OEC 10-K & 10-Q changes, risk factors and insider trading

Our operations and performance are materially connected to worldwide economic conditions. Because carbon black is used in a diverse array of end products, demand for carbon black has historically been related to real gross domestic product (“GDP”) and general global economic conditions. In particular, a large part of our sales has direct exposure to the cyclical automotive industry and, to a lesser extent, the construction industry. As a result, certain parts of our business experience a level of cyclicality. The nature of our business and our large fixed asset base make it difficult to rapidly adjust our fixed costs downward when demand for our products declines, which could materially affect our profitability. Global and regional economic downturns have in the past, and may in the future, reducedreduce demand or pricing for our products, which have decreased and would decrease our revenue, and could have a material adverse effect on our business, financial condition, results of operations and cash flows. In periods with significant market turmoil or tightened credit availability, we could experience difficulties in accounts receivable collections, pricing pressures and reduced global or local business activity.

In addition, changes in, or tensions relating to, U.S. or other countries’ trade relations with countries where we do business or from which we source necessary supplies may adversely impact our business. The imposition of additional restrictive policies by individual countries could lead to unexpected operating difficulties in countries we operate in or do business with. ActualFurther changes and uncertainty in the geopolitical environment or government policy, including actual or threatened tariff measures have,such as tariffs, counter-tariffs and other trade barriers, have and may continue to have,have impacts on global markets and foreign exchange rates. Any of these could increase our costs and negatively impact our financial condition, results of operations and cash flows.

As a reinforcing agent in certain rubber applications, carbon black competes primarily with precipitated silica in combination with silane, neither of which are part of our product portfolio. Historically, silica has offered some performance benefits over carbon black in the area of rolling resistance. To date, silica-based tire applications have gained position in passenger car tire treads. Although substitution has not been significant due to carbon black’s cost advantage, technological advances and changing customer requirements may lead to increased demand for silica-based tires, especially in developed regions. Increased substitution and competition from precipitated silica producers could adversely affect our business, financial condition, results of operations and cash flows. If we should decide to include precipitated silica in combination with silane in our product portfolio in the future, we may be restricted in our ability to do so under our intellectual property sharing arrangements with Evonik Industries AG (“Evonik”) and its affiliates, one of our previous owners.

Our manufacturing processes consume significant amounts of raw materials and energy, the costs of which are subject to fluctuations in local and worldwide supply and demand as well as other factors beyond our control. The preponderance of raw material cost used in the production of carbon black is related to petroleum-based or coal-based feedstock known as carbon black oil, with some additional use of other raw materials, such as acetylene, hydrogen and natural gas. We obtain a considerable portion of our raw materials and energy from selected key suppliers. Although we maintain certain raw material reserves, if any of these suppliers is unable to meet its obligations under supply agreements with us on a timely basis or at all, or if we cannot source sufficient supply, we may be forced to incur higher costs to obtain the necessary raw materials and energy elsewhere. Additionally, raw material sourcing and related infrastructure (e.g., harbor access, cargo or ship availability, pipeline, tank, rail, waterway or road-access), may be subject to local developments or regulations in certain jurisdictions where we operate that may reduce, delay or halt the physical supply of raw materials. Our inability to source energy or quality raw materials like carbon black oil, including due to the Russia-Ukraine war, Hamas-IsraelMiddle conflictEast conflicts and China’s relations with the U.S. and with the EU, or otherwise, in a timely fashion and at costs that we anticipate or that are acceptable to us, or an inability to pass-through any cost increases to our customers, could have an adverse impact on our business, financial condition, results of operations and cash flows.

We may also be subject to volatility in the cost, quality and availability of raw materials and energy due to factors beyond our control, such as geopolitical conflict. See “Negative or uncertain worldwide economic conditions may result in business volatility and may adversely impact our business, financial condition, results of operations and cash flows” and “Our business, financial condition and results of operations have in the past and could in the future be adversely affected by disruptions in the carbon black oil and natural gas supplies, including disruptions caused by the ongoing warRussia-Ukraine betweenwar, Russiaongoing geopolitical tension in Ukraine, the Hamas-IsraelMiddle conflictEast and the growing geopolitical tensionstension between China and Taiwan.Taiwan” This could have an adverse impact on our business, financial condition, results of operations and cash flows.

Plant capacity expansions and capital investments such as site development projects may be delayed, cost more than anticipated and/or may not achieve the expected benefits.

Our ability to complete capacity expansions and consolidations as planned, including capacity conversions from Rubber Carbon Black to Specialty Carbon Black and vice versa, and other capital investments, such as site development projects, including those associated with yield efficiency improvements or emission controls, have in the past been and may in the future be delayed, interrupted, or otherwise limited by the need to obtain environmental and other regulatory approvals, unexpected cost increases, changes in end-use markets, availability of labor and materials, unforeseen hazards such as weather or health conditions, and other risks associated with construction projects. In addition, lower oil prices may impact our yield efficiency improvements. Moreover, the costs of these activities could have a negative impact on our results of operations and capacity utilization at any particular facility. We may not be able to absorb the incremental costs associated with capacity expansion projects. In addition, our ability to expand capacity depends in part on economic and political conditions in the regions we focus on and, in some cases, on our ability to establish operations, construct additional manufacturing capacity or form strategic business alliances.

We rely on information technology systems to manage and operate our production facilities, to process transactions,transactions and to summarize our operating results. Our information technology systems are an important element for effectively operating our business. Information technology systems failures, particularly in connection with running SAP, including risks associated with upgrading or timely updating our systems, network disruptions, misuse, cybercrime and breaches of data security, have occurred in the past, and if they occur in the future, could disrupt our production as well as our operations by impeding our processing of transactions, our ability to protect customer or company information and our financial reporting, and could lead to increased costs. It is possible that future technological developments could adversely affect the functionality of our computer systems and require further action and substantial funds to prevent or repair computer malfunctions. Our information technology systems, including our back-up systems, are subject to damage or interruption from power outages, computer and telecommunications failures, computer viruses, cybercrime, internal or external security breaches, catastrophic events such as fires, earthquakes, floods, tornadoes, hurricanes, acts of war or terrorism, and usage errors by our employees or third-party providers. These risks may be exacerbated as we continue to develop our information technology systems, including through the implementation of certain artificial intelligence tools, which tools may also expose us to additional risks. Although we have taken extensive steps to address these concerns by implementing sophisticated network security, back-up systems and internal control measures, there can be no assurance that a system failure or data security breach will not have a material adverse effect on our business, financial condition, results of operations and cash flows. If our information technology systems are damaged or cease to function properly, we may have to make a significant investment to fix or replace them, and we may suffer loss of critical data and interruptions or delays in our production and operations. Any material disruption in our information technology systems, or delays or difficulties in implementing or integrating new systems or enhancing current systems, could have an adverse effect on our business, financial condition or results of operations. We have experienced non-material cybersecurity attacks in the past and may experience additional cybersecurity attacks in the future, potentially with more frequency or sophistication.

Our business, financial condition and results of operations have in the past and could in the future be adversely affected by disruptions in the carbon black oil and natural gas supplies, including disruptions caused by the ongoing Russia-Ukraine war, Hamas-Israelongoing conflictgeopolitical tension in the Middle East and the growing geopolitical tension between China and Taiwan.

The impacts of war and other geopolitical events, including but not limited to the war in Ukraine and ongoing geopolitical tension in the Hamas-IsraelMiddle conflict,East, the growing geopolitical tensionstension between China and Taiwan, are difficult to predict. For example, the conflict in Ukraine has previously caused, and may continue to cause, volatility in crude oil and natural gas prices. The responses of countries and political bodies to Russia’s actions in Ukraine, the larger overarching tensions, and Ukraine’s military defenses and the potential for wider conflict may generally increase energy market volatility, have severe adverse effects on regional and global economic markets and cause volatility in energy and other product prices. The sanctions, shipping disruptions, collateral war damage, and the potential continuation or expansion of the conflict between Russia and Ukraine, or the conflictongoing betweengeopolitical Hamastension andin Israel,the Middle East, could further disrupt the availability of crude oil and natural gas supplies.

The extent or length of any adverse effects of the war in Ukraine or the Hamas-IsraelMiddle conflictEast conflicts on the supply of oil and natural gas and the quality and availability of carbon black oil is difficult to quantify.

The continuation or escalation of events like the war in Russia-Ukraine war or the Hamas-IsraelMiddle conflictEast conflicts could decrease our production volumes and margins and may adversely impact our business operations, financial condition and results of operations and are difficult to predict. The war in Ukraine has caused and may continue to cause curtailed or delayed spending by our customers’ customers, particularly in the automotive industry, and increases the risk of customer defaults or delays in payments. The Hamas-IsraelMiddle conflictEast conflicts or any escalation thereof could adversely impact our margins.

Environmental and safety regulations are subject to frequent change, as are the priorities of those who enforce them, and we could incur substantial costs to comply with current or future laws and regulations.regulations, particularly if these regulations change rapidly or require us to comply with multiple, diverging sets of requirements in the different jurisdictions in which we operate. The global trend in environmental regulation is to impose increasingly stringent restrictions on activities that may affect the environment.environment, although certain governments, including the current U.S. Administration, are engaging in efforts to reduce climate-related regulations in various jurisdictions in which we operate. Such regulations have in the past included, and may in the future include, laws and rules designed to reduce emissions of GHG, SO2, NOx, particulate matter and other air pollutants. For instance, the EU has enacted GHG legislation and continues to expand the scope of such legislation. The EPA has promulgated regulations applicable to operations involving GHG above certain thresholds, and the United States and certain states within the United States have enacted, or are considering, limitations on GHG emissions. Any new or amended environmental laws and regulations may result in costly measures for matters subject to regulation, including but not limited to more stringent limits or control requirements for our air emissions; new or increased compliance obligations relating to emission of GHG, SO2, NOx, and particulate matter; any impact our operations could have on the environment or surrounding community; which, in each case, could have a material adverse effect on our operations and financial condition and cash flows. We may be unable to offset these impacts or costs with price increases, productivity improvements, or cost-reduction efforts. Any success we do have in offsetting these impacts or costs will depend on competitive and economic conditions that are inherently variable.

Given the industry we operate in, regulations requiring a reduction of or that impose additional taxes or fees on greenhouse gas emissions may have a significant impact on our business, financial conditions, results of operations and cash flows as further explained below. Despite our efforts to control,control emissions, significant volumes of CO2, a GHG, are emitted in our carbon black manufacturing processes. Over the past few decades, the relationship between GHGs and concern for global climate change have resulted in increased levels of scrutiny from regulators, investors and the public alike, and have led to proposed and enacted laws and regulations on both national and supranational levels, to monitor, regulate, control and tax emissions of CO2 and other GHGs. These laws and regulations could adversely affect our business, financial condition, results of operations and cash flows. Investors and other financial institutions are also focused on sustainability and climate change as it relates to their investment and financing decisions. Increased awareness in the investment community and any adverse publicity in the global marketplace about potential impacts on climate change by us or other companies in our industry could also harm our reputation.

Currently, approximately halfMost of our manufacturing sites, including one jointly owned production facility, have some form of co-generation transforming waste heat from combusting exhaust gas, the main by-product of the carbon black production process, into electricity, steam or hot water. Some of this co-generated energy is self-consumed, and the excess may be sold to third parties. Our ability to benefit from co-generation, and in particular our ability to sell it to third parties, may be limited due to general market conditions or regulatory changes, which may adversely affect our business, results of operations and cash flows.

We may also be subject to litigation based on environmental matters such hasas pollution, remediation, contamination, or exposure to hazardous substances either in the workplace or resulting from the use of our products. This litigation could result in substantial liability for us, which could have a material adverse effect on our business, financial condition and/or profitability. Certain environmental groups could also initiate litigation against us, which could cause reputational as well as financial harm.

Our intellectual property rights are important to our success and competitive position. We own various patents and other intellectual property rights and have licenses to use intellectual property rights covering some of our products as well as certain processes and product uses. We often choose not to seek to patent a production method or product in order to avoid disclosure of business specific know-how. In addition to patents, a significant part of our intellectual property are our trade secrets, general know-how and experience regarding manufacturing technology, plant operation and quality management, which third parties, including our competitors, may develop independently without violating our trade secret rights. We make careful assessments with respect to production process improvements and decide whether to apply for patents or retain and protect them as trade secrets. In some of the countries in which we operate or sell products, such as China, the laws protecting patent holders are scoped or interpreted differently than in the U.S., the EU or certain other regions. When we file a patent application, it is usually filed for all countries with active competition where we have existing customers. Nonetheless, because the laws and enforcement mechanisms in some countries may not be as effective as in others, and because our intellectual property rights may, if asserted, ultimately be found to be invalid or unenforceable, we may not be able to protect all of our intellectual property rights successfully. Insufficient protection of intellectual property may limit our ability to make use of technological advantages or result in a reduction of future profits. This may cause competitive restrictions and may have an adverse effect on our business, financial condition, results of operations and cash flows.

In addition, a downgrade could adversely affect our existing financing, limit access to the capital or credit markets, or otherwise adversely affect the availability of other new financing on favorable terms, if at all, result in more restrictive covenants in agreements governing the terms of any future indebtedness that we incur, increase our borrowing costs,costs or otherwise adversely affect our business, financial condition, results of operations and cash flows.

We are exposed to market risks relating to fluctuations in foreign currency exchange and interest rates. Our results of operations have in the past been affected and may in the future be affected by both the transaction and translation effects of foreign currency exchange rate fluctuations. We are exposed to currency fluctuation when we convert currencies that we may receive for our products into currencies required to pay our debt, or into currencies in which we purchase raw materials, meet our fixed costs or pay for services, any of which could result in a gain or loss depending on fluctuations in exchange rates. Fluctuations in currency exchange rates could require us to reduce our prices to remain competitive in foreign markets. In each case, the relevant income or expense is reported in the relevant local currency and is translated into the U.S. dollar at the applicable currency exchange rate for inclusion in our consolidated financial statements. Therefore, our financial results in any given period are materially affected by fluctuations in the value of the U.S. dollar relative to other currencies, in particular the euros,euro, the Korean won and Chinese renminbi. In addition, certain of our outstanding debt obligations are denominated, pay interest and must be repaid in euros (and certain of our future debt obligations may be denominated in euros), and therefore expose us to additional exchange rate risks. An appreciation of the euro would make our financing under euro-denominated instruments more expensive. We are also exposed to adverse changes in interest rates. We manage our foreign exchange risk through normal operating and financing activities and, when deemed appropriate, through the selective use of derivative transactions, the effectiveness of which is dependent, in part, upon the counterparties to these contracts honoring their financial obligations to us. We cannot be certain that we will be successful in reducing the risks inherent in exposures to foreign currency and interest rate fluctuations, and our financial results could be adversely affected.

Other international tax measures, such as the Organization for Economic Cooperation and Development’s (“OECD’s”) base erosion and profit shifting (“BEPS”) project and the global minimum taxation regime (“Pillar Two”) contribute to increased uncertainty and may adversely affect our tax provision. The BEPS project contemplates changes to numerous international tax principles, as well as national tax incentives, and these changes, when adopted by individual countries, could adversely affect our provision for income taxes. The rules are fairly new and certain aspects of Pillar Two are not yet finalized. We continuously monitor the development of these rules and if and to which extent they may affect us. Changes in these and other international tax measures, as well as our interpretation of them and their impacts on our business, could adversely impact our tax rates and have a material adverse effect on our business, financial condition, results of operations and cash flows.

As there is no direct treaty in force on the reciprocal recognition and enforcement of judgments in civil and commercial matters between the U.S. and Luxembourg, courts in Luxembourg will not automatically recognize and enforce a final judgment rendered by a U.S. court. The enforceability in Luxembourg courts of judgments rendered by U.S. courts will be subject to the procedure and the conditions set forth in the Luxembourg procedural code.

Our success is dependent on the management and leadership skills of our key management and personnel. The loss of any member of our key leadership team,team and personnelpersonnel, or an inability to attract, retain, develop and maintain additional personnel could prevent us from implementing our business strategy. The loss of one or more members of our key management or operating personnel, or the failure to attract, retain and develop additional key personnel, could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Reconciliation of Non-GAAP Financial Measures

•Adjusted EBITDA—Income from operations before depreciation and amortization, stock-based compensation, and non-recurring items (such as, restructuring expenses, Loss (recovery) due to misappropriation of assets, net, Goodwill impairment, etc.) plus Earnings in affiliated companies, net of tax.

Our operations are managed by senior executives who report to our Chief Executive Officer (“CEO”), the chiefChief operatingOperating decisionDecision makerMaker (“CODM”). Adjusted EBITDA is used by 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 use this measure, together with other measures of performance under GAAP, to compare the relative performance of operations in planning, budgeting and reviewing our business. We believe these measures are useful measuresmetrics of financial performance in addition to Net income, Income from operations and other profitability measures under GAAP, because they facilitate operating performance comparisons from period to period. By eliminating potential differences in results of operations between periods caused by factors such as depreciation and amortization, 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. In addition, we believe these non-GAAP measures aid investors by providing additional insight into our operational performance and help clarify trends affecting our business.

The following tablestable presentpresents a reconciliationReconciliation of eachNet Non-GAAPincome measure(loss) to theAdjusted most directly comparable GAAP measureEBITDA:

The following discussion and analysis summarizes the significant factors affecting our results of operations and financial condition during the three and six months ended MarchJune 31,30, 2026 and 2025 and should be read in conjunction with the information included under Item 1. Financial Statements and Supplementary Data (Unaudited) elsewhere in this report. Results for the three and six month periods ended MarchJune 31,30, 2026 isare not necessarily indicative of results that may be expected for the entire year.

For the three months ended MarchJune 31,30, 2026 compared to three months ended MarchJune 31,30, 2025

Cost of sales for the three months ended MarchJune 31,30, 2026 increased marginally by $0.7$39.9 million, or 0.2%,11%, year over year to $380.3$407.9 million.million, mainly due to feedstocks linked to higher oil costs driven by the Middle East conflict.

Gross profit for the three months ended MarchJune 31,30, 2026 decreased by $18.9$5.4 million, or 19.3%,5%, year over year to $79.2$93.0 million. The decrease was primarily driven by an unfavorable productpricing impact of 11%, owing primarily to annual contract agreements in the Rubber Carbon Black segment, partially offset by a 4% favorable volume impact and regional3% mix,favorable unfavorableforeign timingexchange fromrate the pass-through effect of raw material costs and contractual pricing.impact.

Selling, general and administrative expenses for the three months ended MarchJune 31,30, 2026 increased marginally by $0.7$5.0 million, or 1.2%,9%, year over year to $59.1$62.7 million. The increase was driven 4% due to higher freight and distribution expenses and 3% higher variable compensation.

Income tax expense for the three months ended MarchJune 31,30, 2026 and 2025 werewas $6.7$3.4 million and $8.9$4.6 million, respectively. Income tax expense is primarily determined based on the projected pre-tax income mix in countries with varying statutory tax rates and the impact of valuation allowances on tax losses.

Comprehensive Income (loss) and Net Income (loss)

Comprehensive lossincome for the three months ended June 30, 2026 decreased in the first quarter of 2026 by $14.8$4.1 millionmillion, or 95%, year over year to $4.7$0.2 million. The components of Comprehensive income (loss) are discussed below:

Net income for the three months ended June 30, 2026 decreased by $19.0$7.2 millionmillion, inor the80%, firstyear quarterover of 2026 comparedyear to the$1.8 first quarter of 2025million as discussed above.

The activities from the components of Other Comprehensivecomprehensive income (loss) are discussed below:

•$1.0$3.2 million of net favorable impact due to change in foreign currency translation adjustments as a result of the weakening of the U.S. dollar versus euro, andeuro.

•$3.2$3.0 million of net favorable impactimpacts related to financial derivative instruments,instruments primarily driven by net periodic changes in cross currency and interest rate swaps.

These non-GAAP measures include, but are not limited to, EBITDA, Adjusted EBITDA, Segment Gross Profit, Net Working Capital, Capital Expenditures and Free Cash Flow.

•Adjusted EBITDA—Income from operations before depreciation and amortization, stock-basedstock based compensation, and non-recurring items (such as, restructuring expenses, legal settlement gain, loss (recovery) due to assets misappropriation, net, etc.) plus Earnings in affiliated companies, net of tax.

Our operations are managed by senior executives who report to our Chief Executive Officer (“CEO”), thewho is our chief operating decision maker (“CODM”). Adjusted EBITDA is used by our 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 use this measure, together with other measures of performance under GAAP, to compare the relative performance of operations in planning, budgeting and reviewing our business. We believe these measures are useful measures of financial performance in addition to Net income, Income from operations and other profitability measures under GAAP, because they facilitate operating performance comparisons from period to period. By eliminating potential differences in results of operations between periods caused by factors such as depreciation and amortization, 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. In addition, we believe these non-GAAP measures aid investors by providing additional insight into our operational performance and help clarify trends affecting our business.

For the quarter ending June 30, 2026, Adjusted EBITDA decreased $10.6 million, or 15%, year over year to $58.2 million. The decrease was driven by a 16% unfavorable timingpricing offrom thelower pass-throughannual contract agreements and a 4% effect of raw material costs, lower contractual pricing,from unfavorable product and regional mix in our Rubber Carbon Black segmentsegment, andwhich higher production costs. These werewas partially offset by afavorable favorablevolume and product mix in our Specialty Carbon Black segment. Additionally, foreign exchange rate impact inwas bothfavorable segments.by 4%.

Net sales increased by $9.0$26.7 million, or 5.6%,17%, year over year to $169.7$184.8 million, for the three months ended MarchJune 31,30, 2026, driven primarily by 8% higher volumepricing, mainly on higher year-over-year oil prices, 4% favorable product mix, 3% benefit from higher volumes in our Americas and EMEA regions,regions and a 2% favorable foreign exchange rate impact, favorable product mix, those were partially offset by unfavorable price.impact.

GrossAdjusted profitEBITDA increased by $3.2$19.1 million, or 8.0%,96%, year over year,year to $43.2$39.0 million for the three months ended MarchJune 31,30, 2026,2026. primarilyThe increase was driven 52% by thebeneficial pricing across most products and regions, supported by higher volumeoil andprices, a 22% effect from higher volumes, a 19% benefit from favorable product mix.mix and a 4% favorable foreign exchange rate impact.

AdjustedNet EBITDA for the three months ended March 31, 2026sales increased by $1.7$35.7 million, or 6.7%,11%, year over year to $27.1$354.5 million.million Thefor increasethe drivesix months ended June 30, 2026, driven primarily by highera volume,4% favorable foreign exchange rate impact, 4% favorable product mix and favorable3% foreignhigher currencyvolumes, translation impact, partially offsetdriven by higher productiondemand costs.in our Americas and EMEA regions.