NYSE: OEC

We are a premium supplier of carbon black generating long-term benefits for stakeholders while remaining committed to responsible business practices with a focus on team culture, reliability, quality and sustainability.

Our business is organized into two reportable segments: Specialty Carbon Black and Rubber Carbon Black. Our business segments are discussed in more detail later in this section.

Our internet address is www.orioncarbons.com. We make available, free of charge on or through our website, our current Annual Reports in Form 10-K, Quarterly Reports in Form 10-Q, reports in Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after electronically filing such material with, or furnishing it to, the U.S. Securities and Exchange Commission (“SEC”). Information appearing on our website is not a part of, and is not incorporated in, this Annual Report in Form 10-K.

Products and Applications

Carbon black is manufactured in a highly controlled process to produce particles and aggregates of varied structure and surface chemistry, resulting in many different performance characteristics for a wide variety of applications.

Specialty Carbon Black

The Company manufactures Specialty Carbon Black for a broad range of specialized applications such as polymers, batteries, printing and coatings. The various production processes result in a wide range of different Specialty Carbon Black grades with respect to their primary particle size, structure, surface area and surface chemistry. These parameters affect jetness, tinting strength, undertone, dispersibility, electrical conductivity and other characteristics. Carbon black is an additive that enhances the physical, electrical and optical properties of our customers’ end products.

We have several post-treated Specialty Carbon Black grades for coatings and printing applications, as well as several high purity carbon black grades for the fiber industry and conductive carbon black grades for batteries, polymers and coatings. Our specialty grades of carbon black are used to impart color, provide rheology control, enhance conductivity and static charge control, provide UV protection, enhance mechanical properties and provide formulation flexibility through surface treatment. These specialty carbon products are used in a wide variety of applications, such as coatings, inks, plastics, adhesives, toners and batteries.

Products

Carbon Black for Coatings—We offer a broad range of Specialty Carbon Black products for coatings, which includes products used for pigmentation and protection (e.g., automotive base coats and architectural coatings), for conductivity and for tinting, as well as for paints and for light tinting in transparent coatings (e.g., metallic effects and wood glazing). The diversity of our manufacturing processes allows for the creation of a wide range of Specialty Carbon Black grades with different structures and chemical properties, thereby allowing our products to impart unique characteristics to our customers’ products.

Carbon Black for Polymers—We offer Specialty Carbon Black for polymers in a diverse range of end markets, including pipe (e.g., gas, oil, municipal water, sewage), construction, energy distribution (e.g., power cables), automotive, agriculture and consumer packaging. Certain products within this portfolio provide UV protection against polymer degradation for material such as pipe used for potable

water, injection molding, agriculture films and cables. Other products include standard- to high-performance grades designed and modified to provide electrical conductivity, antistatic and reinforcing properties to many different polymer applications, including high-voltage cables, film and high-pressure pipes.

Carbon Black for Printing—We offer Specialty Carbon Black for printing inks used in different printing systems and applications. We apply different process technologies to offer highly specialized products meeting specific requirements, including compliance with food-contact regulations and specially formulated products that require unique attributes such as color undertone, optical density and gloss.

Carbon Black for Batteries—We offer conductive additives for lithium-ion batteries for electric vehicles, energy storage and consumer applications. They can be used both in the cathode and anode. We also offer conductive additives for lead-acid batteries, supercapacitors and dry cell batteries. Our products, which are manufactured in different production processes, are differentiated by high purity, high conductivity, low moisture and easy dispersion, enhancing the performance, lifetime and safety of batteries.

Competition—We are one of the largest global producers of Specialty Carbon Black. There are two other large global producers of Specialty Carbon Black. There are also regional Specialty Carbon Black producers, as well as technology specialists such as acetylene black producers. Orion differentiates itself by offering the broadest process technology portfolio and Specialty product portfolio to its customers.

Rubber Carbon Black

Our Rubber Carbon Black products are used in tires and mechanical rubber goods (“MRG”). Rubber Carbon Black is used to enhance the physical properties of the systems and applications in which they are incorporated. Rubber Carbon Black has traditionally been used in the tire industry as a rubber reinforcing agent to increase tread durability and are also used as a performance additive to reduce rolling resistance and improve traction. In MRG, such as hoses, belts, extruded profiles and molded goods, Rubber Carbon Black is used to improve the physical performance of the product, including the product’s physical strength, fluid resistance, conductivity and resistivity.

Products

Carbon Black for Tires—We offer a broad range of carbon black products for tires, which includes high-reinforcing grades and semi-reinforcing grades. Fine particle reinforcing grade carbon black is used mostly in the tread of tires. Other reinforcing grade carbon black is also used in different components of the tire carcass. In addition to standardized grades, we produce advanced grades tailored to meet specific customer performance requirements, such as ECORAX® grades designed to lower rolling resistance and high-performance grades for truck tires and high- and ultra-high-performance passenger car tires.

Carbon Black for Mechanical Rubber Goods—We produce a wide range of carbon black products for a variety of MRG end-uses, including automotive production, construction, as well as certain food, consumer and medical applications. These grades have exceptionally high purity and high consistency and satisfy special requirements needed for smooth surfaces and electrical resistance. These grades also disperse well in rubber compounds used in parts like window seals, automotive hoses, transmission belts, damping elements and electrically conductive and antistatic rubber goods.

Competition—We are one of the leading global producers of Rubber Carbon Black. We compete with two other global companies and multiple regional companies. The smaller regional suppliers mainly participate in standard and MRG applications and are less likely to provide specialized products used in higher-end tire and MRG applications. Competition for our Rubber Carbon Black products is generally based on product quality and performance, supply reliability, technical innovation and customer service.

Drivers of Demand

Besides general global economic conditions, certain specific drivers of demand for carbon black differ among our operating segments. Specialty Carbon Black has a wide variety of end-uses and demand is largely driven by the growth and development of the coatings, polymers, printing and battery industries.

•Demand in the coatings and polymers industries is mainly influenced by industrial production, automobile original equipment manufacturer (“OEM”) demand, consumer spending and construction sector growth and activity.

•Demand in the printing industry is mainly influenced by developments in print media and packaging materials.

•Demand in the batteries industry is driven by electric vehicles penetration, growth of consumer and industrial batteries business and energy storage systems use.

Demand for Rubber Carbon Black is largely driven by the growth and development of the automotive tire, commercial tire and MRG industries.

•Demand in tires is mainly influenced by the number of replacement and original equipment tires produced, which in turn is driven by:

◦number of miles driven and truck traffic,

◦vehicle trends, including the number of vehicles produced and operated,

◦demand for larger vehicles, such as trucks and buses,

◦local tire production trends,

◦demand for high-performance tires,

◦consumer and industrial spending on replacement tires and on new vehicles, and

◦changes in regulatory requirements.

•Demand in MRG is mainly influenced by vehicle production and design trends, construction activity and general industrial production.

Customer Contracts

Most of our long-term contracts, 12 months or longer, contain formula-driven price adjustment mechanisms for changes in raw material and/or energy costs. We sell carbon black under the following two main categories of contracts based on price adjustment mechanisms:

•Contracts with feedstock adjustments (indexed contracts)—This category includes contracts with monthly or, in some cases, quarterly automatic feedstock and/or energy cost adjustments, which covers approximately 65% of our global volume;

•Non-indexed contracts—This category includes short-term contracts (usually shorter than three months) where sales prices of our carbon black products are not linked to carbon black oil market prices.

Many of our indexed contracts allow for periodic or quarterly price adjustments. These contracts have enabled us to reduce the impact of fluctuations in oil prices on our margins; however, rapid and significant oil price fluctuations have had and are likely to continue to have significant effects on our earnings and results of operations given that (i) not all contracts contain price adjustment mechanisms and (ii) the value of our productivity improvements rises and falls with oil price movements.

Sales prices under non-indexed contracts are reviewed on a regular basis to reflect raw material and energy price fluctuations as well as overall market conditions.

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