Olin Corporation · NYSE:OLN
Olin — Morgan Stanley Basic Materials Corporate Access Day 2017
31 slides from Olin's conference presentation, Feb 13, 2017
Slide 1: Morgan Stanley Basic Materials Corporate Access Day
Morgan Stanley Basic Materials Corporate Access Day New York, NY February 14, 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: Olin Corporation Company Overview
All financial data are for the twelve months ended December 31, 2016. Data are presented in millions of U.S. dollars. Additional information is available at www.olin.com. Winchester Chlor Alkali Products and Vinyls Full Year 2016 Revenue: $ 2,999 Adj. EBITDA: $ 654 Revenue: $ 5,551 Adjusted EBITDA:
Slide 4: Highlights
Highlights 4 3 Achieved Adjusted EBITDA of $221.7 million in the fourth quarter 1 Full year 2016 Adjusted EBITDA of $838.5 million 2 Expect full-year 2017 cost synergy realization in the $50 million to $75 million range Full year 2017 Adjusted EBITDA guidance range expected to be $1 billion, +/- 5%
Slide 5: Strategic Actions to Create Today's Olin
Strategic Actions to Create Today’s Olin Leading Chlor-alkali Assets Leading Winchester Business 2007 2008 2010 2011 2012 2015 • Winchester Relocation / Cost Reduction Initiative Announced • Announced Conversion/Closure of Mercury Cell Plants • First Hy-Pure® Bleach Plants Begin Operations • Purchas
Slide 6: Global Leader in Chlorine Derivatives
Global Leader in Chlorine Derivatives Global: • #1 chlor-alkali producer • #1 seller of membrane grade caustic soda • #1 supplier of epoxy materials • #1 seller of chlorinated organics • Top quartile chlor-alkali cost position • Broadest geographic presence in caustic, epoxy and chlorinated organics
Slide 7: Significantly Expanded Chlorine End Uses
Significantly Expanded Chlorine End Uses 3 Merchant HCI Bleach 19 Merchant HCI Bleach Ethylene Dichloride VCM Allyl Chloride Epichlorohydrin Liquid Epoxy Resin Vinylidene Chloride Perc Tric M1 M2 M3 Carbon Tetrachloride MDI Propylene Oxide Propylene Glycol Ag 5 Merchant HCI Bleach Ethylene Dichlorid
Slide 8: Key Chlor Alkali Products & Vinyls EBITDA Sensitivity
8 Product Price Change Full Year EBITDA Impact Chlorine $10/ton $10 million Caustic $10/ton $30 million EDC $.01/pound $20 million Key Chlor Alkali Products & Vinyls EBITDA Sensitivity
Slide 9: 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 10: 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 Ce n ts P er P o u 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 $20 million • 2016 index EDC
Slide 11: Epoxy has Access to Attractive High Growth End Uses
Epoxy has Access to Attractive High Growth End Uses Around the Globe Select Epoxy End Use Growth Rates(’13-’18)2 Composites Civil Engineering, Adhesives Industrial Coatings Electrical Laminates 2016 3,200 2015 3,000 2014 2,900 2013 2,750 2012 2,550 2011 2,600 Epoxy Resin Consumption1 3% CAGR (’13-’1
Slide 12: Epoxy Priorities for Success
Epoxy Priorities for Success 12 0 50 100 150 200 250 300 350 Epoxy Segment EBITDA ($ in millions) Upstream Midstream Downstream Continue driving productivity and cost improvements Utilize advantaged cost position to outgrow the market (“Sell out”) Upgrade mix to improve margin (“Sell up”) Continued
Slide 13: Significant Realizable Synergies
Significant Realizable Synergies $250 Logistics & Procurement Operational Efficiencies Asset Optimization Accessing New Segments & Customers Capital Investment Actual 2016 Synergies Breakdown 2017 2018 2019 75 Projected Annual Impact 125-150 180-200 250 120 Projected Year-End Run Rate 150-175 230-25
Slide 14: Winchester Brands
Winchester Brands: Hunters & Recreational Shooters Ammunition Products Retail Distributors Mass Merchants Law Enforcement Military Industrial Rifle N/A Handgun N/A Rimfire Shotshell Components 14
Slide 15: Favorable Industry Trends: Growing Target Shooting Participation
Favorable Industry Trends: Growing Target Shooting Participation Female Participation is Increasing Target Shooters are on the Rise Handgun Shooting Tops the Chart New Shooters Are Younger Source: National Shooting Sports Foundation 15
Slide 16: Winchester Adjusted EBITDA Margins
0 20 40 60 80 100 120 140 160 180 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Winchester Adjusted EBITDA Margins 6.7% 8.3% 8.6% 13.7% 13.3% 8.6% 11.2% 20.3% 19.4% 18.7% 2006-2010 Average Adj. EBITDA margin: 10.1% 2013-2016 Average Adj. EBITDA margin: 19.4% 16 ($ in millions) 19.1%
Slide 17: 2017 Free Cash Flow
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 18: 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 18
Slide 19: Appendix
Appendix
Slide 20: The Chlorine Envelope
The Chlorine Envelope 20 Epoxy Brine (NaCl) Power Phenol Acetone Caustic Soda (NaOH) Chlorine (CI2) Bisphenol-A GCO (Perc/Tric/CMP/VDC) Epichlorohydrin Allyl Chloride EDC / VCM Chlor-alkali Cumene Bleach HCl Merchant
Slide 21: 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 22: 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 22
Slide 23: 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 24: 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 25: 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 26: Corporate & Other
Corporate & Other 26 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 27: 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 28: Advantaged Ethylene Arrangement
Advantaged Ethylene Arrangement •A series of three supply agreements with Dow •Pipeline supply without operating or start-up risk •Producer economics Tranche Effective Date Annual Volume (short-tons) Cost (millions) #1 Acquired at closing Up to 180,000 $433* #2 Available ~ 2H 2017 Up to 160,000 ~$21
Slide 29: 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 30: 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 $76.6 million was non- cash impairment charges for
Slide 31: Non-GAAP Financial Measures by Segment
Non-GAAP Financial Measures by Segment 31 (In millions) Income (loss) before Taxes Depreciation and Amortization Adjusted EBITDA Chlor Alkali Products and Vinyls 72.4$ 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
Olin — Morgan Stanley Basic Materials Corporate Access Day 2017 on 6ix