Slide 1: KeyBanc Basic Materials & Packaging Conference
KeyBanc Basic Materials & Packaging Conference September 11, 2008 Exhibit 99.1
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
Slide 3: Investment Rationale
Investment Rationale • Strong outlook based on: – Historically high ECU prices – Benefits from the Pioneer acquisition – Increasing profitability from Winchester • Strong balance sheet with no debt maturities until • Substantial cash flow supports 81+ year continuous common dividend with above avera
Slide 4: 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 5: Olin Corporate Strategy
Total Return to Shareholders in Top Third of S&P Mid Cap 400 Return on Capital Employed Over Cost of Capital Through the Cycle Olin Corporation Goal: Superior Shareholder Returns Olin Corporate Strategy 1. Build on current leadership positions in Chlor-Alkali and Ammunition • Improve operating effic
Slide 6: Impact of Strategic Actions
Impact of Strategic Actions “The New Olin” • Improved profitability • Improved product mix with increased value-added bleach and greater geographic diversity • Stronger balance sheet with reduced working capital investment and volatility • $30 million per year lower legacy costs
Slide 7: Olin's Chlor Alkali Strategy
Olin’s Chlor Alkali Strategy • Be the preferred supplier to chlor alkali customers in addition to being the low cost producer • Goal is to increase the value of the Chlor Alkali Division to Olin through: – Optimizing capacity utilization – Higher margin downstream products – Cost reduction and finan
Slide 8: ECU definition
ECU = Electrochemical Unit; a unit of measure reflecting the chlor-alkali process outputs of 1 ton of chlorine, 1.13 tons of 100% caustic soda and 0.3 tons of hydrogen.
Slide 9: Pioneer Acquisition
Pioneer Acquisition • Synergistic, bolt-on acquisition that enhances our chlor-alkali franchise – Immediately accretive to earnings and cash flow that remains highly accretive throughout the cycle – Improves profitability through synergies and capacity optimization – Provides platform for value-adde
Slide 10: Synergies & Cost Reductions
Synergies & Cost Reductions • Approximately $10 million of synergies realized in Q2 • Original synergy forecast increased from $35 million annual rate to more than $40 million; about 10% of purchase price • Synergies of $8 to $10 million annually expected to be realized from the Q2 Dalhousie, NB pla
Slide 11: Chlorine Capacities
Chlorine Capacities Pioneer Acquisition moves Olin up to #3 Producer and… Source: CMAI/Olin Includes St. Gabriel conversion/expansion, Sunbelt joint venture and Dalhousie shutdown. Presumes Shintech startup during 2008. Oxy includes OxyVinyls.
Slide 12: Plant Locations
39 Plant Locations … Enhances Olin ’ s Operational and Geographical Platform Pioneer Chlorine Plants Pioneer Bleach Plants Source: /Olin Tacoma, WA Tracy, CA Santa Fe Springs, CA Henderson, NV St. Gabriel, LA McIntosh, AL Augusta, GA Charleston, TN Niagara Falls, NY Becancour , Quebec Olin Chlorine
Slide 13: Industry Pricing Environment
• Industry pricing environment has improved through: – Net capacity reductions of about 12% since 2000 – Higher natural gas prices have increased competitor manufacturing costs by $25 to $30 an ECU for every $1 increase in natural gas (the Olin system exposure to natural gas is less than 25%) – Weak
Slide 14: Olin ECU Netback Outlook
Olin ECU Netback Outlook • 1st half caustic price announcements totaling $490-495 per ECU are supported by tight caustic supply, expected to be realized in Q3, Q4 and into 2009 • 3rd quarter caustic price announcement of $130 is expected to be realized in Q4 and Q1’09 • Higher ECU netbacks are drive
Slide 15: Capacity Rationalization: 2000-2012
Capacity Rationalization: 2000-2012 Source: Olin Data Technology Key: DIA=Diaphragm, HG=Mercury, MB=Membrane, STB=Salt-to-Bleach. Chlor Alkali Capacity Reductions Chlor Alkali Capacity Expansions Company Location Tech ECU COMPLETED Dow Ft. Saskatchewan DIA 526,000 Dow Plaquemine, LA DIA 375,000 Form
Slide 16: Why Industrial Bleach
Why Industrial Bleach • Olin is the leading bleach producer with a current capacity of 250 million gallons, or 160,000 equivalent ECUs, in a 1 billion gallon market • Bleach commands a $100 to $200 price premium over ECU selling prices • Utilizes both chlorine and caustic soda • Regional nature of b
Slide 17: Winchester Products
Products End Uses Winchester ® sporting ammunition -- shot- shell, small caliber centerfire & rimfire ammunition Hunters & recreational shooters, law enforcement agencies Small caliber military ammunition Infantry and mounted weapons Industrial products -- 8 gauge loads & powder- actuated tool loads
Slide 18: Winchester's Strategy
Winchester’s Strategy • Leverage existing strengths – Seek new opportunities to leverage the legendary Winchester® brand name – Investments that maintain Winchester as the retail brand of choice, and lower costs • Focus on product line growth – Continue to develop new product offerings • Provide ret
Slide 19: Winchester
Winchester • Twelve price increases announced since beginning of to offset higher metal prices • Other U.S. manufacturers, including Remington and ATK, have implemented similar price increases • Continued expansion of military and law enforcement business now accounts for 25 - 30% of total revenue:
Slide 20: Financial Highlights
Financial Highlights • Strong Balance Sheet – Gross Debt / EBITDA is less than 1x – Ample liquidity with multi-year lines of credit totaling $350 million and cash of $207 million – Pension plan now over-funded • Strong Profit Outlook – ECU price trend is favorable due to strength of caustic soda – W
Slide 21: Investment Rationale
• Strong outlook based on: – Historically high ECU prices – Benefits from the Pioneer acquisition – Increasing profitability from Winchester • Strong balance sheet with no debt maturities until • Substantial cash flow supports 81+ year continuous common dividend with above average yield Investment R
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
Slide 23: Olin company history
founded in East Alton, IL providing blasting powder to Midwestern coal mines formed Westerner Cartridge Co to manufacture small arms ammunition acquires Winchester Repeating Arms 1940s & 1950s acquires cellophane, paper, lumber & powder-actuated tools businesses founded in Saltville, VA to produce s
Slide 24: North American ECU Capacity
(1) Olin production capacity includes Sunbelt & other joint ventures. Source: CMAI - May, 2008 North American ECU Capacity
Slide 25: North American Chlorine Demand by End Use
Source: CMAI, 2008 “Organics” includes: MDI, TDI, polycarbonates, monosodium glutamate, and more. “Inorganics” includes: titanium dioxide (TiO2), sodium silicates, sodium cyanide, and more. North American Chlorine Demand by End Use
Slide 26: North American Caustic Soda Demand by End Use
Source: CMAI, 2008 “Organics” includes: MDI, TDI, polycarbonates, monosodium glutamate, and more. “Inorganics” includes: titanium dioxide (TiO2), sodium silicates, sodium cyanide, and more. North American Caustic Soda Demand by End Use