Olin Corporation · NYSE:OLN
Olin — Credit Suisse Basic Materials Conference 2015
26 slides from Olin's conference presentation, Jun 24, 2015
Slide 1: Olin Credit Suisse Basic Materials Conference
Olin Credit Suisse Basic Materials Conference Boston, MA June 25, 2015
Slide 2: Forward-Looking Statements
Forward-Looking Statements 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 projection
Slide 3: SEC Disclosure Rules: Important Notices and Additional Information
SEC Disclosure Rules Important Notices and Additional Information In connection with the proposed combination of Olin with the chlorine products business of The Dow Chemical Company (“TDCC”), Blue Cube Spinco Inc. (“Spinco”) has filed a registration statement on Form S-4 containing a prospectus and
Slide 4: Olin to Acquire Dow Chemical's Chlorine Products: Transaction Overview
Olin to Acquire Dow Chemical’s Chlorine Products Transaction Overview Reverse Morris Trust structure Total value of $5.5B, consisting of approximately 1) $2.4B in common stock, 2) $2B in cash and cash equivalents, and 3) $1.1B in assumed debt and pension liabilities Separate agreement on ethylene is
Slide 5: Reverse Morris Trust Structure
Reverse Morris Trust Structure Step 1: Split-off 1 Non-electing S/Hs Dow Stock Electing Dow S/Hs Dow DCP stock DCP Step 2: Merger Non-electing S/Hs Dow Electing Dow S/Hs DCP DCP Stock Olin S/Hs Olin stock Olin Merge Merger Sub Step 3: Final Result Non-electing S/Hs Dow Electing Dow S/Hs ~53% Olin S/
Slide 6: Strategic Benefits
Strategic Benefits Creates Leading Producer of Chlorine Derivatives and Caustic Soda Leading global chlor alkali producer with 6.2 million tons of low cost chlorine capacity #1 global seller of membrane caustic soda and chlorinated organics #1 global supplier of epoxy materials #1 North American sel
Slide 7: Creates Chlorine-Based Products Leader
Creates Chlorine-Based Products Leader Top chlorine producers worldwide (kMT) Chlorine global capacity: ~90,000 kMT 6,191 Olin + DCP 1 4,320 DCP 1 3,430 OXY, 2,363 Formosa Plastics 2,249 Post-separation 2 2,249 axiaII, 1,871 Olin 1,886 Solvay, 1,719 Bayer Source: CMAI 2014 average capacities in kMT
Slide 8: Diversified Geographic Footprint
Diversified Geographic Footprint Freeport, TX CA, VCM, EDC Epi/Allyl, LER, CER BisA, Phenol/Acetone CMP, Tric, VDC Brine, Power Plaquemine, LA CA, EDC Perc Brine, Power Russellville, AR Cell assembly and maintenance Rheinmünster, Germany CER Terneuzen, Netherlands Cumene Bécancour, QC Niagara Falls,
Slide 9: Will Diversify Olin's Business Mix
Will Diversify Olin’s Business Mix 2014 pro forma EBITDA by business ($bn) Dow Chlorine Products Chlor Alkali & Vinyl 70% Global Chlorinated Organics 18% Epoxy 12% ~$0.68bn + Olin Chlor Alkali 59% Winchester 37% Chemical Distribution 4% $0.34bn = Pro forma New Olin Chlor-Alkali & Vinyl 66% Wincheste
Slide 10: Top Tier Low Cost Structure
Top Tier Low Cost Structure Stable and Low Cost Raw Materials Electricity – 85% of the New Olin system’s energy to generate electricity will come from natural gas and hydroelectric sources Salt Brine – 80% of brine requirements will be supplied from owned and operated mines that are connected to man
Slide 11: Significant Synergies
Significant Synergies Synergies breakdown Logistics & procurement Increased procurement efficiencies Elimination of duplicate terminals and optimization of freight to terminals Reduction of net acquisition cost for purchased caustic Savings from trucking and rail fleet optimization COGS reduction op
Slide 12: Olin Stand Alone Performance
Olin Stand Alone Performance
Slide 13: Company Overview
Company Overview Olin Corporation Q1 2015 FY 2014 FY 2013 Revenue: $518 $2,241 $2,515 Adj. EBITDA: $71 344 $425 Chlor Alkali A Leading North American Producer of Chlorine and Caustic Soda Q1‘15 FY‘14 FY’13 Revenue: $ 293 $ 1,209 $ 1,331 EBITDA: $ 48 $ 234 $ 306 Chemical Distribution A Leading Distri
Slide 14: Chlor Alkali Process
C hlor Alkali Process Raw Materials BRINE+ELECTROLYSIS=PRODUCTS Potassium Chloride or Sodium Chloride KOH or Caustic Soda Chlorine Hydrogen North American Position Percent of 2014 Revenue KOH – 1.59 Tons (Potassium Hydroxide) #2 11% Caustic Soda – 1.13 Tons (Sodium Hydroxide) #4 51% Bleach (Sodium H
Slide 15: Growing EBITDA
Growing EBITDA Olin Five Year Trailing Adjusted EBITDA 123 159 215 259 251 276 309 322 332 13% CAGR 2006 2007 2008 2009 2010 2011 2012 2013 2014 0.0 50.0 100.0 150.0 200.0 250.0 300.0 350.0 Achieving Growth Through: Strategic Acquisitions Pioneer, 2007 SunBelt JV, 2011 KA Steel, 2012 Investments in
Slide 16: Diverse Customer Base
Diverse Customer Base North American Industry Olin Corporation Chlorine Other 16.5% Exports 1.8% Polycarbonates 1.8% Chlorinated Intermediates 3.9% Urethanes 7.3% Pulp & Paper 0.5% Inorganic Chemicals 5.4% Epichlorohydrin 5.6% Water Treatment 6.5% Propylene Oxide 10.3% Vinyls 40.3% Other 1.9% Distri
Slide 17: Bleach Growth is a Key Objective
Bleach Growth is a Key Objective Olin Bleach Historical Sales Volume (DT) 22% CAGR 2006 2007 2008 2009 2010 2011 2012 2013 2014 Bleach sells at a premium to the ECU and, while seasonal, is not cyclical Olin bleach volumes have delivered steady growth since 2006 We expect additional growth to continu
Slide 18: Growing HCl Volumes
Growing HCl Volumes Olin HCl Historical Sales Volume (DT) 14% CAGR 2006 2007 2008 2009 2010 2011 2012 2013 2014 Olin is the leading producer of burner-grade HCl with 5 production locations in North America Olin HCl volumes have grown steadily since 2006 Distribution strategy is expected to increase
Slide 19: EBITDA Improvement Chlor Alkali
EBITDA Improvement Chlor Alkali Annual EBITDA 64 59 13 92 107 262 283 274 386 185 192 331 352 306 234 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 0 50 100 150 200 250 300 350 400 450 Higher Peaks and Higher Troughs Olin Bleach, HCl and KOH initiatives have reduced the
Slide 20: Chemical Distribution
Chemical Distribution KA Steel, purchased in August 2012, established Olin as the largest caustic distributor in the U.S. with an infrastructure that provides a strong fit with Olin’s chlor alkali assets: Mature supply relationships 90,000 tons of caustic storage in a network of 26 terminals Expande
Slide 21: Winchester
Winchester Ammunition Hunters & Recreational Shooters Products Retail Distributors Mass Merchants Law Enforcement Military Industrial Rifle N/A Handgun N/A Rimfire (.22 caliber) Shootshell Components Winchester Strategy Centerfire relocation: $24 million of cost savings in 2014 Expect $35 million of
Slide 22: Strong Correlation Between Firearms & Ammunition Sales Data
Strong Correlation Between Firearms & Ammunition Sales Data Correlations U.S. Commercial Ammunition Mfr. Shipments & NICS Checks: +93% (1999-2014) U.S. Commercial Ammunition Mfr. Shipments & U.S. Firearms Production: +82% (1992-2013) NICS Checks & U.S. Firearms Production: +96% ( 1999 – 2013) Increa
Slide 23: Growing Shooting Sports Participation Has Increased Installed Base
Growing Shooting Sports Participation Has Increased Installed Base New Shooters Are On The Rise 40 Million +8 Million New Shooters Since 2008 +4 Million New Shooters Added During 2012 Alone 32 Million 2008 2009 2010 2011 2012 New Shooters Are Younger New Shooters 66% Are 18-34 Established Shooters 3
Slide 24: Winchester Is Growing
Winchester Is Growing Annual EBITDA 25% CAGR 25 36 42 78 73 49 69 158 144 34 2006 2007 2008 2009 2010 2011 2012 2013 2014 Q1 ’15 020 40 60 80 100 120 140 160 180We expect Winchester’s 2015 earnings to exceed 2014 earnings as a result of: Cost savings from the centerfire relocation to Oxford, MS A si
Slide 25: Strong Balance Sheet
Strong Balance Sheet Q1 2015 cash balance of $197 million reflects a seasonal increase of $53 million in working capital and the payment of transaction costs Q1 2015 CAPEX was $23 million and depreciation and amortization expense was $34 million 2015 CAPEX is expected to be in the $120 to $130 milli
Slide 26: Profit Outlook
Profit Outlook Q1 2015 Adjusted EBITDA was $71.2 million Earnings improvements are expected in all three business segments in 2015 over 2014 results Chlor Alkali Products full year 2015 segment income is expected to improve compared to 2014 primarily due to higher cyclical ECU pricing and higher ble