Areas, and corrosion when you're immersed in fluids is not good, right, from a server perspective. We've manufactured this molecule so that there's no corrosion issues and that it's fully self-contained. 3M has obviously publicly said that they're getting out of PFAS and getting out of this molecule, so we will be the only individuals with this competitive dynamic and product online. We have said commercialization in 2026, end of 2026. Key steps there are obviously manufacturing footprint and supply, which we're hoping to discuss more transparently to shareholders in the months to come.
There is another question in the audience.
Just a quick question on titanium dioxide, TiO2. Will the recently announced Tronox shutdown in Europe have any material effect on the supply side?
Yeah, it's a great question. I think the shutdown obviously is balancing their capacity and thinking through what the actual supply side looks like. At this point, I think people are asking a lot about capacity, whether it be in China or shutdowns in there. I don't see it as a significant impact to myself, right, to Commerce on this side. I think there's an opportunity here as we think about share in Europe. If only if I look ahead, I really am just thinking that it might be positives for us. The market, a lot of TBD on where capacity might go in China, to be honest with you.
Still on TiO2, you mentioned that you have lowered your own inventories and you are satisfied where you are. Can you talk about where the overall industry is? We are getting into the spring and summer season. Usually, there is a higher demand for coatings with a problem with high, well, a problem with high interest rates. Housing is not really that robust. Can you talk about what you see in this environment?
Yeah, sure. As I think about just overall demand and potential, obviously, we will see the seasonality come through in the spring demand in the second quarter, and we've indicated such. Now, do I think there's a restock or any of that such coming? I think customers are looking ahead and thinking through and maybe balancing strategic decisions based on where the market environment goes. There is a lot of complexity and a lot of ambiguity going on right now. Though we're cautiously optimistic that we see a little bit of growth in the back half based on market conditions, we're going to see where we go. I don't see a major restock as we think about in the second quarter, though I do see customers' inventory still being maintained at a lower level, so that restock could come in the future.
Are they buying mostly on an as-needed basis? Do you see that happening instead of building up inventory?
We do, yeah. I think it's more on an as-needed basis versus building up security and inventory supply.
Do we still have any other questions from the audience? Yes, Keith?
Yeah, first of all, Shane, thank you for the overview. I think it's actually really interesting. On PFAS, by the way, I think it's also included in pretty much every space component, right?
Yes, absolutely.
It's pretty important. On the liabilities, though, one of the things you did not talk about, I think, was the potential European exposure. Could you help quantify for us what the European liability could be for the company and sort of where that is in the state and status? My understanding is that you've got each country has its own element here. I'm just curious what that is from your perspective.
Yeah, no, it's a great question, Keith. From a European perspective, it is. It's state by state, and it's mainly where we operate, right? When you think about where we operate, there's not a lot of individual areas. It's mainly focused on several key countries, Amsterdam being one of them as we think about the PFAS components there. We're in active discussions with those states. I think as you look at our public filings, we've done a lot to mitigate community efforts, whether it be activities in the community or resolving such. The quantification of that is quite difficult because it's not like the federal level when you think about EPA or on the other side in the U.S. We have not put numbers out, but we feel like it's less than what we would see, far less what we see from a U.S. perspective.
That's really the only quantification I can kind of give.
Very different litigation structure, very different regulatory structure. Exposure is typically a lot more contained, and it's more based on municipality. We have had some recent events with the Kitchen Gardens Reserve and things that are on our books as well.
Shane, we have run out of time. Again, I go off a board. Thank you very much for your really informative presentations. Brandon, thank you for joining us as well in contributing.
I just want to share, if you haven't seen the two-phase immersion cooling opportunity or the technology, it's on our website. There's a video that explains it's pretty exciting stuff.
All right. Looking forward to looking at it. Thank you.
Thank you.
It's a pleasure.
Thank you, Brandon. Really appreciate it.
Oh, perfect. I'm going to introduce you. Just to make you my last name. Okay, no problem. Good. Thank you. Perfect. Doesn't bother me. It bothers everybody. There we go. Yeah, so it's just that one forward. Yeah, got it. I'll introduce you.
Okay, so moving right along, next up, we have Orion Engineered Carbons. Orion, headquartered in Luxembourg, but with its executive offices in Spring, Texas, is a leading global manufacturer and supplier of Carbon Black products. Carbon Black is a solid form of carbon produced in powder or pellets and is used to create a variety of desired physical, electrical, and optical qualities of various materials. Carbon Black products are primarily in the form of rubber carbon black used in the reinforcement of tires and other rubber applications, and specialty carbon black used as additives in the production of polymers, batteries, printing inks, and coatings. Orion is one of the largest global producers of both. Orion has around 57 million shares outstanding, closed yesterday at $13.90 for a $792 million market cap, net debt of $860 million for a $1.65 billion enterprise value.
Joining us today is CFO Jeff Glajch and VP of Investor Relations, Chris Kapsch. Jeff joined Orion in 2022 and has over 30 years of experience leading corporate finance and accounting functions for both public and private companies, including Graham Corporation, where he served as CFO for 13 years prior to joining Orion. Chris joined Orion last year as VP of Investor Relations, following nearly 30 years in institutional sell-side research focused on specialty chemicals. I will now turn it over to Jeff for an overview of Orion.
Thanks, Wayne. We've got our safe harbor statement, which I'll quickly go by. Carbon Black is in a lot of different products. We talk about it being in tires, being in rubber, but it's in a lot of other products. It's in coatings. It's in fibers. It's in batteries, which we'll talk about in a little more detail later. It's a very well-used product across many different areas. We have 15 manufacturing sites. One of the things about Carbon Black, it can be transported across the world, but particularly the rubber products typically are manufactured and used in the same region. As you can see, we have manufacturing locations in the Americas, five in the Americas. I believe we have six in Europe and EMEA. We also have ones in Asia. We're currently building another plant in La Porte, Texas, which I'll talk about in a few minutes.
Orion has a revenue of about $2 billion. We are the largest specialty carbon black manufacturer in the world, and we're the third largest rubber manufacturer in the world. We have value proposition. We believe it's a very important long-term value proposition. Particularly, the rubber market is very resilient. You don't see the rubber sales drop dramatically in a recession. You don't see them spike too high in a stronger period. It tends to be a pretty consistent long-term business and very resilient. Our specialty business is really driven by the end markets that we're in. Sometimes they're very strong. Sometimes some of them are strong. Some of them can be weak. Overall, Orion has got a very resilient profitability level and very predictable as we move forward. As we're looking forward, one of the important things about Orion, we currently have EBITDA of about $300 million.
We have the capacity by the end of this year and entering 2026, we have the capacity to earn $500 million of EBITDA. How do we do that? We need to fill up some of the facilities that are a little underutilized right now, as well as our new plant in La Porte, Texas. If we can do that, we can move from the $300 million range, which is a new plateau we moved to a couple of years ago, up to as high as $500 million. A key point in that is our ability to generate free cash flow. For many, many years, we had to reinvest in this business, first for some required emissions investments here in the U.S., and then more recently for some growth investments in Italy, in China, and the plant in La Porte, Texas, that we're currently building.
When those are done, at the end, they're all done except for the La Porte plant. When the La Porte plant is done at the end of this year, we will be reducing our capital spending, using that runway that we have to get toward the $500 million of EBITDA, and ultimately generating a lot more free cash flow. That, we believe, is an important inflection in the Orion story. As you can see, our profitability level, other than the 2020 dip due to COVID, has actually been pretty consistent. Importantly, over the last three years were the first three years that we had ever gotten our EBITDA over $300 million. We've been consistent in that despite some pretty significant headwinds in our end markets.
Specifically, if you look at the rubber market, which are primarily tires, if you look at the tire market, the imports coming into the United States have increased very significantly over the past two or three years from their normalized level. This is because the consumer is looking for cheaper tires. Some of our customers have not reacted as aggressively yet. When they start to react and/or when the consumer moves to higher value tires, that will allow us to fill up some of the available capacity that we have today and ultimately allow us to move toward that $500 million of EBITDA. In the rubber market alone, we believe we have about $80 million of available EBITDA just by filling that capacity. Talking about rubber carbon black, rubber carbon black is about two-thirds of our revenue. About 70% of it or so goes into tires.
It is not just car tires. It is car tires. It is truck tires. It is heavy operating equipment. Beyond looking just at the tire side, when you are looking particularly at the car tires, it is mostly replacement tires. If you think about buying a new vehicle, you buy a vehicle, how many times do you change the tires out? Typically, three or four times. About 60% of our volume, roughly, in the rubber market is replacement tires. The other roughly one-third of the business beyond the tire side are mechanical rubber goods. If you are looking at a vehicle, you are looking at the dashboard, you are looking at the sealants around the windows, the hoses within the vehicle. If you are looking at an EV, you do not have a lot of the hoses, but you do have the mat that the battery is on top of.
These are all important end markets for us. A lot of it is driven by vehicles, but it is not necessarily driven by OEM vehicle sales. It could be a function. It is the replacement tires as well as, obviously, the freight market and the truck tires. Growth drivers. Traditionally, you have had miles-driven tire production. Those have been what has been driving the tire market and the rubber market for us in the past. As we look forward, the transition toward EVs on the rubber side, if you think about an electric vehicle, yeah, it does not have the hoses, but it has got a mat for the tires or for the battery, I am sorry. You look at the tires. If you think about EV tires, they are heavier. The vehicle is heavier. Typically, EV weighs about one-third more than an internal combustion engine vehicle.
You also have greater acceleration if you've driven an EV or even if you've driven a hybrid. When you accelerate, you get a quick start from the stop. That quick start is friction. The friction is wear on the tires. If you look at a car vehicle like a Tesla or if you look at a truck like a Rivian, the tires do not last anywhere near as long as they do on a regular internal combustion vehicle. That is an important change, as well as the design of the tires. All of these are positive things for us as we look forward. Specialty business, it's about one-third of our overall revenue. It's a lot of end markets. The biggest end market for us is polymers. Polymers is a pretty broad end market.
It tends to be mid to kind of lower end of our specialty business. We have the coatings market. If you look at a very high, sleek black car, you've got the black, but you've also got the kind of blue undertone. That's a tremendous market for us. The fiber market, the athletic wear that's worn primarily by women, but also by men. There's carbon black within those. There's the ink market. There's the battery market. The battery market's a very, very small volume for us, but it's a significantly higher profitability per ton of product. All of these are important markets for us in the specialty arena. We're heavily weighted in Europe and Asia in the specialty markets, a little underweighted here in the United States.
The growth drivers for specialty, again, consumer demand and some of the headwinds that we've seen globally have impacted us over the past couple of years. We think that that eventually will turn. It may not turn immediately, but it could eventually turn. One of the questions I often get around the consumer market, but specifically the European market, is the fact that carbon black has now been banned from being imported into the EU from Russia. What happens if the war ends in Ukraine? First off, if the war ends in Ukraine, that's a very good thing for humanity. We should all be happy about that. It is beyond our quarterly or annual results. If that does happen, two things. One, we believe that consumer confidence in Europe will go up very significantly, and that will help on the consumer demand side.
Secondly, the product that used to be imported, the carbon black that used to be imported from Russia, that is no longer allowed to be imported from Russia because they put a ban on it last summer, has been replaced from imports from Asia. We believe if Russia is back into the European market, the Asian imported product will probably cut back some. Why? There have been very significant supply chain issues getting product from Asia into the European market. We believe that ourselves and our other European local competitors will continue to keep our market share, and the import piece will just move from one to another. As it did when it moved from Russia to Asia, it will just move back from Asia to Russia. That is more speculation on what happens in Ukraine. Sustainability.
We are actually the leader, we believe we're the leader within the carbon black area and sustainability in a couple of ways. One, on the specialty side with the high-value, high-purity specialty products that go into EV batteries, for example, that's a key driver market for us going forward. Also, if you look at sustainability from a rubber market side, we have tires. We're working with the EU. We've worked with Michelin on a project called BlackCycle, which focused on how do you take and recycle old tires. We are continuing work in that area of sustainability with some work that we've got that's been funded by both the German government and the EU. We finished 2024, and now we're looking at 2025 and beyond. I want to talk a little bit about 2024, but more importantly, where we're headed in 2025.
As I noted earlier, we had our third year of EBITDA of $300 million or above. First time we ever did that was 2022. We have three years in a row of it. We are really pleased, despite the fact that there have been some pretty significant headwinds in our end markets. One of the key things here, one of the key metrics we look at is, even with that higher level of EBITDA, we are looking at rubber demand 15% below where it was pre-COVID. Why? Imports into the United States from Southeast Asia, imports into the EU from China. Both of those have been pretty significant headwinds, even though consumer demand has improved on the tire side because it has to, because you have to replace tires. The reality, they are buying cheaper tires from imports. We think that will change over time.
I think another important point I talked about a little bit earlier, we have $100 million of available capacity within our system. $80 million of that on the rubber side, $20 million of that on the specialty side. If we can fill up our existing plants, we can move that EBITDA number from the low 300s to the low 400s just simply by that demand. If we include the plant that we're building in La Porte, Texas, there's another $40 million of EBITDA opportunity there. We have some additional opportunities to grow profitability by upgrading the quality of our product portfolio. Biggest challenges, consumer confidence and inflation. Consumer confidence has been a headwind in both the Americas and in Europe. Inflation has driven people to lower-value tires. What does that mean, lower-value tires? They buy cheaper tires. They don't last as long.
Their long-term cost of ownership may actually be higher, but their short-term, "What do I have to pay today to buy a tire?" is lower. That trend needs to change. Finally, customer forecasting. When you put out guidance at the beginning of the year, you're always challenged. If you have to adjust it as the year has gone on, as we've had to the last year and a half, it's really a function of our customers looking at their view at the beginning of the year and then their view at the end as the year goes on. It has been falling, falling, falling. Hopefully, that's been stabilized, and that won't be as much of an issue going forward. Market observations in 2025. The replacement tire market, I've talked about that already.
On the car side, on the freight side, we believe if we start to see an improvement in manufacturing at some point, perhaps not early, but at some point, that can help the freight market. The geopolitical, there's a lot of uncertainty there. I talked a little bit about the war in Ukraine, but there's just uncertainty whether it's tariffs. We're not planning for tariffs. Tariffs are a benefit to us, perhaps, but we're not planning for tariffs. That uncertainty is out there. Our view is we can't affect that uncertainty. That's beyond the control of what we can do. We're going to be agile in our business, and we're going to make sure that we can affect what we can change and what we can improve, and we'll address the market if it changes. Finally, the specialty market, we saw growth in 2024.
That was a good thing. Most of the volume growth was at the lower end of the portfolio of our products. We believe going into 2025, we'll see additional growth, but it'll be at the higher end. Why will it be at the higher end? Partly the end markets and partly some debottlenecking projects that we've done over the past couple of years that have given us additional available capacity of high-end products. We're focused on what can we do. There's a lot of stuff we can't control. We can't control the end markets. We can't control foreign exchange. What we can do, though, is the things that can improve our business. Our rubber contracts, we've seen a significant improvement in our rubber business over the past couple of years as pricing has improved in the rubber area.
We continue to focus on how do we get additional lines from our customers, as well as how do we make sure that the pricing improvement that we've seen is not a spike. We don't believe it's a spike. We believe it's a change in the structure of the market. We put a cost reduction program in place at the end of 2024, early 2025. That's been essentially completed now, and we're moving forward. We reduced our headcount of our non-manufacturing personnel by about 6%. Just something that you have to do every once in a while. You have to look and say, "Have we added a little bit too much? Maybe we need to cut back some." We've had some operational issues at our new plant, particularly in China.
Of those we believe are now resolved, we expect to pick up $10 million in EBITDA this year from our plant in China. We believe there is another $10 million at least available to us beyond 2025. We are focused on things that we can control and focused on growing our specialty business, as I talked about before with our debottlenecking projects that we have done and trying to improve our product portfolio. Finally, the last thing is operational excellence. We have been investing in maintenance capital the last couple of years. We will continue to invest in maintenance capital. This is a business that historically, as an industry, had been underinvesting in maintenance. We have changed that tune in the last couple of years, and we will continue that going forward. That will give us additional capacity. It will also give us additional productivity.
I'm going to pass on the slides because I'm a little tight on time. Very quickly, our guidance for the year is $290-$330 million of EBITDA. The $290 is a little bit lower than last year. Part of it is really driven by foreign exchange. If you took last year's results adjusted for foreign exchange, when we set our guidance, it would have been about $290. What we're saying is on the downside is a flat market. On the upside is growth in the low double digits. Very, very important story for us going forward is free cash flow. Free cash flow starts with profitability and then follows with where do you spend that cash that you earn. You can see here for the past four or five years, we've spent a lot of money in capital.
We've spent over $200 million a year most of the last four or five years. We've spent on maintenance. We will continue to do that. We had to spend on the EPA projects. Those are done. Those finished up at the end of 2023. We're done with our EPA capital spending. A couple of our competitors still have spending going on both in the U.S. as well as in Canada, which what that will do is have not only them spending cash, but that will also help us in the market because as we all spend capital, ultimately the end user pays for that by higher prices. That will help us. We've also spent a lot on growth capital in the last four or five years. I talked about the plant in China at our Huaibei facility.
We made an investment to expand our facility in Italy in 2021 and 2022. Now the La Porte, Texas, a settling-based product plant that we're building right now will be finished by the end of this year. It will be started up in 2026. That's been a significant usage of capital in the last couple of years. It's a significant use this year. It'll be done once we're done in 2025. What does that mean? You can see our capital spending from 2024 to 2025 has reduced almost $50 million. That's going to become free cash flow for us. Then another $50 million as we go into 2026. Our expectation beyond 2026 is this lower level of capital spending, which will generate more free cash flow for Orion. My last slide is really just looking at the free cash flow story.
This is the inflection point in the business. From an investor standpoint, this is probably the most important thing. You've gone from in 2024, where we had a use of cash of about $40 million, to 2025, we're improving that about $100 million. Half of that is lower capital spending. There's a little bit we believe we've got a little bit of improvement in working capital, a little bit in our taxes, and the EBITDA number is relatively the same, but $100 million improvement in free cash flow. As you go to 2026, another $50 million beyond that, which is that reduction in capital spending. Now, if you look at this, we say higher EBITDA, but we don't put a number on it because I'm not going to put out guidance for next year. I've already put it out for this year.
If the benefits of the investments that we've made are able to come to fruition, as well as the improvements in some of our end markets, we believe that that free cash flow number will grow even further as EBITDA grows. That $100 million can be much, much higher in 2026 and beyond. If there are any questions. Okay, we'll open it up to questions. I'll start off if you want to join me here. You mentioned the resiliency of the tire market. You can't put off replacing tires forever. I know that all too well, driving up from Long Island to our office in Rye every day. There's been headwinds with, as you mentioned, the Chinese and South Asian tire imports into Western markets and Europe.
With all the tariff noise going on right now, can you discuss any impacts on Orion and with the EU and US potentially looking at anti-dumping actions? When can we see action on that? Is that baked into guidance for this year or any potential benefits that you could have from that? Sure. Great question. A couple of things. First off, if you look at the Western tire markets, and we are overweighted in the Western tire markets, the US has already tariffed Chinese tires out of the market. What comes into the US comes from Thailand, comes from Indonesia, comes from Vietnam, primarily in the Southeast Asian countries into the US. Into Europe is primarily Chinese tires.
If there were actions on tariffs, not on Chinese, but on Southeast Asian into the Americas or from China into Europe, if there's actions either way, that will benefit our business because we have, particularly in the Americas, we have excess available capacity to meet that. We haven't planned that. We believe that planning on a tariff or government action that has an unknown idea, an unknown timeframe, would be foolish on our part. That is something that is ultimately going to have to get pushed by the administration, whether it is here or the EU, as well as perhaps the unions sometimes are also driving that to push the administration. There is significant upside that $80 million of available EBITDA from rubber, you could get a significant amount of that if we saw tariffs either from Southeast Asia into the US or from China into the EU.
What else would it take to get to that full 80? Sure. I think the other thing that would have to happen is that import level would have to come back to normal. If you looked historically, and I'll use the U.S. as an example because the data is probably the best data we have, typically you see about 52% of tires being imported into the U.S. And that's a pretty constant number. In the last year, year and a half, that number has raised up to close to 60%. If we could get back to that normalized number in the low 50s, that alone would give us significant additional volume on the rubber side that would help us. How does that happen? Certainly, tariffs is one way.
Convincing the consumer to buy the tire companies, convincing the consumer to buy more expensive tires, but one that will last longer and ultimately their long-term cost of ownership will be lower. That's another way it can happen. A third way is perhaps some of the higher-end tire companies. It's great to have an 80,000-mile guarantee on your tire, but there's a lot of people out there who don't want to buy a tire that has an 80,000-mile guarantee. Perhaps marketing their second-tier brands that have a 30- or a 40,000-mile tire a little harder, that also can drive demand. There are a lot of things that can drive that incremental demand, which is incremental supply for us on the carbon black side. It's probably worth adding one thing also. Our tire customers are committing capital to reshoring activity.
They're spending more money making their tire factories onshore in North America or in Europe. That commitment suggests that the demand that they see, the currently elevated level of imports, is somewhat transient. I could use the 80,000 guarantee but pay for the 40. Yeah. With reshoring dynamics in the U.S., there's some tire production being brought online. Is there any risk to more carbon black production being brought on? Can you talk about kind of your competitive moat there? Sure. Sure. Right now, there's a little excess supply in America's market. Should we have that movement toward less imports and more production or more onshoring, that'll quickly get eaten up. No one has made an announcement or made a decision to build additional carbon black capacity in either the Americas or in EMEA with a few very minor exceptions.
We made a small expansion in Italy a few years ago. One of our competitors added 200 KT around the world. They added 40 KT into an existing plant in Hungary. 40 KT, by the way, in the European market is 2% of the market. Very, very small increase. Nothing in the Americas, with the exception of there's a private company called Monolith that is looking to, rather than using the bottoms of a refinery or using coal tar as the raw material, they're looking to use methane as the raw material to make carbon black and also to make hydrogen. There have been a number of articles in the Wall Street Journal about it. Their capital cost compared to building a pure carbon black plant is multiples of what it would cost to build a carbon black plant.
We kind of think of something in the range of $2 million per ton to build a carbon black plant. If you were building a carbon black plant that they've announced of 180 KT, it would cost you $350-$400 million. According to the Wall Street Journal article of about a year ago, their plant was going to cost $1.4 billion. Four times that. They also would manufacture hydrogen, and they got the hydrogen credit from the IRA Act of a couple of years ago. However, they haven't broken ground yet. We don't know where that's at. The fact that they are out there and they and we and others believe they can make product the way that they're going to make it is an impediment to others to want to make an investment in carbon black capacity.
Right now, other than that, in the Americas, there really is not any significant expansion of capacity either in the Americas or in EMEA of carbon black. With that, I have a bunch more questions, but we are bumping up on time. We really appreciate you being here. We will continue to follow the story. I will be following up with a lot more questions and just around if anyone wants to follow up. Thank you so much, everyone.