Olin Corporation · NYSE:OLN
Olin — Q4 2016 Earnings Presentation
22 slides from Olin's earnings presentation, Feb 1, 2017
Slide 1: Fourth Quarter 2016 Earnings Presentation
Fourth Quarter 2016 Earnings Presentation February 1, 2017 TM Exhibit 99.1
Slide 2: Forward-Looking Statements
Forward-Looking Statements 2 This communication includes forward-looking statements. These statements relate to analyses and other information that are based on management’s beliefs, certain assumptions made by management, forecasts of future results, and current expectations, estimates and projecti
Slide 3: Highlights
Highlights 3 3 Achieved Adjusted EBITDA of $221.7 million in the fourth quarter, exceeding guidance1 Full year 2016 Adjusted EBITDA of $838.5 million at the higher end of our guidance range2 Expect full-year 2017 cost synergy realization in the $50 million to $75 million range Full year 2017 Adjuste
Slide 4: Full Year 2017 Adjusted EBITDA
$838.5 4 Full Year 2017 Adjusted EBITDA 2016 Actual 2017 Forecast ($ in millions) 1: Olin’s definition of “Adjusted EBITDA” (earnings before interest, taxes, depreciation and amortization) is net (loss) income plus an add-back for depreciation and amortization, interest expense (income), income tax
Slide 5: Chlor Alkali Products and Vinyls Segment Performance
4Q16 3Q16 ∆ Q/Q Sales $782.6 $779.4 0.4% Adjusted EBITDA $178.9 $160.0 11.8% 4Q16 Performance Higher caustic soda pricing Lower operating costs Higher electricity costs driven by higher natural gas costs 1Q17 outlook vs. 4Q16 Expected improvement in both domestic and export caustic soda
Slide 6: Multi-Year View on Caustic Soda
Multi-Year View on Caustic Soda North American chlor alkali capacity reductions, no capacity additions announced Increasing North American caustic exports European mercury cell chlor alkali production sunset by the end of this year Growing internal caustic soda consumption in China coupled with lowe
Slide 7: Epoxy Segment Performance
4Q16 3Q16 ∆ Q/Q Sales $441.7 $470.1 -6.0% Adjusted EBITDA $19.6 $32.9 -40.4% 4Q16 Performance Lower volumes Higher operating costs 1Q17 outlook vs. 4Q16 Expected higher pricing and higher volumes Expected higher raw materials costs associated with benzene and propylene Expected lower o
Slide 8: Winchester Segment Performance
4Q16 Performance Sequentially lower volumes to commercial customers reflecting a normal seasonal pattern Year-over-year sales increased 3% Adjusted EBITDA was 11.2% higher than 4Q15 1Q17 outlook vs. 4Q16 Expected sequential increase from the normal seasonally weak 4Q16 Expected custome
Slide 9: Significant Realizable Synergies
Significant Realizable Synergies $250 Logistics & Procurement Operational Efficiencies Asset Optimization Accessing New Segments & Customers Capital Investment Actual 2016 Synergies Breakdown ($M) 2017 2018 2019 75 Projected Annual Impact 125-150 180-200 250 120 Projected Year-End Run Rate 150-175 2
Slide 10: Adjusted EBITDA Potential: Mid-Cycle
$1.5 billion + FY 2017 Forecast $1 Billion Chlor Alkali Mid-Cycle EDC Price Recovery Continued Epoxy Improvement Synergies Adjusted EBITDA Potential: Mid-Cycle 10
Slide 11: 2017 Free Cash Flow Forecast
Working Capital4 Adjusted EBITDA1 Free Cash Flow After Dividend Cash Taxes2 Capital Spending and Investments3 Free Cash Flow 1: Mid-point of Olin’s estimated Adjusted EBITDA forecast of $1 billion, plus or minus 5% for full year 2017 2: Estimated using the mid-point of the cash tax rate of 25% to 30
Slide 12: Full Year 2017 Forecast Key Elements
Full Year 2017 Forecast Key Elements Capital Spending $300 to $350 Maintenance level of capital spending of $225M to $275M annually, synergy capital of $30M, includes bleach capacity and other projects Investments $210 Includes 20 year ethylene at cost supply contract Total $510 to $560 Depreciation
Slide 13: Appendix
Appendix 13
Slide 14: Non-GAAP Financial Measures – Adjusted EBITDA
Non-GAAP Financial Measures – Adjusted EBITDA (a) (a) Unaudited. (b) Restructuring charges were primarily associated with the closure of 433,000 tons of chlor alkali capacity across three separate Olin locations, of which $76.6 million was non- cash impairment charges for equipment and facilities fo
Slide 15: Non-GAAP Financial Measures – Net Income (loss) from Operations per share
Non-GAAP Financial Measures – Net Income (loss) from Operations per share (a) (a) Unaudited. (b) Restructuring charges were primarily associated with the closure of 433,000 tons of chlor alkali capacity across three separate Olin locations, of which $76.6 million was non- cash impairment charges for
Slide 16: Non-GAAP Financial Measures by Segment
Non-GAAP Financial Measures by Segment 16 (In millions) Income (loss) before Taxes Depreciation and Amortization Adjusted EBITDA Chlor Alkali Products and Vinyls 72.4$ 106.5$ 178.9$ Epoxy (3.1) 22.7 19.6 Winchester 25.0 4.7 29.7 (In millions) Income (loss) before Taxes Depreciation and Amortization
Slide 17: Chlor Alkali Products and Vinyls Pricing and Volume Comparisons
4Q16 versus 4Q15 3Q16 Chlorine Caustic Soda EDC Bleach HCI Chlorinated Organics Chlor Alkali Products and Vinyls Pricing and Volume Comparisons 4Q16 versus 4Q15 3Q16 Chlorine Caustic Soda EDC Bleach HCI Chlorinated Organics Volume Comparison Pricing Comparison 17
Slide 18: Annual EBITDA Sensitivity
Product Price Change EBITDA Impact Chlorine $10/ton $10 million Caustic $10/ton $30 million EDC $.01/pound $20 million Annual EBITDA Sensitivity 18
Slide 19: Olin Caustic Soda Price Realization
Olin Caustic Soda Price Realization • A $10 per ton change in Olin’s caustic soda selling price changes annual Adjusted EBITDA by approximately $30 million Fundamental Principle Domestic Sales • A significant portion of domestic sales are linked to index prices • Index price changes typically occur
Slide 20: EDC Pricing History 2000 – 2016
0.00 5.00 10.00 15.00 20.00 25.00 0 25 50 75 100 EDC Pricing History 2000 – 2016 EDC Spot Export Prices C en ts P er P ou n d Source: IHS EDC Pricing Distribution Percent of Time in Price Range • A $0.01 change in Olin’s EDC sales price changes annual Adjusted EBITDA by $20 million • 2016 index EDC
Slide 21: Corporate & Other
Corporate & Other 21 4Q16 3Q16 Pension Income $13.4 $15.4 Environmental Expense $(3.7) $(0.4) Other Corporate and Unallocated Costs $(18.5) $(28.2) Restructuring Charges $(6.7) $(5.2) Acquisition-related Costs $(9.2) $(13.1) ($ in millions) Corporate and other unallocated costs are consistent with
Slide 22: End slide
End slide TM 22