# DEAR FELLOW SHAREHOLDERS

_Source: `DeepSeekOCR_Ardian_pruned_1k/basic-materials-specialty-chemicals/NYSE_OEC_2020/NYSE_OEC_2020.mmd` · pages 3-9_

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DEAR FELLOW SHAREHOLDERS

Corning Painter – Chief Executive Officer

I'll never forget March 23rd, 2020, the day we suspended our dividend. That day Lorin Crenshaw and I spoke with 24 major investors and analysts. I knew we did the right thing but was ready for some tough calls.

![](images/3_0.jpg)

Instead, the vast majority of the calls were overwhelmingly supportive. In fact, I jotted down some of the comments and shared them on my next video to employees. In their video, I said that we all know that we work for investors, but so few of us get to meet them that it is not personal for most of us. I explained that I was sharing our investors' comments so that all of us at Orion could take pride in their support and trust, and feel the same personal commitment I feel: we are not going to let you, our investors, down.

## WE ARE AGILE

Early in the pandemic we committed ourselves to using this time to take action. Our goal was not just to ensure Orion survived; our goal was to use this opportunity to ensure we emerged stronger. In a way, the complete collapse in demand was a rare gift and we did not waste it. For example, there are certain plant reliability upgrades that are hard to do without shutting down the whole plant, so this work tends to build up. When the customer orders stopped, our people (labor and management) regrouped. We agreed to waive work rules and notice periods – everything but safety – and got to work. Work we would have normally contracted out, we did ourselves, keeping our people gainfully employed. People who normally worked in a lab worked with a shovel instead. It was not glamorous, but it was meaningful. We did it for ourselves, our families, our customers, and our investors – and we are a stronger company for it.

Beyond flexible, our people were fast. We strived to exceed our customer's expectations during the depths of the downturn and through the sudden surge in orders. We overrode demand forecasting processes, shortened planning periods, and stepped up the pulse of Orion. Despite the surge, we engineered work process improvements such as shortening cycle times to confirm orders. Through it all, our team was diligent with COVID-19 safety protocols so that we had zero workplace transmission, despite the fact that we operate in hotspots like Italy, Sweden, the USA, and Brazil.

Despite the pandemic, we decided to stay the course on investing in our people. In 2020, we launched a global wellness program, an e-learning platform, and a global human resources information system. These actions expanded learning and development opportunities, which in turn enhanced the value of this company.

## WE ARE RESILIENT

Our hard work was rewarded and proved our financial resilience. Our business model is time-tested – our Kalischeuren plant celebrated its 125th year anniversary in 2020. Orion, however, was not public prior to 2014, so the pandemic was the first serious macroeconomic challenge we have faced as a public company. I am pleased to say that we rose to the challenge: net leverage rose only one turn, year-over-year, and our business required only a net $27 million in borrowing operationally, as we advanced our EPA, safety, sustaining, and growth capital investments.

Fourth quarter volumes were up slightly from the prior year, with rubber at 98 percent and specialty at 115 percent of the prior year. A great position to leverage as we entered 2021.

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# We are setting the table for the future by expanding our capacity in growth markets, with an emphasis on higher margins, differentiated products, advancing our ESG-related offerings, and investing in our people.

As the prospects for herd immunity improve, we are recalibrating our capital allocation and dividend policy to maximize shareholder value. First, we intend to ensure our financial standing and dividend capacity across a severe economic downturn like 2020. Second, we will maintain more capital to fund value-enhancing growth initiatives than in years past. Finally, we'll establish a mechanism to guide the size and frequency of capital returned to shareholders over time. We believe these principles will result in a fundamentally higher earnings capacity and intrinsic value.

## WE ARE COMMITTED TO ENABLING A SUSTAINABLE FUTURE

We see rising interest in Environmental, Social, and Governance (ESG) concerns – particularly environmental – as a key opportunity that will become a threat if ignored. We are improving air emissions, cogeneration rates, and reporting transparency, having upgraded several plants in 2019 and 2020. We have stepped up our community support efforts and improved our governance, in terms of board independence and diversity. However, climate change and the advent of a circular economy are the strategic opportunities for our industry.

We have a threefold strategic focus to address climate change and the development of a circular economy:

■ Recycled carbon blacks: such as those made from oil recovered from end-of-life tires,

■ Green carbon blacks: derived from renewable feedstocks, and

■ Enabling carbon blacks: which are grades that enable lower fuel consumption or extend end-product life.

I am proud to say we are partnered with leading companies to drive a circular economy and sustainable solutions via the BlackCycle consortium. You will hear from us on these topics.

## SHIFTING TOWARD HIGHER MARGIN, SPECIALIZED CARBON BLACKS

We have several projects underway to shift the mix of our portfolio even more toward higher margin, specialized, and technical grade carbon blacks. We are completing an expansion of our Ravenna, Italy site adding 25 kilo metric tons principally to produce specialty grades, and we are building a new plant in Huaibei, China that will add 65-70 kilo metric tons primarily for specialty and technical rubber grades.

## LOOKING FORWARD

In the near-term, we are making the most of the economic recovery and staying agile to succeed in whatever demand scenario unfolds. At the same time, we are setting the table for the future by expanding our capacity in growth markets, with an emphasis on higher margins, differentiated products, advancing our ESG-related offerings, and investing in our people.

Sincerely,

![](images/4_0.jpg)

Corning Painter
Chief Executive Officer