Olin Corporation · NYSE:OLN
Olin — Morgan Stanley Chemicals Small Cap Roundtable (November 2005)
12 slides from Olin's conference presentation, Nov 30, 2005
Slide 1: Morgan Stanley Chemicals Small Cap Roundtable
* Exhibit 99.1 * * ****** Morgan Stanley Chemicals Small Cap Roundtable December 1, 2005 1
Slide 2: Highlights
Highlights • Chlor Alkali netbacks have and will continue to improve sequentially, particularly as a result of higher Caustic prices • Contracts renewing in 2006 will provide favorable price resetting • Metals volumes through August are down approximately 4% and 6% for strip and rod, respectively; b
Slide 3: Chlor Alkali Products
Chlor Alkali Products • Recent price increases announced: – August Caustic $50 – impact Q4 2005 – Early September Chlorine $20 – impact Q4 2005 – Late September Caustic $75 – impact 2006 – Early November Caustic $60 – impact 2006 • Contracts resetting in 2006 • Hurricanes did not damage any Olin pla
Slide 4: Olin's Chlor Alkali Contracts
Olin’s Chlor Alkali Contracts • Olin contracts nearly 100% of its chlorine and caustic sales • On about two-thirds of the chlorine and caustic volumes, prices change quarterly, with a combination of formula-based and negotiated pricing, balance renegotiated annually or semi- annually • Many contract
Slide 5: Impact of High Chlorine Prices On Chlor Alkali Profitability
Impact of High Chlorine Prices On Chlor Alkali Profitability • Chlorine buyers are highly concentrated • Some large chlorine buyers have contractual caps and / or discounts which dampen impact of price increases at high end of contract range • Chlorine contracts are multi-year and recognize cycle pr
Slide 6: Caustic Price Increases Are A Key to Higher ECU Values
Caustic Price Increases Are A Key to Higher ECU Values • Historically, Olin’s chlor alkali business has seen peak earnings during times of high Caustic prices • Caustic customers are smaller and more numerous • Caustic demand improvement normally lags Chlorine by six months • Olin sells 10% more cau
Slide 7: Metals
Metals • Volumes through August are down in strip and rod by 4% and 6%, respectively, but better than the industry which is down 11% and 9% • Shipments in electronics, automotive and building products down 9%, coinage up 7% and ammunition flat, but with upside in 2006 for ammunition • Higher energy
Slide 8: Metals
Metals • Earnings improvement opportunities through the likely combination of plant closures, realignments and headcount reductions to be completed in 2006 • Limited expansion of our China distribution facility by adding stamping capabilities • We believe that we are the low cost metals producer in
Slide 9: Winchester
Winchester • Higher sales volumes to commercial, military and law enforcement customers were more than offset by increased copper, lead, steel and resin costs • Price increases announced for 2006 to offset higher commodity prices • Start-up costs at the Oxford, MS facility also increased expenses in
Slide 10: Financial Highlights
Financial Highlights • 2005 cash generation supported by use of net operating loss carryforwards • Recovery of environmental costs offsets higher legal and legal related costs • $6 million voluntary pension contribution in September 2005 • We do not believe that mandatory contributions will be requi
Slide 11: Financial Highlights (continued)
Financial Highlights (continued) • Repaid $27 million of debt in 2004 and $52 million in 2005 • 2005 pension expense expected to increase by approximately $16 million over 2004 • 2005 effective tax rate of 39% • Commitment to investment grade credit rating • Capital spending levels expected to be in
Slide 12: Forward-Looking Statements
Forward-Looking Statements This presentation contains estimates of future performance, which are forward-looking statements and results could differ materially from those anticipated in the forward-looking statements. Some of the factors that could cause actual results to differ are described in the
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