Olin Corporation · NYSE:OLN
Olin — Bank of America BASics/Industrials Conference 2008
21 slides from Olin's conference presentation, May 6, 2008
Slide 1: Bank of America BASics/Industrials Conference
Bank of America BASics/Industrials Conference May 7, 2008 Exhibit 99.1
Slide 2: Olin Representatives
Olin Representatives 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 lpkromidas@olin.com (618)
Slide 3: Investment Rationale
Investment Rationale • Strong outlook based on: – Relatively 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
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 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 through: – Optimizing capacity utilization – Higher margin downstream products – Cost reduction
Slide 8: 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 9: Synergies & Cost Reductions
Synergies & Cost Reductions • $5.5 million of synergies realized in Q1 • Total synergy forecast increased from $35 million annual rate to at least $40 million • Synergies of $8 to $10 million annually expected to be realized from Dalhousie plant closing • St. Gabriel expansion/conversion expected to
Slide 10: Chlorine Capacities
Chlorine Capacities Pioneer ’ s Acquisition moves Olin up to #3 Producer and … Source: CMAI/Olin 1,000 2,000 3,000 4,000 5,000 Dow Occidental Olin* PPG Formosa GGC Bayer AG Mexichem Diaphragm Membrane Mercury Other 4,780 3,484 1,955 1,856 * Includes St.Gabriel expansion and Dalhousie shutdown
Slide 11: 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 12: Industry pricing environment
• Industry pricing environment has improved through: – Capacity Reductions – Higher natural gas prices have increased competitor manufacturing costs (Olin system uses approximately 25% natural gas) – Weaker US dollar and higher transportation costs have significantly reduced caustic imports – A $10
Slide 13: ECU Netback Outlook
ECU Netback Outlook • First quarter caustic price announcements totaling $80 per ECU are supported by tight caustic supply, expected to be realized in Q2 and Q3 • Second quarter caustic price announcement totaling $60 per ECU expected to be realized in Q4 and Q1 2009 • Higher ECU netbacks are driven
Slide 14: Capacity Rationalization
Capacity Rationalization North America Chlor Alkali Capacity Reductions Through 2010 North America Chlor Alkali Capacity Expansions Through 2010 Company Location Short Tons as Chlorine Dow Plaquemine, LA (375,000) Oxy Vinyls LP Deer Park, TX (395,000) Formosa Plastics Baton Rouge, LA (201,000) Pione
Slide 15: Why Industrial Bleach
Why Industrial Bleach • Bleach commands a $100 to $200 price premium over ECU selling prices • Utilizes both chlorine and caustic soda • Regional nature of bleach business benefits Olin geographic diversity • Platform for future growth • Current capacity of 250 million gallons or 160,000 equivalent
Slide 16: 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 17: 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
Slide 18: 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 19: Financial Highlights
Financial Highlights • Strong Balance Sheet – Net debt / EBITDA is less than 1x – Ample liquidity with multi-year lines of credit totaling $375 million and cash of $276 million – Pension plan now over-funded • Strong Profit Outlook – ECU price trend is favorable due to strength of caustic soda – Win
Slide 20: Investment Rationale
• Strong outlook based on: – Relatively 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 Rat
Slide 21: 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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