Orion S.A. Common Shares

Welcome to Orion SA Full Year 2023 Financial Results 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 your host, Wendy Wilson, Head of Investor Relations. Thank you, Ms. Wilson. You may begin.

Thank you, Ranju. Good morning, everyone, and welcome to Orion's conference call to discuss our 2023 financial results. I'm Wendy Wilson, Head of Investor Relations. With me today are Corning Painter, Chief Executive Officer, and Jeff Gleit, 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, February 15, 2024. 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 here press release. I'll now turn the call over to Corny Painter.

Thank you, Wendy. Good morning, everyone, and thank you for joining our call today. In 2023, we delivered another year of record-adjusted EBITDA, our third year of growth. As good as that is, we are not satisfied. If demand had not cooled off over the year, our results could have been in line with or even beaten our initial guidance. When Jeff takes you through the EBITDA waterfall on slide nine, you'll see just how impactful the 2023 contract round was and how the slowing underlying markets impacted us. The good news is, as we predicted, we achieved our goals for the 2024 rubber pricing cycle, despite relatively weak demand in our key markets. I believe this sets us up well for the 2025 cycle, which will be negotiated later this year. Our customers remain cautious about 2024 volume, and our guidance reflects that. I'll explain more about that later on the call. Focusing on 2023 and consistent with our pre-release commentary From our January 22nd press release, full-year adjusted EBITDA was $332 million, and adjusted diluted EPS came in at $1.92. We also delivered strong operating cash flow and strengthened our balance sheet. We returned $1.10 per share to shareholders by repurchasing stock. We also lowered our debt by $1.30 per share, or $78 million. This reduced our net leverage to 2.35 times EBITDA, down from three times EBITDA just 18 months ago. On the operations front, we completed our final air emission upgrade project in the U.S. It is hard to express how big this is for Orion. A huge thank you to our engineering and operations team. Well done. This now allows us to focus our capital allocation to growth, debt reduction, and returning value to our shareholders. I see capital allocation as my top responsibility after safety. Beyond the implications for capital allocation, completing the air emissions work means we can just shift more of our effort to reliability, productivity, and quality. As you'll see later in our presentation, we are also confirming our 2025 mid-cycle earnings capacity goal. While we'll need something more like the pre-COVID market conditions to more fully load that capacity, we believe the path is clear and achievable. Jeff will review this later in the call. There are so many more highlights to 2023 beyond those we featured in our slides today. For example, we've completed a number of steps in our journey to advance our sustainability goals. We achieved our 2022 emissions target in the U.S. and received a 10 basis points rate reduction in our interest payments on our sustainability-linked term loan. If you recall, Orion agreed to the seven-year $650 million term loan in 2021, and we were one of the first companies to link the loan to environmental goals. If we meet our targets for all four years, we could reduce our financing costs by a total of $2.6 million. We introduced Kappa 10, a new conductive carbon aimed at batteries with more of a cost-based value proposition. We believe this product is well-positioned for that portion of the market. We were also selected for a 6.4 million euro grant from the German government and the European Union. further develop and demonstrate a climate-neutral process for producing carbon black from alternative carbon sources. We have already shown that we can make a wide range of carbon black raids with bio-circular raw materials, backed up. The challenge is now to improve efficiency to make these more cost-competitive. That's what this funding will help with. We believe there is strong demand for these materials as we make them more cost-effective. Also, in 2023, we secured international sustainability and carbon certification for our flagship specialty plant in Cologne. It's not just the tire customers who want to build a circular economy, and this will help us to support specialty customers with sustainable and traceable carbon black. It also means we now lead the industry with a number of certified carbon black production sites. All of these achievements advance sustainability as a business model. Looking at our two business units, specialty demand, reflecting weak broader market conditions, continues to be subdued. We are using this as an opportunity to push new customer qualifications, upgrade our plants, and introduce new products like Kappa 10 to the market. We have achieved a number of recent wins in the battery, wiring cable, and coatings market. We've also achieved several technical milestones related to the ongoing deep bottlenecking of our high-performance surface-treated braids. In addition to the financial benefits of this, these successes allow us to better support our customers' growth plans and allows them to build us into new formulations with confidence. In the rubber business, we successfully completed our negotiations for 2024 per plan That we gained volumes in Europe should be no surprise at all with the coming ban on Russian carbon black. Importantly, we raised prices on top of last year's step-year step change. We did this in the face of relatively weak demand and outlook from our customers and at a time of some painful actions in the tire industry. We succeeded for several reasons. First, the industry has restructured. Tire capacity has grown in our key markets carbon black capacity has not. In North America, devaluecking has been offset by a plant closure, and the European Union, the investment entire capacity, beyond the investment entire capacity, there's the Russian ban coming this June. The changes that we're seeing in the long-term trade patterns are amplifying the importance of local production. There have been some recent announcements of capacity additions in other markets, but not in North America or in Europe, or in other countries where we manufacture. Second, we naturally need to earn a return on investment on our compliance investments, but also on our investments to renew our plants. By stepping up our maintenance and replacing end-of-life equipment, we improve our plant uptime and add effective capacity that our customers need for their continued growth. That investment warrants a return as well. Third, the industry wants sustainable offers. The investments we make, people, R&D, and supply chain to make this happen demand a return. All that is only fair to Orion, the people who work in our plants, and to you, our investors. Slide four is a good visual representation of our growing profitability. This is our third consecutive year of adjusted EBITDA growth, and based on our current guidance for 2024, this trend should continue. This also reflects how special our market space is. There are not many chemical or materials companies who had a record 2023, and we expect to set a new record this year. We're in a niche space with very attractive industry restructuring. The completion of the U.S. Air Emissions work, which was a burden, is another structural positive for us going forward. Despite those U.S. Air Emission projects, our ROCE has stabilized at a level well above our cost of capital It is great to have that spending behind us. With that, I would ask Jeff to provide additional insights into our financial results and long-term goals.

Thank you, Corey. On slide five, you can see the consolidated results for the fourth quarter. Beyond this slide, I will focus more on the full year, but the detailed quarterly financial and EBITDA walks for both businesses are in the appendix. For Q4, Volume was up mainly from the specialty polymers market and from our new facility in China. This was partly offset by lower volume in the Americas. Revenue was essentially flat due to higher contractual pricing in our rubber business, offset by lower oil pricing in the quarter. Gross profit and gross profit per ton were down due to the cogeneration effects from the lower European electricity pricing and unfavorable product and geographic mixed in both segments. In addition, higher maintenance turnaround activity, including Y-bay, the final EPA start-up cost and other timing items affected the court. Gross profit per ton was up slightly in rubber versus Q4 last year, but down sequentially at $357. Rubber gross profit was leaked due to several reasons. First, volume while it was slightly up, but we had more volume in China and less in the Americas. This geographical swing adversely impacts gross profit. Second, the expected impact on cogeneration from lower electricity prices in Europe. And finally, continued startup costs at Huawei and the final EPA project, which hurt rubber at the gross profit level. Specialty gross profit per ton was down very sharply versus prior year and sequentially at $492. While we had higher volume, it was primarily from the lower margin polymer market and . This resulted in a less profitable product mix in the quarter. Specialty was impacted by the lower electricity prices in Europe, similar to rubber. European cogen effects are more impactful than specialty on a per ton basis since Global rubber volumes are three to four times down special. Finally, costs were up due to higher maintenance, startup, and timing related items. We'll talk more about how we expect specialty to recover in both the near and longer term in subsequent slides. One final item in the quarter, our tax rate was extremely high. This was due to a few items which impacted the full year tax rate, specifically a provision for a German tax audit going back to 2017, a prior year tax adjustment, and a full year true of our LTIP tax charges. The full year tax rate was 37%. We expect to be back near 30% for 2024. On to slide six. For the full year, the success of our rubber price, 2023 rubber pricing negotiations helped us achieve a record adjusted EBITDA despite numerous headwinds in both businesses. Customer demand weakened as the year progressed. Ultimately, volume was down across all regions except China. Electricity prices in Europe were dramatically lower from their elevated level in 2022. This alone had a $30 million impact on 2023 results. Without this impact, gross profit for Tong would have been up $50 instead of $18. Mixed deteriorated Slide seven provides the year-to-date EBITDA drivers. Strong pricing in rubber was offset by weaker volume across both businesses and less benefits from cogeneration. Last year's very high European electricity prices made for a difficult comparable. We also have YBA and EPA startup costs, related startup costs. On slide eight, a rubber volume decrease was impacted by lower demand in the Americas and EMEA and lack of recovery in tire production in those markets. We experienced the higher gross profit per ton driven by the contractual price increases, but this was partially offset by the lower cogeneration pricing effects. It's important to note that our 2023 gross profit per ton was up 22% compared with 2022. As Courtney noted, successful 2024 pricing negotiation and expect next year's gross profit per ton to be in line with the full year 2023 levels. Slide 9 shows in a waterfall chart the effects of rubber as discussed on the previous slide. On to slide 10. Volume was relatively flat especially for the year with weakness across most geographies and the printing market offset by gains in China and the polymer market. All other financial metrics were down. The change in mix as well as the reduction of cogeneration effects due to the lower European power pricing contributed to the weaker results. As we look forward, we believe the following will move in a positive direction for specialty. Volumes will improve as we move toward mid-cycle conditions. Two, as volumes improve, we believe we'll have more pricing power. Mix should improve with business conditions, and as a result of our debottle-necking of our premium products. It's early, but we're starting to see some promising signs. Four, the EPA and quite a big set of costs are mainly behind us. And five, the battery market remains a significant upside for us. On this slide 11, which shows in a waterfall chart those categories affecting specialty as discussed on the previous slide, gross profit per ton decreased due to both geographic mix, which you see in volume, market mix of sales, which you see in mix, as well as lower code generation effects, which you see in cost. Importantly, for the specific mix of products that we sold in the quarter, our pricing has remained stable. Slide 12 looks at cash flow for the year. Our improved cash flow allowed us to both repurchase $66 million worth of shares and reduce our debt by $78 million. Our debt-to-event ratio now stands at 2.35, down from nearly three times just 18 months ago. As Courtney mentioned earlier on the call, we spent $1.10 per share to repurchase stocks and $1.30 per share to reduce our debt. Our goal is to reduce our total debt, improve our debt-to-event ratio, and continue to strengthen our balance sheet. We've made substantial progress in all of these areas over the past year. On slide 13, we have transitioned to a dramatic increase on our discretionary cash flow conversion as we have stepped up our profitability and at the same time completing our EPA projects. Note that our 2023 conversion rate included $89 million in working capital improvement from changes in our customer agreements. We expect to Let's look at capital spending on slide 14. Up through 2023, we had a significant capex related to our EPA report. This spending reduced in 2023 and is now behind us. With our increased EBITDA and no future EPA capital spending, we expect to focus on growth investments and high return projects, as well as a sustained higher level of maintenance projects, which will improve reliability. For 2024 and 2025, the majority of our growth capex will be for our conductors plan in LaPorte, Texas. We will also complete some high return de-bottlenecking projects in our specialty business. Other than LaPorte, the growth investments shown in 2025 carry us beyond our 2025 mid-cycle EBITDA capacity goals. We will prioritize those accordingly as we develop our 2025 capital plan later this year. The hash line for 2025 is a placeholder for those potential growth and productivity opportunities. These projects are not committed to at this point, and again, we will prioritize them as part of our capital allocation process. Perhaps another way to look at this is between maintenance and report, we expect to spend approximately currently just a placeholder. On to slide 15. Before we discuss our 2024 guidance, we want to provide an update on our progress toward our mid-cycle capacity goal of $500 million of EBITDA. We believe at mid-cycle, we would expect global economies and demand for our product to be at pre-COVID levels. We would not expect extraordinary pricing for carbon efficiently to offset cost inflation. The volume level, which would correspond to plant utilization in the upper 80% range, would generate a rubber volume of 840 to 860 kT and 260 to 280 kT for specialty. The specialty volume excludes the incremental 12 kT from report. For us to meet these volume levels, we do not We have achieved these values before, and we are confident we can do it again. On slide 16, according to the Discuss 2024 Guidance shortly, we'll have a midpoint of $350 million of EBITDA. To move from $350 million to $500 million, there are three major components. First off, the capital conductors business should add about $50 million. Most of that, 80 to 90%, comes from the report plan, which we expect to be on stream in mid-2025. The remaining $100 million gain is split $70 million in volume and $30 million in margin. The former is primarily a recovery in our end markets to mid-cycle level. This includes approximately 80 to 100 KT in rubber and 20 to 40 KT in specialty compared with our estimates for 2024. Most of this capacity is already in place to achieve these volume levels. There's a portion of specialty volume growth that requires completing de-bottle decking projects for some high-end products. But again, most of the volume gains needed are for market improvement, not capacity increases. Using the midpoints, the 90 kT of rubber volume would be at an incremental EBITDA per ton of approximately $400, very much in line with our current GP per ton For specialty, the incremental volume of 30 kT is closer to $100 per ton. This volume is partly due to the recovery of our current market mix, which has a lower incremental profit plus volume gains in our higher-end products, including the de-bottlenecking projects that we have discussed in the past. This is not simply a math exercise. We have specific products in high-end markets that achieve these margin levels today. Finally, the $30 million of margin gains are pricing a mix. The $500 million target split roughly 60-40 between rubber and specialty. The details for each business are also in the appendix slides. With that, I will turn the call back over to Courtney to discuss our 2024 guidance.

Thanks, Jeff. And just one clarification. It's $1,000 per ton on the specialty, and we think that makes sense for all the reasons Jeff just outlined. Based on our discussions with customers and given the slow recovery in our markets that we've observed, we're projecting mid-single-digit adjusted EBITDA percentage growth in 2024. Many chemical firms saw their profits shrinking in 2023 and are bouncing back from a lower base, With projections of a soft landing in the US and the expected weakness in the EU and Chinese economies, we expect our EBITDA growth for 2024 to be similar to what we achieved in 2023. That said, we believe we are well positioned for whatever 2024 brings, and it will be another year of record growth for Orion. We are confident in our business and are setting our adjusted EBITDA guidance range to $340 to $360 million today. This EBITDA guidance is up over 5% at the midpoint and supports our adjusted EPS guidance range of $2.05 to $2.20 per share, which is an increase of 11% at the midpoint. I'll close with six points. First, we built on last year's rubber pricing game. An upset. Second, we're beginning to see a rebound in specialty mix in Q1. Third, 2023 was our third straight year of EBITDA growth, and our expectation is that 2024 will be our fourth. Fourth, the U.S. air emissions projects are complete. This is huge for us. Fifth, we don't have the one-time working capital reduction from improved customer terms like we did last year. Nonetheless, underlying discretionary cash continues to improve. Sixth, this year, our growth investments are focused on our new acetylene-based plant in LaPorte, Texas, and some deep bottlenecking of our high-value products that customers want. With that, Renju, please open up the lines for questions.

Thank you. We will now be conducting a question and answer session. If you would 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 would like to remove your questions from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. As a reminder, Please restrict yourself to one question and one follow-up. One moment, please, while we poll for questions. The first question comes from the line of Josh Spector with UBS. Please go ahead.

Yeah, hi. Good morning. Good morning, Josh. So I wanted to ask around CapEx. And I think, Jeff, in the comments, you maybe clarified a bit, but so 2025, Really, what should we be expecting as a base case? So is $150 million-ish the base case, and then you would invest more in de-bottlenecking if need be? And I ask that in the context of you show what capacity you have in specialty. You have a pretty muted outlook on volume this year. It would seem you could kind of grow into your capacity over the next few years and maybe shift to cash return versus growth. And I'm just wondering how you're thinking about that different dynamic.

Yeah, so I think you're correct, right? You should think about 150 is a number that we're on track of for next year. And then we'll look at the additional cash we have and we'll consider strategic options. So maybe there's something around batteries that we want to continue to invest in and see an important element there. It might be that we see, no, really the best thing here is simply to return the capital via share purchase or other mechanisms for it. It might be that we decide to green light some, let's say, lower risk productivity projects. But I'd say 150 is what we're on track for. And we're really just trying to show that we have growth opportunities. We have opportunities to enhance our profitability that are discretionary for us. Jeff, anything you'd like to add?

No, I think that's pretty clear. We will decide this as we get later this calendar year. We're looking into 2025, our capital allocation, what's the right approach for us. I think importantly, though, if we do spend in 2025 for growth or productivity capex, it's not likely to have a significant impact on the 2025 profitability levels, but more beyond that.

Yeah, thanks. And I guess, I mean, what do you say investors that might look at that slide 14 and say you spent a couple hundred million on growth investments and you're not seeing it in specialty? I guess obviously that's probably not fair in the context of where volumes are today, but what's the embedded view there about your success on those investments and returns?

Right. So look, the one big investment we have in specialty is is the acetylene facility in La Porte, and it's not on stream yet. So no one should expect to see something from that yet. People should look at this, I think, and say, yeah, they're on track for 150 million next year, but it's a company that has growth prospects. So there's another concern out there, what's your next act? And I would just say we have choices on it, but they're choices. And clearly, if we don't think the market's ready, we don't think the timing's right, if we don't think the environment is clear, then we wouldn't do it.

Yeah, sorry. I guess I was asking about more of the historical spend. I mean, obviously, LaPorte isn't in there, but over the last five years, you've spent a couple hundred million on growth investments. Specialty is still underperforming versus 2019. I guess, how do you think about the returns on those investments? Have those met your expectations? Is it just we're not seeing it? Any comments there? Thanks.

Yeah. Well, so I would say the investment in Ravenna, that's worked out very, very well for us. It was loaded very quickly. I'd say the investment in Bayer was quite strategic for us. It's opened up this opportunity for us in a steadily. You know, China is a more difficult market for what it's worth of the business in China. I'd say the specialty is doing relatively well. It's a much more challenging environment there right now on the rubber side.

Okay, thank you.

Does that help, Josh?

Yeah, that helps. I'll turn it over. Thanks.

Thank you. Next question comes from the line of Lawrence Alexander with Jefferies. Please go ahead.

Good morning. It's Dan Rizawan for Lawrence. Thank you for taking my questions. When you look at your assumptions for 2025, do you assume, I mean, I know you assume better volumes, but are you assuming improvement in the overall macro environment in Europe, America, and in China?

Yeah, and that would drive us to the kind of demand profile that would fill up those, take us back to those levels that we achieved before. We would decide, we would think that is more mid-cycle than the current environment, which we would say from our demand profile is quite weak, really, in all three markets, in North America, Europe, and China.

So if we think about 2024 to 2025, then I guess that would assume that 2024, the outlook is kind of back half loaded. I was wondering about the cadence as we go into and try to get to the mid-cycle. It was soft in the beginning and then sequential improvements is, I guess, the way we should think about it.

No, no, I wouldn't say that. I think, look, our sense of 2024 is not as strong as I guess some people's are. I was in China in Q4. Didn't strike me as an economy that was about to accelerate. I think things are challenging in Europe, and North America will have an interesting election cycle. And in case nobody's noticed, the global order is a little bit stressed right now. So I think it's wise to just listen to our customers who are cautious for the year. For 2025, I think we have a good shot at being in a better place from a global economy, just as the natural cycle of the economy plays out. But again, we're talking about a capacity in 2025.

Just to be clear, we're not assuming that's our 2025 number by any means. That's a mid-cycle capacity number for us, which is how we've been representing it.

But I mean, with a return of the environment, I think 2025 could be a really good year for us. OK, we won't have report loaded in 2025, right? That's clear. But I think we could see a pretty dramatic swing in volumes in our base specialty in rubber business. It's going to depend upon the economic outlook in 2025, or as you say, as this year plays out. All right.

Thank you very much.

Thank you. Next question comes from the line of John Tan Banting with CTA Securities. Please go ahead, John.

Hi, good morning, guys. Thank you for taking my questions. I was wondering if you'd go through a little bit what you're seeing in Q1 so far in both segments from an underlying volume and NGP per ton perspective. And I think you mentioned especially rebound. Maybe you could give a little more color on that, where that's coming from. And two, as my follow-on, just what are you seeing in demand versus destocking the inventory trends? Thank you. Yeah.

So, interestingly, we've seen some strength in areas, some of which are less differentiated. Let's say film and pipe have been stronger areas, a certain degree of wire and cable. On the other hand, I'd say some things related to automotive and manufacturers who supply that terrain, so adhesives, engineered plastics, some areas like that, a bit weaker. MRG is certainly weaker for us in China. Regionally, I think we're really going to have to wait until March and April to see how China comes out of Chinese New Year. I don't see the big hockey stick flying out there, but we would be very happy if we prove wrong on that. And I think, you know, we see slight improvement in North America and not much in Europe right now is the sentiment.

Okay, and just on the end demand versus inventories and these stocking trends, especially in tires.

Yeah, so I mean, clearly, anecdotally, we hear from some players, let's say like distributors, who didn't place very large orders last year. One of our largest ones, when the whole thing began, I asked him, one of the owners, like, how do you think this is going to play out? And he compared it to previous recessions and how people overbought and then realized, wow, I got a year's supply in my warehouse. And two or three years ago, he predicted that to us. What we're seeing now is some of those players are beginning to place orders. So I think there's some indication that destocking, at least in that space, seems to be improving for us at this point. But, you know, this is very much a customer-by-customer situation, and it's going to depend over the course of the year how they see customer demand playing.

Okay, great. I'll jump back in queue. Thank you. All right.

Thank you. Next question comes from the line of Jeff Jakowskis with JPMorgan. Please go ahead.

Hi, this is Lydia Huang on for Jeff. Can you talk about what to expect in 2024 in terms of pricing in the specialty segment?

So I think the strength in pricing, we have, as we said, we've been holding our price for the specific products that we're in. I think that we'll be able to continue to do that as the year plays out. If we see a dramatic tightening in this market, obviously supply and demand, that would favor it. But I think that's maybe not going to be the biggest part of the story for this year. When you look at Orion specifically, though, I would always say keep in mind Mix is very important for us. So certain end segments, we add more value, so we're able to share in more value when we sell that. So the mix is where I think you're much more likely to see it than in, let's say, raw and customer pricing changes.

And in terms of price and mix, do you see it trending down sequentially quarter-to-date in relation to fourth-quarter levels?

No, no, no, we do not.

Okay, thank you.

Thank you. Next question comes from John Tang, Van Tang with CGA Securities. Please go ahead.

Hi, I was wondering if you could give us a little more color on the competitive environment. You mentioned, obviously, that you finished your EP investments. And some of your peers have not done so, and I'm wondering what benefits that accrues to you, how that's incorporated into your guidance, and if you're actually seeing that in the market.

So I think that will play out for us when competitors bring on their plants. And oftentimes that's a challenging item. Most of these plants are not very young plants, so to speak. And so that startup of the new equipment can be challenging. It was certainly challenging for us as we did the work on our final plant. So I'd expect to see that impact if it plays out that way in Q2 or possibly Q3 for us.

Got it. Thank you. Jeff, I think you mentioned or maybe with your coin that you expect the GP per ton to be relatively flat this year. Did I mishear that or was that referring to a specific segment? And just to kind of help me understand what the drivers are to that with prices going up and if you expect volumes in prices.

Sure, sure, John. I actually think I was referencing rubber, that we expected rubber GP per ton, which was just over $400 a ton this past year. In 2023, we would expect to be very similar in 2024. We also had some cost increases, inflationary cost increases, and we have the, if you recall, we talked about the little bit of a headwind we have on cogeneration for some of the forward items that we bought last, we bought power forward last year, which helped us. So, we expect GDP retirement, that was really targeted toward rubber.

Got it. Can you quantify the impact of, year-over-year impact of cogen, if possible?

So the COGEN, we do have the $10 million impact on COGEN, and perhaps it ends up being even a little bit more than that. Are you talking 23 to 24 or 22 to 23? I'm sorry.

If you could give us both, that would be great, but I was looking more for 2022.

Got it. No problem. 2022 to 2023, I think we mentioned, was $30 million. That was primarily due to the price impact of power in Europe in 2022. 2023 to 2024, we probably have a $10 million headwind that we have from the the forward contract that we bought. We also have some additional, if you look at price, most of it, most of the impact was in 2023, but we will see additional impact in 2024, perhaps another $5 to $10 million beyond that. Understood. Thank you, guys. Sure.

Thank you. A reminder to all the participants that you have pressed star 1 to ask a question. There are no further questions at this time. I would now like to turn the floor over to Corning Painter for closing comments.

Okay, thank you for that. So one thing I'd add, Josh, just in my response to you on the whole issue of volumes, also keep in mind that Ravenna was initially going to be aimed at specialty. That plant came on as the invasion took place, and so that has really shifted that capacity over to the rubber area. Just one other area for your modeling thoughts as you think about that. But look, I just want to thank everyone for taking time out of your day to be with us. We appreciate it. Your time is valuable. And just one last time, it's just hard to describe, not just the capital, but the distraction, the effort to have the EPA work behind us is really tremendous for Orion. So with that, I hope you all have a good rest of your day. Thank you.

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