Olin Corporation · NYSE:OLN
Olin — BB&T 2007 Manufacturing and Materials Conference
22 slides from Olin's conference presentation, Mar 22, 2007
Slide 1: BB&T 2007 Manufacturing and Materials Conference
Exhibit 99.1 * * * BB&T ****************** 2007 Manufacturing and Materials Conference March 22, 2007 1
Slide 2: Olin Attendees
* * Olin Attendees *** Joseph D. Rupp Chairman, President & Chief Executive Officer 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 2
Slide 3: Company Overview
* Company Overview Olin Year Ending Dec. 31, 2006 Revenue: $3,152 Pretax Inc. from Cont. Ops.: $201 Earnings Per Diluted Share: $2.06 Metals Chlor Alkali Winchester *** Specialty Copper-Based Products North American Producer of North American Producer of and Related Engineered Materials Chlorine and
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 • Following our customer
Slide 5: Olin Corporate Strategy
* Olin Corporate Strategy Olin Corporation Goal: Superior Shareholder Returns TRS in Top Third S&P Mid Cap 400 ROCE Over Cost of Capital Over the Cycle * 1.Build on current leadership positions in Chlor-Alkali, Metals and Ammunition • Improve operating efficiency and profitability • Integrate downst
Slide 6: 2006 Highlights
* 2006 Highlights • Highest earnings per share level since 1996 *• Second consecutive record year for Chlor Alkali Products division • Capital expenditures for bleach expansion projects and rail transportation to improve margins and customer service • Unprecedented copper, zinc and lead prices incre
Slide 7: 2006 Highlights Continued
* 2006 Highlights Continued • Metals restructuring charges were more than offset by LIFO inventory gains * • Revenues increased 8% over 2005 primarily due to increased selling prices and commercial sales • Tax dispute settled favorably with IRS resulting in a reduction in income tax expense of $22 m
Slide 8: First Quarter 2007 Outlook
* First Quarter 2007 Outlook * • Chlor Alkali expects lower ECU netbacks in Q1 2007 versus Q4 2006, but: – $40 caustic price increase announced in Q4 2006 – $40/$50 diaphragm/high grade caustic increase announced Q1 2007 – $25 chlorine increase announced in Q1 2007 • Metals earnings are projected to
Slide 9: Olin's Chlor Alkali Strategy
* * Olin’s Chlor Alkali Strategy * • Be the preferred merchant supplier to non-integrated chlor alkali customers • Continue to drive cost improvements through manufacturing and logistic optimization • Continue our partnership philosophy with our customers • Opportunities to increase the value of the
Slide 10: Olin Has Leading Capacity Share in Eastern U.S.
* * Olin Has Leading Capacity Share in Eastern U.S. Bayer 2% th Mexichem Other • 4 Overall in U.S. Capacity 2% 8% Georgia Gulf • Largest Producer East of 3% Dow the Mississippi River Pioneer 32% 5% • Olin Has 1.23 Million tons Formosa 6% ECU Capacity Per Year (1) • A $10 / ECU Change Olin 8% Equates
Slide 11: Chlor Alkali Products
* Chlor Alkali Products * • 2005 & 2006 record years, peak ECU in Q1‘06: Q3 ’05 $515 Q1 ’06 $590 Q3 ‘06 $540 Q4 ’05 $545 Q2 ’06 $560 Q4 ’06 $520 • Chlorine and Caustic price increases announced in Q1’07 • Higher transportation and energy costs • $1 change in Natural Gas MMBTU increases costs of Natu
Slide 12: North America Chlor Alkali Forecast
North America Chlor Alkali Forecast North America Chlor Alkali Capacity North America Chlor Alkali Capacity Reductions 2000 Through 2006 Expansions 2000 Through 2006 Short Tons as Short Tons as Company Location Chlorine Company Location Chlorine Dow Ft. Saskatchewan 610,000 Vulcan C-A Geismer, LA 21
Slide 13: 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, and the balance is renegotiated annually or semi-annually
Slide 14: Metals
* * Metals ***** • Olin is the leading manufacturer of copper alloy strip, and a leading manufacturer of brass rod in the U.S. • Olin possesses leading technology position – 37 U.S. patents for High Performance Alloys – 40 U.S. patents on various proprietary processing and technical capabilities • O
Slide 15: Metals
* Metals * • During 2006, copper and zinc prices increased 84% and 137%, respectively, compared to 2005, which increased operational costs and investment in working capital • Higher natural gas prices and metal melting losses, due to higher metal prices, reduced earnings by $21 million compared to 2
Slide 16: Metals Outlook
* * Metals Outlook ** • Moderating metals prices will help reduce metal melting losses and reduce working capital • US dollar coin program should add volume for the strip business • Expansion of our China distribution facility by adding stamping capabilities • We believe that we are the low cost met
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
Slide 18: Winchester
* Winchester **** • Profits of $15.8 million in 2006 more than doubled 2005 levels • Eight price increases announced since the beginning of 2004 to offset higher commodity prices • Continued increase in lead prices poses a challenge for 2007 • Olin, as part of the General Dynamics team, was awarded
Slide 19: Financial Highlights
* * Financial Highlights ** • Year end cash and short-term investments of $276 million exceed outstanding debt by nearly $25 million • Exchanged $125 million of 9.125% bonds due in 2011 for new 6.75% bonds due 2016 • $80 million voluntary pension contribution in Q3 2006 coupled with higher discount
Slide 20: Financial Highlights (continued)
* * Financial Highlights (continued) ** • Voluntary transition by 25% of Metals and Winchester hourly workers to Olin’s defined contribution plan from the defined benefit pension plan • Favorably settled all IRS audits through 2002 resulting in a $22 million reduction in tax expense • 2007 effective
Slide 21: Investment Rationale
* * Investment Rationale **** • Continued strong performance based on – Relatively high ECU prices – Cost reductions, moderating metals costs, better pricing and restructuring in Metals – Cost reductions, price increases and increased Military revenue in Winchester • Strong financial discipline • Co
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 ar
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