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Orion SA (OEC)
NYSE:OEC
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Orion SA
(NYSE:OEC)
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Rating:50Neutral
Price Target:
$6.50
▲(17.12% Upside)
Action:ReiteratedDate:02/19/26
The score is held back primarily by weakened profitability and elevated leverage, despite improved 2025 cash flow. Technicals are neutral-to-modestly improving but still below the long-term trend, while valuation is challenged by a negative P/E and only a modest dividend. The latest call adds some support from cash-preservation actions, but 2026 guidance points to a material EBITDA downdraft and ongoing industry pressure.
Positive Factors
Cash generation resilience
Orion produced positive free cash flow in 2025 after prior volatility, driven by working-capital gains that delivered $64M in Q4. Durable cash generation capacity supports debt servicing, funds selective investment, and gives management room to execute deleveraging and restructuring plans over the next 2–6 months.
CapEx discipline
A deliberate shift to a capital-light profile materially lowers near-term cash needs and preserves free cash flow. Sustained capex restraint improves the company’s ability to allocate cash to debt reduction or productivity investments, reducing refinancing pressure and supporting balance-sheet repair over several quarters.
Operational & ESG improvements
Measurable reliability and productivity gains (200bp improvement) plus top-tier ESG recognition indicate structural improvement in operations and risk management. Better uptime and safety reduce unit costs, support customer relationships, and lower operational disruption risk, improving sustainable margins and competitiveness.
Negative Factors
Elevated leverage
High absolute debt and multi‑x leverage materially constrain financial flexibility and increase refinancing and covenant risk if profits weaken. Even with recent reductions, servicing large debt requires sustained strong cash flow — a structural vulnerability if industry headwinds persist over the medium term.
Profitability deterioration
A swing to an annual net loss and compressed margins signals weakened earnings power that erodes equity and return profiles. Persistent profitability weakness undermines internal funding capacity, raises cost of capital, and heightens the risk that operational fixes and working-capital gains will be insufficient to restore durable profitability.
Structural demand headwinds & project delays
Sustained trade-driven demand weakness in core tire markets and delayed new-plant timing point to lower medium-term demand for core products. This reduces near-term utilization and postpones expected growth from projects, increasing the risk of margin pressure and underused capital for multiple quarters.
Orion SA (OEC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$365.78M
Dividend Yield1.61%
Average Volume (3M)935.23K
Price to Earnings (P/E)―
Beta (1Y)1.17
Revenue Growth-4.31%
EPS Growth-206.57%
CountryUS
Employees1,658
SectorBasic Materials
Sector Strength58
IndustryChemicals - Specialty
Share Statistics
EPS (TTM)-0.34
Shares Outstanding56,273,700
10 Day Avg. Volume1,047,203
30 Day Avg. Volume935,232
Financial Highlights & Ratios
PEG Ratio0.02
Price to Book (P/B)0.77
Price to Sales (P/S)0.16
P/FCF Ratio5.92
Enterprise Value/Market Cap3.36
Enterprise Value/Revenue0.68
Enterprise Value/Gross Profit3.42
Enterprise Value/Ebitda8.11
Forecast
1Y Price Target
$5.58Price Target Upside0.54% Upside
Rating ConsensusModerate Sell
Number of Analyst Covering3
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Orion SA Business Overview & Revenue Model
Company DescriptionOrion Engineered Carbons S.A., together with its subsidiaries, manufactures and sells carbon black products in Germany, the United States, South Korea, Brazil, China, South Africa, the rest of Europe, and internationally. It operates in two segments, Specialty Carbon Black and Rubber Carbon Black. The company offers post-treated specialty carbon black grades for coatings and printing applications; high purity carbon black grades for the fiber industry; and conductive carbon black grades for polymers, coatings, and battery electrodes. It also provides rubber carbon black products for applications in mechanical rubber goods under the PUREX brand, as well as in tires under the ECORAX brand name. The company was formerly known as Orion Engineered Carbons S.à r.l. and changed its name to Orion Engineered Carbons S.A. in July 2014. Orion Engineered Carbons S.A. was founded in 1862 and is headquartered in Senningerberg, Luxembourg.
How the Company Makes MoneyOrion Engineered Carbide generates revenue primarily through the sale of its engineered carbide products, which are used in various industrial applications. The company employs a direct sales model, collaborating closely with clients to deliver customized solutions that meet their operational requirements. Key revenue streams include the sale of standard and bespoke wear parts, cutting tools, and other engineered solutions. OEC also benefits from long-term contracts with major players in its target industries, providing a stable income base. Additionally, partnerships with technology providers and industry leaders enhance its product offerings and market reach, contributing positively to overall revenue growth.
Orion SA Key Performance Indicators (KPIs)
Orion SA Earnings Call Summary
Earnings Call Date:Feb 17, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 30, 2026
Earnings Call Sentiment Neutral
The call balanced clear operational and financial strengths—most notably positive free cash flow in a difficult year, successful working capital and CapEx reductions, safety and ESG accolades, improved plant reliability, and proactive credit amendments—against persistent industry headwinds (elevated tire imports, freight weakness) and notable near-term earnings pressure. Management emphasized cost actions and footprint rationalization to preserve cash, but 2026 guidance implies a material EBITDA decline versus 2025. Overall, positives (cash generation, cost actions, safety/ESG) offset but do not fully outweigh the expected earnings downdraft and external market risks, resulting in a cautious, balanced outlook.Q4-2025 Updates
Positive Updates
Full-Year EBITDA Outperformance
Delivered full-year adjusted EBITDA of $248,000,000 for 2025, exceeding the company's most recent outlook.
Positive Free Cash Flow and Working Capital Execution
Generated $55,000,000 of free cash flow for full-year 2025, driven by better-than-expected Q4 volumes and working capital initiatives (working capital initiatives delivered $64,000,000 in Q4 alone). Company expects continued positive free cash flow in 2026 with guidance of $25,000,000 to $50,000,000.
Material CapEx Reduction and 2026 CapEx Guidance
Reduced capital spending by $46,000,000 in 2025 vs. 2024 and guided 2026 CapEx to $90,000,000 (down $70,000,000 versus 2025), a capital-light stance to support free cash flow generation.
Operational Reliability and Productivity Gains
North American plant reliability improved by more than 200 basis points during 2025; company expects an additional $20,000,000 of productivity, efficiency, and headcount savings from actions taken.
Safety and ESG Recognition
Near-record safety performance with only three incidents globally in 2025 (second best year since going public) and an EcoVadis platinum rating placing Orion in the top 1% of companies surveyed in 2025.
Net Debt Reduction and Credit Flexibility
Reduced net debt by $40,000,000 in the quarter, finishing 2025 with $920,000,000 net debt and leverage of 3.7x (down from 3.8x). Successfully negotiated a credit agreement amendment providing additional covenant flexibility and unanimous bank support.
Specialty Segment Q4 Sequential Improvement
Specialty segment reported a Q4 adjusted EBITDA of $27,000,000 (improving 6% year-over-year and 23% sequentially) driven by positive mix and new production qualifications, indicating pockets of demand strength despite a soft year overall.
Restructuring and Footprint Rationalization Executed
Executed previously announced plan to rationalize 3–5 production lines and closed the intended lines, aligning capacity with demand to improve efficiency and cost structure.
Negative Updates
Industry Demand Headwinds from Elevated Tire Imports
Persisting elevated imports of lower-tier tires into Western regions and a related trade-down in consumer buying depressed Western tire production and pricing negotiations throughout 2025, creating a challenging backdrop for carbon black demand.
Rubber Segment Profitability Decline
Rubber segment full-year adjusted EBITDA was $155,000,000 but declined 20% year-over-year. Net sales decreased ~3% (lower pricing) even though volumes increased ~4% (driven by South America and APAC), reflecting adverse mix and pass-through effects from lower oil prices.
Specialty Segment Full-Year Weakness
Specialty full-year results reflected weaker demand: volumes decreased 5% year-over-year, net sales decreased 4%, and full-year adjusted EBITDA fell 14% year-over-year despite Q4 sequential improvement.
2026 EBITDA Guidance Indicates Meaningful Downdraft
2026 adjusted EBITDA guidance range is $160,000,000 to $200,000,000 versus $248,000,000 in 2025 — implying a potential decline of approximately 19% to 35% year-over-year depending on where results land within the range.
Free Cash Flow Guidance Reduced versus 2025 Outturn
Although 2025 free cash flow was $55,000,000, 2026 free cash flow is guided to $25,000,000–$50,000,000, reflecting the expectation of lower EBITDA and the company’s conservative planning posture.
Leverage and Credit Risks Require Management
Net debt remains elevated at $920,000,000 with leverage of ~3.7x; management required a credit agreement amendment to provide covenant headroom given the anticipated EBITDA downdraft.
Market and Project Timing Pressures (La Porte & Conductive Carbon)
Slower EV and conductive carbon demand led management to delay the La Porte project start to 2027, shifting expected depreciation and start-up activity into later periods and indicating softer near-term end-market demand (expected incremental depreciation of roughly $10,000,000 annually when online).
Tax and One-time Charges Impacting Reported Results
2025 effective tax rate influenced by a Q3 goodwill impairment charge that was non-deductible, creating a large tax-related item and valuation allowance movements that weighed on reported results.
Company Guidance
Orion guided 2026 adjusted EBITDA of $160–$200 million (with first‑half EBITDA of $90–$110 million, reflecting a historical ~55% H1 weighting), free cash flow of $25–$50 million, and capital expenditures of $90 million (down $70 million versus 2025). Management said this outlook assumes lower EBITDA versus 2025 ($248 million FY2025 adjusted EBITDA) but continued positive free cash flow after executing working‑capital initiatives that generated $64 million in Q4 and helped deliver $55 million of free cash flow for 2025; operating cash flow improved to $2 million for 2025, CapEx was $46 million lower than 2024, and Q4 net debt reduction was $40 million, finishing the year with $920 million of net debt and 3.7x leverage (down from 3.8x). They also plan $20 million of productivity/headcount savings, have rationalized 3–5 lines, improved North American plant reliability by >200 basis points, and secured a credit‑agreement amendment to provide leverage flexibility.Orion SA Financial Statement Overview
Summary
Overall fundamentals are pressured: profitability deteriorated sharply with a swing to a net loss in 2025 and weaker margins, while the balance sheet remains highly leveraged (debt-to-equity ~2.55x). Offsetting this, 2025 operating cash flow and free cash flow rebounded to positive, but cash generation has been volatile and remains modest relative to debt.Income Statement
Profitability has weakened meaningfully: net income swung to a loss in 2025 (-$70.1M) from a profit in 2024 ($44.2M), and margins compressed versus prior years (net margin -3.9% in 2025 vs +2.4% in 2024 and +5.5% in 2023). Revenue has also been soft, declining slightly in 2024–2025 after a post-2021 peak, with 2025 down ~1.2% year over year. A positive is that gross margin remains near ~20% and operating profitability (EBIT margin ~5.6% in 2025) is still positive, but overall earnings quality and trend have deteriorated.46
Neutral
Balance Sheet
Leverage remains elevated for the profile: debt-to-equity is ~2.55x in 2025 (still high despite improvement from 2020’s very high level). Equity has declined from 2023–2025, and returns to shareholders turned negative in 2025 (return on equity about -18%), reflecting the earnings loss. Total debt is sizable (~$980M) relative to equity (~$385M), which increases financial risk if profitability stays pressured, though total assets have been fairly stable.41
Neutral
Cash Flow
Cash generation improved in 2025 with solid operating cash flow ($211.2M) and positive free cash flow ($50.2M), a sharp rebound from negative free cash flow in 2024 (-$81.4M). However, cash flow has been volatile across the period (negative free cash flow in 2020–2022 and 2024, strong in 2023). Another concern is that in 2025 operating cash flow was modest relative to the company’s debt load (operating cash flow-to-debt around 0.34), suggesting limited near-term balance-sheet de-risking capacity without sustained improvement.58
Neutral
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 1.81B | 1.88B | 1.89B | 2.03B | 1.55B |
| Gross Profit | 359.80M | 428.80M | 451.00M | 448.80M | 386.60M |
| EBITDA | 233.50M | 225.90M | 324.90M | 308.00M | 327.10M |
| Net Income | -70.10M | 44.20M | 103.50M | 106.20M | 134.70M |
Balance Sheet | |||||
| Total Assets | 1.91B | 1.86B | 1.83B | 1.89B | 1.63B |
| Cash, Cash Equivalents and Short-Term Investments | 60.70M | 54.10M | 37.50M | 60.80M | 65.70M |
| Total Debt | 979.50M | 1.03B | 927.20M | 1.01B | 867.50M |
| Total Liabilities | 1.52B | 1.38B | 1.35B | 1.43B | 1.31B |
| Stockholders Equity | 384.60M | 474.90M | 478.50M | 459.40M | 319.70M |
Cash Flow | |||||
| Free Cash Flow | 50.20M | -81.40M | 173.10M | -151.80M | -69.50M |
| Operating Cash Flow | 211.20M | 125.30M | 345.90M | 81.00M | 145.20M |
| Investing Cash Flow | -161.00M | -206.70M | -172.80M | -232.80M | -214.70M |
| Financing Cash Flow | -36.60M | 89.30M | -197.10M | 149.30M | 73.30M |
Orion SA Technical Analysis
Negative
5.55
Price Trends
6.00
Negative
5.76
Negative
8.06
Negative
Market Momentum
0.02
Positive
40.35
Neutral
25.25
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For OEC, the sentiment is Negative. The current price of 5.55 is below the 20-day moving average (MA) of 6.58, below the 50-day MA of 6.00, and below the 200-day MA of 8.06, indicating a bearish trend. The MACD of 0.02 indicates Positive momentum. The RSI at 40.35 is Neutral, neither overbought nor oversold. The STOCH value of 25.25 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for OEC.
Orion SA Risk Analysis
Orion SA disclosed 37 risk factors in its most recent earnings report. Orion SA reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Orion SA Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $5.75B | 38.85 | 12.86% | 0.61% | 7.55% | 22.43% | |
74 Outperform | $3.93B | 13.23 | 20.88% | 2.72% | -7.04% | -11.28% | |
67 Neutral | $5.05B | 15.34 | 4.56% | ― | -6.73% | ― | |
65 Neutral | $3.89B | 29.02 | 12.31% | 1.70% | 4.25% | 56.51% | |
61 Neutral | $10.43B | 7.12 | -0.05% | 2.87% | 2.86% | -36.73% | |
55 Neutral | $3.17B | -9.20 | -87.12% | 4.37% | 2.12% | -579.74% | |
50 Neutral | $365.78M | -5.00 | -7.24% | 1.61% | -4.31% | -206.57% |
* Basic Materials Sector Average
OEC
Orion SA
5.55
-8.97
-61.77%
BCPC
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175.68
11.12
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CBT
Cabot
74.58
-8.32
-10.04%
SSL
Sasol
8.77
3.97
82.71%
SXT
Sensient Technologies
91.87
23.37
34.11%
CC
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18.03
2.47
15.87%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.