Orion S.A. (OEC) Earnings Call Transcript & Summary

Good morning. Welcome, everyone. This is Orion Engineered Carbons 2020 Annual General Meeting. I'll now turn the meeting over to the Chairman of the company's Board of Directors, Mr. Dan Smith.

Good afternoon, everyone. I am Dan Smith, Chairman of the Board of Directors of Orion Engineered Carbons S.A. I would like to welcome you to the annual general meeting of shareholders of the company. You will note that, in addition to me, 3 other directors of the company are present by telephone at this Annual General Meeting of Shareholders. Ms. Kerry Galvin, Mr. Marc Jean Pierre Faber and Mr. Corning Painter, who is also CEO of the company. I also welcome Mr. Lorin Crenshaw, the CFO of the company; Dr. Christian Eggert, the General Counsel of Orion Group; and Mr. Carsten Opitz, the company's legal adviser on Luxembourg law matters, who are physically present at the meeting venue in Luxembourg. As Chairman of the Board of Directors, I hereby declare the meeting open and call myself to be Chairman of the meeting. In compliance with the provisions of the articles of Association, I call Mr. Carsten Opitz, lawyer, as secretary to the meeting. I hereby also call Dr. Christian Eggert, Orion Group's General Counsel, as scrutineer of the meeting. The scrutineer will supervise the counting of the shareholder votes cast. For each agenda item subject to a vote, I will ask the shareholder representatives to submit the votes of the shareholders to myself, the secretary and the scrutineer. Resolutions will be adopted by a simple majority of the votes validly cast at this Annual General Meeting. I would now like to verify whether the Annual General Meeting has been convened in compliance with both the company's articles of association and the Luxembourg law governing commercial companies dated 10th of August 1950, as amended, and whether the meeting has been legally convened and fulfills the requirements in terms of quorum. Article 10 of the Articles of Association requires notice of a general meeting of shareholders to be given to shareholders with a minimum of 15 days prior to the meeting by publishing the notice in the Luxembourg Official Gazette and in a Luxembourg newspaper as specified by the Board of Directors. In light of the above, the Board of Directors published the invitation in the Luxembourg Official Gazette and in a newspaper commonly delivered in Luxembourg. The public notice regarding the Annual General Meeting of Shareholders was published on June 9, 2020, in the Luxembourg Official Gazette and in the Luxembourg newspaper, Wort. Proxy statement and the proxy statement supplement of the Annual General Meeting were made publicly available through the U.S. Securities and Exchange Commission's EDGAR system and on the company's website. They were also mailed to the shareholders of the company on the record date by the transfer agent for the company's common shares. The convening notice and agenda of the Annual General Meeting, together with the meeting materials, were sent by registered mail to the registered shareholders of the company on June 4, 2020. Article 10 of the Articles of Association also provides that the Annual General Meeting of Shareholders shall be held in the Grand Duchy of Luxembourg, at the registered office of the company or at such other place as may be specified in the meeting notice of such meeting within 6 months after the end of each financial year. The convening notice for every general meeting of shareholders shall contain the date, time, place and agenda of meetings. The Board of Directors have decided that the Annual General Meeting of Shareholders shall be held on Tuesday, June 30, 2020, 2:00 p.m. Central European Time at the registered seat of the company located at 6, Route de Tréves [Audio Gap] 2633 Senningerberg (Municipality of Niederanven) Grand Duchy of Luxembourg. In addition to participating in person, shareholders were provided with the opportunity to participate in the Annual General Meeting by teleconference in consideration of the potential public health and travel concerns of our shareholders with regard to the coronavirus, COVID-19. The dial-in information for participation in the Annual General Meeting by teleconference was published on our website 1 week prior to the Annual General Meeting date. In consideration of the COVID-19 situation, our shareholders were provided with the possibility to ask questions to the Board of Directors until the voter deadline by sending an e-mail to our Investor Relations e-mail address. It will not be possible to raise questions and vote shares during the meeting if you participate by teleconference. The audited annual financial statement for the financial year 2019, including the management reports, was made available on the company's website on April 29, 2020. Also, the audited consolidated financial statement of the company for the financial year 2019, including the management reports, was made available on the company's website on April 29, 2020. Furthermore, these reports were sent by mail to the registered shareholders of the company on June 4, 2020. The audited statutory annual financial statement for the financial year 2019, including the management reports, was also available at the registered office of the company since May 11, 2020. The audited consolidated financial statements for the financial year 2019, including the management reports, was available at the registered office of the company since May 27, 2020. The Annual General Meeting will deliberate validly regardless of the number of common shares present or represented by proxy. I note that the Annual General meeting of Shareholders has been convened in compliance with both the company's Articles of Association and the Luxembourg law governing commercial companies dated 10th of August 1915, as amended, and that the meeting has been legally convened and fulfills the requirements in terms of quorum. I kindly ask the shareholder representatives to show me their proxies for the shares they represent in accordance with the filled-out and signed attendance sheet.

My name is Marc Faber. I represent the public shareholders with 52,170,905 common shares. During the voting procedure, I will expressly state with how many represented common shares the shareholders voted for, against or abstained from a vote.

Thank you, Mr. Faber. I kindly ask the secretary and the scrutineer to note that out of a total of 60,992,259 common shares of the company, having no par value, 505,142 common shares were held by the company as of April 23, 2020, which is the record date for this meeting and, therefore, are not entitled to vote, and 52,170,905 common shares are present or represented at the meeting. I further ask the secretary and the scrutineer to note that a total of approximately 86% of the common shares that are entitled to vote are present or represented at the meeting. This meeting has now come to an order. We shall move on to the matters that should be decided in the general meeting according to the agenda. One or more shareholders of record holding at least 10% of the common shares may put items on the agenda in the general meeting, provided that each such item is accompanied by a justification or a direct resolution to be adopted in the general meeting. I verify hereby that no additional item was put on the agenda of the meeting. I would now like to start with the fifth item of the agenda, which is the presentation of the management report by the Board of Directors and the reports of the independent auditor of the company in relation to the annual accounts and the consolidated financial statements of the company for the financial year ended on December 31, 2019. I would like to ask Mr. Painter, the CEO of the company, to provide our shareholders with a brief overview of the business of the company for our shareholders in the financial year 2019 and to present the management report and audited statements for the financial year 2019 on behalf of the Board of Directors to the shareholders.

Thank you, Mr. Smith. In 2019, the company generated $244 million of EBITDA and $267 million of adjusted EBITDA of revenue on $1.476 billion. Cash generated from operations was $231 million. Importantly, as 2020 has played out, we ended the year with $355 million of liquidity. With a view to enhance long-term value, we enhanced our environmental, social and governance platforms in 2020. We added sustainability to the charter of the now Nominating, Sustainability and Governance Committee, formed an Internal Sustainability Committee, which I chair; set and established sustainability targets; and issued our first sustainability report. We also launched a community support program empowering our people to support social needs in the communities where we operate. It was good to have this in place before the events of 2020 played out. From a governance perspective, if the nominated directors are elected today, we will have enhanced Board independence and diversity significantly. I also direct people's attentions to other published reports of the company. Thank you.

Dear Mr. Painter, thank you very much. I note that no questions were submitted by the shareholders electronically or in person. I would, therefore, like to close the discussion and move on to call all agenda items from item #1 to #11 of the agenda of the general meeting as published on June 9, 2020, in the Luxembourg Official Gazette and then the Luxembourg Newspaper Wort for a vote. Agenda item #1. The Board of Directors proposed that the shareholders resolve as follows: Ms. Kerry Galvin is appointed by the General Meeting as Director of the company for a term ending on the date of the Annual General Meeting of Shareholders of the company called to approve the company's annual accounts and consolidated financial statements for the financial year ending December 31, 2020.

[Audio Gap] 18,966 common shares, the shareholders voted with 45,614,269 common shares voting in favor, 587,399 common shares voting against and 17,298 common shares abstaining from voting.

I therefore kindly ask the secretary and the scrutineer to note this outcome and that the resolution is adopted as proposed by the Board of Directors. Agenda item #1 (2), the Board of Directors proposed that shareholders resolve as follows: Mr. Paul Huck is appointed by the General Meeting as Director of the company for a term ending on the date of the Annual General Meeting of Shareholders of the company, called to approve the company's annual accounts and consolidated financial statements for the financial year ending December 31, 2020.

I represent the public shareholders with 46,218,965 common shares. The shareholders voted with 45,472,018 common shares voting in favor; 716,247 common shares voting against; and 30,700 common shares abstaining from voting.

I therefore kindly ask the secretary and the scrutineer to note this outcome and that the resolution is adopted as proposed by the Board of Directors. Agenda item #1, third part. The Board of Directors proposed that shareholders resolve as follows: Ms. Mary Lindsey is appointed by the General Meeting as Director of the company for a term ending on the date of the annual general meeting of shareholders of the company, called to approve the company's annual accounts and consolidated financial statements for the financial year ending December 31, 2020.

I represent the public shareholders with 46,218,966 common shares. The shareholders voted with 45,624,330 common shares voting in favor; 576,376 common shares voting against; and 18,260 common shares abstaining from voting.

I therefore kindly ask the secretary and the scrutineer to note this outcome and that the resolution is adopted as proposed by the Board of Directors. Agenda item #1, fourth part. The Board of Directors proposed that the shareholders resolve as follows: Mr. Didier Miraton is appointed by the Annual General Meeting as Director of the company for a term ending on the date of the Annual General Meeting of Shareholders of the company called to approve the company's annual accounts and consolidated financial statements for the financial year ending December 31, 2020.

I represent the public shareholders with 46,218,966 common shares. The shareholders voted with 45,619,080 common shares voting in favor; 584,023 common shares voting against; and 15,863 common shares abstaining from voting.

I therefore kindly ask that the secretary and the scrutineer to note this outcome and that the resolution is adopted as proposed by the Board of Directors. Agenda item #1, fifth part. The Board of Directors proposed that the shareholders resolve as follows: Mr. Yi Hyon Paik is appointed by the General Meeting as Director of the company for a term ending on the date of the Annual General Meeting of Shareholders of the company called to approve the company's annual accounts and consolidated financial statements for the financial year ending December 31, 2020.

I represent the public shareholders with 46,218,966 common shares. The shareholders voted with 45,623,647 common shares voting in favor; 579,957 common shares voting against; and 15,362 common shares abstaining from voting.

I, therefore, kindly ask that the secretary and the scrutineer to note this outcome and that the resolution is adopted as proposed by the Board of Directors. Agenda item #1, sixth part. The Board of Directors proposed that the shareholders resolve as follows: Mr. Corning F. Painter is appointed by the General meeting as Director of the company for a term ending on the date of the Annual General Meeting of Shareholders of the company called to approve the company's annual accounts and consolidated financial statements for the financial year ending December 31, 2020.

I represent the public shareholders with 46,218,965 common shares. The shareholders voted with 45,471,986 common shares voting in favor; 661,532 common shares voting against; and 85,447 common shares abstained from voting.

I, therefore, kindly ask the secretary and the scrutineer to note this outcome and that the resolution is adopted as proposed by the Board of Directors. Agenda item #1, seventh part. The Board of Directors proposed that the shareholders resolve as follows: Mr. Dan F. Smith is appointed by the General Meeting as Director of the company for a term ending on the date of the Annual General Meeting of Shareholders of the company called to approve the company's annual accounts and consolidated financial statements for the financial year ending December 31, 2020.

I represent public shareholders with 46,218,965 common shares. The shareholders voted with 42,249,275 common shares voting in favor; 3,952,744 common shares voting against; and 16 -- sorry, 16,946 common shares abstaining from voting.

I, therefore, kindly ask the secretary and the scrutineer to note this outcome and that the resolution is adopted as proposed by the Board of Directors. Agenda item #1, eighth part. The Board of Directors proposed that the shareholders resolve as follows: Mr. Hans-Dietrich Winkhaus is appointed by the General Meeting as Director of the company for a term ending on the date of the Annual General Meeting of Shareholders of the Company called to approve the company's annual accounts and consolidated financial statements for the financial year ending December 31, 2020.

I represent public shareholders with 46,218,965 common shares. The shareholders voted with 45,631,361 common shares voting in favor; 571,149 common shares voting against; and 16,455 common shares abstaining from voting.

I therefore kindly ask the secretary and the scrutineer to note this outcome and that the resolution is adopted as proposed by the Board of Directors. Agenda item #1, ninth part. The Board of Directors proposed that shareholders resolve as follows: Mr. Michel Wurth is appointed by the General Meeting as Director of the company for a term ending on the date of the Annual General Meeting of Shareholders of the company called to approve the company's annual account -- accounts and consolidated financial statements for the financial year ending December 31, 2020.

I represent public shareholders with 46,218,965 common shares. The shareholders voted with 42,797,206 common shares voting in favor; 3,405,675 common shares voting against; and 16,084 common shares abstaining from voting.

I therefore kindly ask that the secretary and the scrutineer to note this outcome and that the resolution is adopted as proposed by the Board of Directors. Agenda Item #2. The Board of Directors proposed that the shareholders resolve as follows: approval on a nonbinding advisory basis the compensation paid to the company's named executive officers as disclosed in the proxy statement for the company's 2020 Annual General Meeting of Shareholders.

I represent the public shareholders with 46,218,965 common shares. The shareholders voted with 45,119,559 common shares voting in favor; 1,006,004 common shares voting against; and 93,402 common shares abstaining from voting.

I therefore kindly ask that the secretary and the scrutineer to note this outcome and that the resolution is adopted as proposed by the Board of Directors. Agenda item #3. The Board of Directors proposed that the shareholders resolve as follows: the option of once every year was determined to be the preferred frequency recommended by the shareholders and the company with which the company is to hold a nonbinding advisory shareholder vote to approve the compensation of the company's named executive officers in accordance with Section 14A of the Securities Exchange Act of 1934.

I represent the public shareholders with 46,172,585 common shares. The shareholders voted with 45,702,214 common shares voting in favor of 1 year; with 5,755 common shares voting in favor of 2 years; with 18,008 common shares in favor of 3 years; and with 446,608 common shares abstaining from voting.

I, therefore, kindly ask that the secretary and the scrutineer to note this outcome and that the resolution is adopted with a 1-year frequency as proposed by the Board of Directors. Agenda item #4. The Board of Directors proposed that the shareholders resolve as follows: the members of the Board during the financial year that ends on December 31, 2020, shall be remunerated as follow: each non-executive director shall receive a cash retainer of $100,000 and restricted shares of the company with a value of $100,000 at the time of issuance, with such awards generally subject vesting only if the director serves the full 1-year term she or he was appointed for. Secondly, the nonexecutive Chairman of the Board shall receive an additional retainer of $105,000; and the Chairman of the Audit Committee of the Board of Directors shall receive an additional retainer of $25,000; the Chairman of the Compensation Committee of the Board shall receive an additional retainer of $20,000; and the Chairman of the Nominating, Sustainability and Governance Committee shall receive an additional retainer of $15,000.

I represent the public shareholders with 46,218,965 common shares. The shareholders voted with 45,460,703 common shares voting in favor; 661,425 common shares voting against; and 96,837 common shares abstaining from voting.

I, therefore, kindly ask the secretary and the scrutineer to note this outcome and that the resolution is adopted as proposed by the Board of Directors. Agenda item #5, the Board of Directors propose that the shareholders resolve as follows: the annual accounts of the company in accordance with Lux GAAP for the financial year that ended on December 2019 -- December 31, 2019, are approved.

I represent the public shareholders with 52,170,903 common shares. The shareholders voted with 51,203,153 common shares voting in favor; 458,804 common shares voting against; and 508,946 common shares abstaining from voting.

I, therefore, kindly ask that the secretary and that scrutineer to note this outcome and that the resolution is adopted as proposed by the Board of Directors. Agenda item #6. The Board of Directors proposed that the shareholders resolve as follows: the consolidated financial statements of the company in accordance with U.S. GAAP for the financial year that ended on December 31, 2019, are approved.

I represent the public shareholders with 52,170,901 common shares. The shareholders voted with 51,213,749 common shares voting in favor; 439,435 common shares voting against; and 517,717 common shares abstaining from voting.

I, therefore, kindly ask that the secretary and the scrutineer to note this outcome and that the resolution is adopted as proposed by the Board of Directors. Agenda item #7. The Board of Directors proposed that the shareholders resolve as follows: that from an amount of EUR 70,316,146.1, which includes EUR 20,200,869.43 of profit brought forward and EUR 50,115,276.67 of profit for the 2019 financial year, an amount of EUR 69,371 shall be allocated to the legal reserve, so as to bring the legal reserve from its current amount of EUR 6,003,557.9, up to an amount of EUR 6,072,928.9. Secondly, an amount of EUR 41,073,334.36, representing and paid in U.S. dollars in an amount of $48,034,813 as interim dividends, interim dividends and an amount of EUR 29,173,440.74 shall be brought forward to the next financial year. The interim dividends paid by the company from its annual -- from its amount available during the 2019 financial year in the above-mentioned aggregate amount of EUR 41,073,334.36 are approved.

I represent the public shareholders with 52,170,902 common shares. The shareholders voted with 51,615,597 common shares voting in favor; 457,134 common shares voting against; and 98,171 common shares abstaining from voting.

I, therefore, kindly ask that the secretary and the scrutineer [ to note the outcome ] and that the resolution is adopted as proposed by the Board of Directors. Agenda Item #8. The Board of Directors propose that the shareholders resolve as follows: that the current members of the Board of Directors are discharged from the performance of their mandates during the financial year that ended on December 31, 2019, including discharge from any liability in connection with the performance of their mandates, including the management of the company's affairs during such period.

I represent the public shareholders with 46,218,865 common shares. The shareholders voted with 45,117,720 common shares voting in favor; 542,304 common shares voting against; and 558,841 common shares abstaining from voting.

I, therefore, kindly ask the secretary and the scrutineer to note this outcome and that the resolution is adopted as proposed by the Board of Directors. Agenda item #9. The Board of Directors propose that the shareholders resolve as follows: the independent auditor is discharged from any liability in connection with the performance of its mandate during the financial year that ended on December 31, 2019, including the audit of the company's annual accounts and consolidated financial statements for such period.

I represent the public shareholders with 52,037,623 common shares. The shareholders voted with 50,632,535 common shares voting in favor; 801 -- sorry, 801,762 common shares voting against; and 603,326 common shares abstaining from voting.

I, therefore, kindly ask that the secretary and scrutineer to note this outcome and that the resolution is adopted as proposed by the Board of Directors. Agenda Item #10. The Board of Directors propose that the shareholders resolve as follows: Ernst & Young, Luxembourg, Société Anonyme - Cabinet de Revision Agréé is appointed as independent auditor of the company for the financial year ending on December 31, 2020, for the purpose of all statutory accounts as required by Luxembourg law, including the annual accounts and consolidated financial statements of the company.

I represent the public shareholders with 52,170,901 common shares. The shareholders voted with 51,434,100 common shares voting in favor; 688,875 common shares voting against; and 47,926 common shares abstaining from voting.

I, therefore, kindly ask the secretary and the scrutineer to note this outcome and that the resolution is adopted as proposed by the Board of Directors. Agenda Item #11. The Board of Directors propose that the shareholders resolve as follows: Ernst & Young GmbH is appointed as the independent registered public accounting firm of the company for all matters not required by Luxembourg law during the fiscal year ending on December 31, 2020.

I represent the public shareholders with 52,170,902 common shares. The shareholders voted with 51,454,466 common shares voting in favor; 676,427 common shares voting against; and 40,009 common shares abstaining from voting.

I therefore, kindly ask that the secretary and the scrutineer to note this outcome and that the resolution is adopted as proposed by the Board of Directors. Does anyone wish to discuss additional matters in connection with the agenda of this Annual General meeting of Shareholders? Hearing none, now that all matters constituting the agenda to be decided by the Annual General Meeting of Shareholders have now been handled, and therefore, I declare the meeting closed at 2:33 Central European Time.

Thank you. This call has concluded. You may now disconnect your lines.