Olin Corporation · NYSE:OLN
Olin — 2007 Citi Basic Materials Symposium, 18th Annual Chemicals Conference
22 slides from Olin's conference presentation, Dec 3, 2007
Slide 1: 2007 Citi Basic Materials Symposium, 18th Annual Chemicals Conference
Exhibit 99.1 Citi Investment Research 2007 Citi Basic Materials Symposium 18th Annual Chemicals Conference December 4, 2007 1
Slide 2: Olin Representatives
Olin Representatives John E. Fischer Vice President & Chief Financial Officer John L. McIntosh Vice President & President, Chlor-Alkali Products Larry P. Kromidas Assistant Treasurer & Director, Investor Relations lpkromidas@olin.com (618) 258 - 3206 2
Slide 3: Olin Vision
Olin Vision To be a leading Basic Materials company delivering attractive, sustainable shareholder returns • Being low cost, high quality producer, and #1 or #2 supplier in the markets we serve • Providing excellent customer service and advanced technological solutions • Generating returns above the
Slide 4: Olin Corporate Strategy
Olin Corporate Strategy Olin Corporation Goal: Superior Shareholder Returns Total Return to Shareholders in Top Third of S&P Mid Cap 400 Return on Capital Employed Over Cost of Capital Through the Cycle 1. Build on current leadership positions in Chlor-Alkali and Ammunition • Improve operating effic
Slide 5: 2007 Strategic Actions
2007 Strategic Actions April Announced that a $100 million pension contribution and an investment policy change would likely result in no future contributions to the defined benefit pension plan May Announced agreement to acquire Pioneer Companies for $426 million August Closed the Pioneer acquisiti
Slide 6: The New Olin
The New Olin ($ in millions) Actual 2006 Pro Forma 2006* Revenue: Chlor Alkali $ 666 $ 1,191 Metals 2,112 - Winchester 374 374 Total Revenue $ 3,152 $ 1,565 Pre-tax Profit $ 201 $ 253 Return on Capital 18.9% 22.3% Total Assets: Chlor Alkali $ 279 $ 1,037 Metals 741 - Winchester 180 237 Corporate and
Slide 7: Olin's Chlor Alkali Strategy
Olin’s Chlor Alkali Strategy • Be the preferred supplier to merchant chlor alkali customers in addition to being the low cost producer • Goal is to increase the value of the Chlor Alkali Division to Olin Corporation through: – Optimizing capacity utilization – Higher margin downstream products – Cos
Slide 8: Pioneer Acquisition
Pioneer Acquisition • Synergistic, bolt-on acquisition that enhances our chlor- alkali franchise: – #3 chlor-alkali producer in North America – Enhances geographic coverage – Improves overall cost position – #1 in industrial bleach in North America • Provides the opportunity for low-cost expansion i
Slide 9: Pioneer Acquisition (Continued)
Pioneer Acquisition (Continued) • Purchase price of $426 million • Expect to realize $20 million in synergies by the end of Q2 2008, ahead of original schedule, and $35 million annually thereafter • Synergies will come from logistics, purchasing, operations and SG&A expenses • St. Gabriel expansion/
Slide 10: Pioneer Acquisition Moves Olin Up to #3 Producer
Pioneer Acquisition Moves Olin Up to #3 Producer and . . . 5,000 4,780 4,000 3,484 3,000 1,992 2,000 1,856 1,000 880 471 430 371 0 Dow Occidental Olin PPG Formosa Georgia Bayer AG Mexichem Gulf Diaphragm Membrane Mercury Other 10
Slide 11: Enhances Olin's Operational and Geographical Platform
. . . Enhances Olin’s Operational and Geographical Platform Dalhousie, Tacoma, WA NB Becancour, Quebec Niagara Falls, Tracy, CA NY Henderson, NV Charleston, Santa Fe Springs, CA TN Augusta, McIntosh, GA AL St. Gabriel, LA (1) Pioneer’s Becancour plant has 275,000 short tons Diaphragm and 65,000 shor
Slide 12: Olin Is The 3rd Largest Producer in North America
Olin Is The 3rd Largest Producer in North America • Olin has 1.99 Million tons ECU Capacity Per Year (1) (Source: CMAI) • A $10 / ECU Change Equates to a $17 Million Change in Pretax Income at Full Capacity, or $.15 per share @ 35% tax rate Includes 50% of SunBelt (1) Source: CMAI Chlor Alkali Repor
Slide 13: ECU Netback Outlook
ECU Netback Outlook • Natural Gas prices and capacity reductions have created a more favorable long-term price outlook • $1 change in Natural Gas MMBTU increases the cost of Natural Gas-based producers by $25 to $35/ECU • Higher 2007 ECU netbacks driven by caustic pricing: 2005 2006 2007 2007 Causti
Slide 14: Capacity Rationalization
Capacity Rationalization North America Chlor Alkali Capacity North America Chlor Alkali Capacity Reductions 2000 Through 2005 Expansions 2000 Through 2005 Reductions 1,930,000 Expansions (382,000) Net Reductions 1,548,000 Annual demand growth at 0.8%/Yr = 110,000 Short Tons/Yr Source: Olin Data 14
Slide 15: Announced Capacity Changes 2006 through 2010
Announced Capacity Changes 2006 through 2010 North America Chlor Alkali Capacity North America Chlor Alkali Capacity Announced Reductions Announced Expansions Reductions (1,326,008) Annual demand growth at 0.8%/Yr = Expansions 2,057,010 110,000 Short Tons/Yr Net Expansions 731,002 15
Slide 16: Chlor-Alkali's Two Tier Bleach Growth Strategy
Chlor-Alkali’s Two Tier Bleach Growth Strategy • Organic Growth – Bleach expansions at Olin’s four existing chlor-alkali sites began prior to the Pioneer acquisition • Acquisitions and Joint Ventures – Pioneer purchase increases bleach output by 130 million gallons or 95,000 ECU’s annually and adds
Slide 17: Winchester Products
Winchester Products Products End Uses Winchester ® sporting Hunters & recreational shooters, law ammunition -- shot- enforcement agencies shells, small caliber centerfire & rimfire ammunition Small caliber military Infantry and mounted weapons ammunition Industrial products -- 8 Maintenance applicat
Slide 18: Winchester
Winchester • Eleven price increases announced since the beginning of 2004 to offset higher metal prices • Continued increase in metal prices, especially lead, prompts 5% to 20% price increases effective January 1st by Winchester, Remington and ATK • Continued expansion of military and law enforcemen
Slide 19: Financial Highlights
Financial Highlights • Ample liquidity with new five-year lines of credit totaling over $350 million • Net proceeds from the sale of the Metals business used to redeem debt, strengthen balance sheet and provide funds for St. Gabriel expansion • Olin expects contribution from four months of Pioneer o
Slide 20: Financial Highlights (continued)
Financial Highlights (continued) • Improved Winchester results: – 69% earnings improvement Q3 ’07 vs. Q3 ’06 – 81% higher earnings YTD September ‘07 vs. ‘06 • 2007 effective tax rate expected to be in the 34% to 35% range • Pension expense expected to be $8 to $12 million lower in 2008 as compared t
Slide 21: Investment Rationale
Investment Rationale • Continued strong performance based on: – Relatively high ECU prices – Pioneer acquisition – Cost reductions, price increases and increased U.S. military and law enforcement revenue in Winchester • Strong financial discipline • At recent price levels, common stock dividend yiel
Slide 22: Forward-Looking Statements
Forward-Looking Statements This presentation contains estimates of future performance, which are forward-looking statements and actual results could differ materially from those anticipated in the forward- looking statements. Some of the factors that could cause actual results to differ are describe
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