Orion S.A. Common Shares

And welcome to the Orion Engineered Carbons first quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. A brief 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. As a reminder, this conference is being recorded. It is now my pleasure to introduce our host, Wendy Wilson, Head of Investor Relations. Thank you, man. You may begin.

Thank you, operator. Good morning, everyone, and welcome to Orion Engineered Carbon Conference Call to discuss our first quarter 2023 financial results. I'm Wendy Wilson, Head of Investor Relations. With me today are Corning Painter, Chief Executive Officer, and Jeff Gleick, Chief Financial Officer. We issued our press release after the market closed yesterday, and we also posted a slide presentation to the investor relations portion of our website. We will be referencing this presentation during the call. Before we begin, I'd like 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 as described in the company's filings with the SEC, and our actual results may differ from those described during the call. In addition, all forward-looking statements are made as of today, May 5th. The company is not obligated to update any forward-looking statements based on new circumstances or revised expectations. All non-GAAP financial measures discussed during this call are reconciled to the most directly comparable GAAP measures in the table attached to our press release. I'll now turn the call over to Corning Painters.

Thank you, Wendy. Good morning, everyone, and welcome to our earnings conference call. We're off to a great start for the year, having delivered the higher rubber pricing to the bottom line, coupled with sequentially much stronger specialty results. I believe this reflects how our position in the economy has been transformed. With significant customer investments and onshoring, higher barriers to entry, and a trend towards deglobalization. We're one of the few manufacturers on track for a stronger 2023 compared with 2022. Thanks go out to the motivated and hardworking Orion team for the foundation we've built over the past years and for the progress that we're making in achieving our short-term and long-term goals. We delivered record first quarter adjusted EBITDA of approximately $101 million, a 21% increase year-on-year, and 55% sequentially. Adjusted diluted EPS of 74 cents, up 30% year-over-year, was also record, with rubber pricing resetting in line with our expectations and specialty outperforming those expectations. We had some timing benefits and a few non-repeating items in the quarter, which helped our results. Our underlying adjusted EBITDA run rate was $92 to $93 million, which would have been record results all the same. We also delivered strong first quarter operating cash flow, cutting the net debt ratio to just below 2.5 times. We expect to drive that lower throughout the year. Jeff will discuss this further. This morning, we announced that the board has authorized a new share repurchase plan. We will complete our previously announced share buyback program later this month, and this new authorization will extend through mid-year 2027. Combined with the soon-to-be-completed repurchase authorization, the company has the potential to purchase up to 15% of its outstanding shares. Of course, we're going to take a balanced approach between allocating funds for growth and productivity opportunities, reducing debt further into our target leverage ratio range, and supporting the second buyback authorization. Let me highlight two additional key accomplishments for this quarter. First, our greenfield facility in Huaibei, China is completed and shipping sample materials to customers. We expect to be ramping production and sales over the course of this year. Second, to our knowledge, we're the only carbon black producer to have completed three air emission control projects in the United States at this point, with our Borger, Texas plant upgrade now online. We have one more plant to go, which we expect to complete in the second half of 2023. Before I turn the call over to Jeff, I'd like to introduce an important additional metric on slide four. As you can see, we have achieved exceptional gross profit per ton growth and record adjusted EBITDA. I'd like to point you to our also exceptional ROCE progress over that same period of time, despite the substantial Air Emission Controls investment. the ROCE levels which we achieved are significantly in excess of our weighted average cost of capital. This is an indicator of our ability to generate significant shareholder value as we profitably invest in our business. Business is not just about growth. It's about profitable growth and return on investment. This key metric keeps us aligned with our shareholders as stewards of their capital and the long-term sustainability of the company. With that, Jeff, perhaps you could provide some more color on our financial results.