvements Driven by Favorable Pricing and OECQ Contribution
Volume growth reflects OECQ contribution and
strengthening global demand. Without OECQ
volume, organic growth of 2.1%
Strong gross profit gain a function of favorable
pricing, volume growth and reduced depreciation
Adjusted EBITDA increase reflected the gain in
gross profit
Adjusted EBITDA margin of 14.1% increased 80
bps
28
Asia
50.8
55.6 7.5 (2.2)
(1.0) 0.4
4Q15 Other 4Q16
110.2
117.7 5.1
2.9 1.4 (1.9)
4Q15 Volume Price FX Other 4Q16(Exc OECQ)
4Q 2016 Consolidated Operating Results (1)
Adjusted EBITDA Variance
Contribution Margin Variance Not to scale
Not to scale
4Q16 4Q15 Y-o-Y
Comparison
Volume (kmt) 280.6 263.5 +6.5%
Revenue (EUR/Millions) 276.3 260.4 +6.1%
Contribution Margin (EUR/Millions) 117.7 110.2 +6.8%
Contribution Margin/ton (EUR) 419.4 418.3 +0.3%
Operating Result (EBIT) (EUR/Millions) 36.7 23.1 +58.9%
Adjusted EBITDA (EUR/Millions) 55.6 50.8 +9.4%
Adjusted EBITDA Margin 20.1% 19.5% +60bps
Net Income (EUR/Millions) 18.6 1.5 €17.1
EPS (EUR) 0.31 0.02 €0.29
Adjusted EPS (EUR) 0.39 0.20 €0.19
€M
€M
1.5
(1.2)
18.6
4.8
4.7 2.3
Other Tax 2
Net Income €M Not to scale
4Q15 4Q16 Depreciation Adj
EBITDA
(1) See quarterly reporting for reconciliation of non-IFRS measures to the most directly comparable IFRS
measures
(2) Other relates to a reduction non-recurring expenses incurred from 2015 primarily first Year SOX and OECQ
post-acquisition costs
Contribution
Margin
FX on
Fixed Costs
Finance
Costs
Quarterly Adj. EPS Increased to €0.39 Per Share
Driven by Improved Operating Performance and
Capital Structure
6.6
OECQ
Fixed Costs
29
Cash at12/31/15
Cash Flowfrom
Operations
Capex Interest Dividends Other Cash PriorTo
VoluntaryActions
VoluntaryDebt
Payments
ShareBuybacks
Cash at12/31/16
117.3
73.9 65.3
(48.2) (39.6)
(40.0)
(40.0)
(3.4)
(3.2)
199.1 (64.3)
2016 Cash Flow and Balance Sheet Highlights
Balance Sheet Highlights 2016 Cash Flow Generation
As of
December 31, 2016
Cash & Cash Equivalents 73.9
Net Working Capital 181.9
Total Debt (long term) 613.5
Total Liability and Equity 998.6
Net Debt 556.7
Net Debt/LTM Adjusted EBITDA 2.50x
Net Working Capital (in days) 63
€M
Continued Strong Cash Flow Generation Due to Cash Flow from Operations.
Leverage reduced to 2.50x
Voluntary
Debt Payment
& Share Buybacks
Cash Flow
Generation Prior to
Voluntary Actions:
€52.0M
(1)
€M
(3)
450
500
550
600
650
700
750
Total Debt
Underlying Debt FX Impact
€M
150
175
200
225
Net Working Capital
(1) Interest payments
(2) Repurchased 312,912 Shares
(3) Net working capital = Inventories + Trade Receivables – Trade Payables
(2)
Not shown an additional €20M
voluntary debt repayment made
in January 2017
1Q17 and FY 2017 Guidance
31
1Q 2017 Trading Update
1Q17
Guidance
1Q16
Y-o-Y
Comparison
Revenue
(EUR/Millions) 303.0-305.0 246.3 ~23%
Total volume
(kmt) 274.0-276.0 277.8 ~(1)%
Adjusted EBITDA
(EUR/Millions) 58.0-59.0 54.0 7-9%
Revenue growth reflects pass-through of
increased oil prices to Orion customers'
through our selling prices
Stable overall volumes with strong growth of
lower margin product in Specialty offsetting
decline in standard Rubber volumes primarily
resulting from the Ambes plant closure in
France at the end of 2016
Increase in Adjusted EBITDA driven entirely by
recovering Rubber profitability due to improved
pricing, particularly in Europe, as well as higher
oil prices improving profit impact from
cogeneration revenues and efficiency
programs
32
Adjusted EBITDA: EUR 220 to 240 million
Forecast assumptions:
• Volume growth in line with current GDP
expectations
• Oil prices and foreign exchange rates at Q4 2016
levels
Other guidance metric assumptions:
• Capital Expenditures: EUR 60 million plus So Korea
• Depreciation: EUR 60 million
• Amortization: EUR 20 million
• Tax rate: 35%
2017 Guidance
Capital Allocation
(EUR/Millions)
Maintenance Capex 30
Mandatory Debt Service 7
Interest Payments * 26
Cash Tax Payments ** 32
Change in NWC *** --
Total Cash Requirements 95**
* At current interest rates and not PF for the repricing
** Assumes mid-range 2017 Adjusted EBITDA guidance
*** A $10 (decrease)/increase in Brent crude will likely (lower)/raise
total cash requirements by causing NWC to (contract)/expand by
roughly €19m - €21m over approximately a 3 month period
Base Business Annual Cash Requirements
Guidance Based on Current Operating Environment
Dividends
Optimization capex
Voluntary debt repayment
Excess cash will be available to support:
2017 Guidance and Cash Analysis
33
Key Actions
• Conversion of rubber production lines to specialty in Korea and the US
• Expanding specialty capacity in Sweden and Germany
• Expanding specialty and technical rubber grade mix at OECQ, Germany, Korea
• Expand technical sales support footprint
• Closed facility in France, plans to close Bupyeong, Korea mid-2018 + further evaluations
• Installing higher temperature air preheaters and high efficiency Orion reactors
• Expanding feedstock delivery options
• Expanding cogeneration capabilities
Priorities
Drive growth of Specialty and Technical Rubber Carbon Black grades
– Continue above market growth in Specialty Carbon Black
– Expand specialty and technical rubber grade mix at OECQ
– Deepen penetration in underserved specialty and MRG markets
– Consistently maintain Specialty product supply ahead of demand
– Continue adding resources focused on penetrating markets and
pursuing substitution opportunities
Continue to systematically evaluate the global production footprint for cost improvement opportunities.
Continue productivity and efficiency measures to improve Rubber Carbon Black’s profitability
Direct Capital Expenditures to:
Expand capacity of selected Specialty Carbon Black grades
Continue attractive yield efficiency projects
Advance Lighthouse projects
Operational Priorities / Actions
34
Non-IFRS Metric Definitions
In this presentation we refer to Adjusted EBITDA, Contribution Margin and Adjusted EPS, which are financial measures that have not
been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards
Board (“IFRS”) or the accounting standards of any other jurisdiction and may not be comparable to other similarly titled measures of
other companies. Adjusted EBITDA is defined as operating result (EBIT) before depreciation and amortization, adjusted for acquisition
related expenses, restructuring expenses, consulting fees related to group strategy, share of profit or loss of joint venture and certain
other items. Adjusted EBITDA is used by our management to evaluate our operating performance and make decisions regarding
allocation of capital because it excludes the effects of certain items that have less bearing on the performance of our underlying core
business. Our use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a
substitute for analysis of our financial results as reported under IFRS. Some of these limitations are: (a) although Adjusted EBITDA
excludes the impact of depreciation and amortization, the assets being depreciated and amortized may have to be replaced in the
future and thus the cost of replacing assets or acquiring new assets, which will affect our operating results over time, is not reflected;
(b) Adjusted EBITDA does not reflect interest or certain other costs that we will continue to incur over time and will adversely affect our
profit or loss, which is the ultimate measure of our financial performance and (c) other companies, including companies in our industry,
may calculate Adjusted EBITDA or similarly titled measures differently. Because of these and other limitations, you should consider
Adjusted EBITDA alongside our other IFRS-based financial performance measures, such as consolidated profit or loss for the period.
Contribution Margin is calculated by subtracting variable costs (such as raw materials, packaging, utilities and distribution costs) from
our revenue. We believe that Contribution Margin and Contribution Margin per Metric Ton are useful because we see these measures
as indicating the portion of revenue that is not consumed by such variable costs and therefore contributes to the coverage of all other
costs and profits.
Adjusted EPS is defined as profit or loss for the period adjusted for acquisition related expenses, restructuring expenses, consulting
fees related to group strategy, certain other items (such as amortization expenses related to intangible assets acquired from our
predecessor and foreign currency revaluation impacts) and assumed taxes, divided by the weighted number of shares outstanding.
Adjusted EPS provides guidance with respect to our underlying business performance without regard to the effects of (a) foreign
currency fluctuations, (b) the amortization of intangible assets which other companies may record as goodwill having an indefinite
lifetime and thus no amortization and (c) our start-up and initial public offering costs. Other companies may use a similarly titled
financial measure that is calculated differently from the way we calculate Adjusted EPS.
We define Net Working Capital as the total of inventories and current trade receivables, less trade payables. Net Working Capital is a
non-IFRS financial measure, and other companies may use a similarly titled financial measure that is calculated differently from the
way we calculate Net Working Capital. .
