Orion to Provide Update on Full-Year 2020 Guidance, Bolsters Cash Position and Enhances Financial Flexibility by Suspending Dividend

  • Withdrawing company guidance for 2020 financial performance
  • Bolstering cash position to approximately $100 million
  • Suspending dividend to significantly enhance financial flexibility

In response to the ongoing uncertainty surrounding the duration, magnitude and geographic reach of COVID-19, Orion Engineered Carbons S.A. (NYSE: OEC) today announced it is withdrawing its full-year 2020 guidance issued on February 20, 2020. The company also announced several proactive actions to maintain and strengthen its financial flexibility, including increasing its cash position and suspending its dividend.

Withdrawing Earnings Guidance

As stated in Orion’s earnings presentation dated February 21, 2020, the company’s guidance included its estimate of the 1Q20 financial and operational impacts of COVID 19. Given the increasing impact and uncertainty surrounding the duration, magnitude and geographic reach of COVID-19, and the likelihood that COVID-19 will have implications for our business for a prolonged period, the company is withdrawing its full-year 2020 guidance. Orion intends to provide an update as to the estimated financial impacts of COVID-19 during the company’s first quarter earnings conference call in May 2020, to the extent that available information permits.

Cash Bolstering and Financial Flexibility Enhancing Actions

As previously disclosed, the company had total liquidity of approximately $355 million as of December 31, 2019 mainly from a revolving credit facility and ancillary credit lines. As a proactive measure, the company partially drew down its revolver, effective March 24, 2020, to access cash sufficient to increase its cash position at quarter end to approximately $100 million from $63.7 million at December 31, 2019. The impact on the balance sheet of the increase in cash will be net debt neutral.

Orion’s previously announced interim dividend in the amount of $0.20 per Common Share will be paid on March 31, 2020 to holders of record as of the close of business on March 10, 2020, as planned. However, the Orion Board has suspended further dividend payments in order to enhance the company’s financial flexibility to successfully manage through the current pandemic and its aftermath.

Corning Painter, Chief Executive Officer, said,

“Given the now global economic uncertainty COVID-19 has created, our ability to accurately predict the financial impact to Orion is limited. In the interest of being prudent and transparent, we believe it is appropriate to withdraw financial guidance for the year. While it is impossible to know the ultimate dimensions of the economic impact of COVID-19, we enter this period with a high performing global team, sound balance sheet, attractive debt maturity profile and substantial liquidity to withstand this economic downturn and emerge even stronger, when it is over.”

Source: Orion 

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