Orion SA Stock (NYSE:OEC) Down Big On Guidance Cut – New Low In Store

Orion SA's stock (NYSE:OEC) plummeted in extended hours, as the carbon black producer slashed its adjusted EBITDA guidance for fiscal year 2025, triggering concerns about the company's near-term profitability. The stock experienced heavy selling pressure, and trades 18.71% lower this morning, extending what has been a year of heavy losses.

The stock price decline comes in response to the company's revised expectation for full-year 2025 adjusted EBITDA, now projected to be in the range of $220 million to $235 million, significantly lower than the previous forecast of $270 million to $290 million. Orion's stock had been trading at $6.84 at yesterday's close, already  down 55.21% YTD. From bad to worse for OEC bulls.

The company attributed the lowered guidance to a confluence of factors, including weaker demand in Western markets, particularly within the rubber segment, and an oil price-driven inventory revaluation that negatively impacted earnings. Further contributing to the revised outlook were efforts to reduce inventory levels, which affected fixed cost absorption, and an adverse shift in the product mix within the Specialty segment. Orion anticipates its third-quarter 2025 adjusted EBITDA to be around $55 million, pending any late accounting adjustments.

The challenging market conditions have prompted a strategic shift within Orion, with an intensified focus on free cash flow generation and debt reduction. Management noted that lower production levels, implemented in response to elevated tire imports and reduced manufacturing rates in the Western tire industry, had an offsetting effect on profitability due to lower absorption variances. While the company believes that evolving global trade dynamics, including U.S. tariff policy, will ultimately benefit its regional footprint, these factors have not yet translated into positive results for 2025.

Several financial institutions have weighed in on Orion's revised outlook, with J.P. Morgan downgrading the stock to “Underweight” and Mizuho Securities reiterating an “Underperform” rating with a price target of $9.00. UBS, while maintaining a “Buy” rating, lowered its price target from $15 to $12. These adjustments reflect concerns about the company's earnings trajectory and the broader challenges facing the carbon black sector.

Despite the current headwinds, Orion reported an adjusted EBITDA of $69 million in Q2 2025, aligning with expectations amid demand challenges. The company also highlighted a 3% year-over-year increase in volumes, driven by improved manufacturing performance and operational initiatives. However, the rubber segment faced challenges due to increased tire imports from Southeast Asia and a decline in cogeneration profitability, contributing to market volatility.

A bad year is worse for bulls, with OEC trading at $5.56 in the pre-market, indicating a new low is likely at the open.