Olin Corporation · NYSE:OLN
Olin — Cowen and Company Metals, Mining & Materials Conference 2014
24 slides from Olin's conference presentation, Nov 10, 2014
Slide 1: Cowen and Company Metals, Mining & Materials Conference
1 Cowen and Company Metals, Mining & Materials Conference November 11, 2014 Exhibit 99.1
Slide 2: Company Overview
2 Company Overview All financial data are for the three and nine months ended September 30, 2014 and for the 12 months ended December 31, 2013. Data are presented in millions of U.S. dollars except for earnings per share. Additional information is available at www.olin.com. Winchester Chlor Alkali A
Slide 3: Investment Rationale
3 Investment Rationale • Leading Positions In: Chlorine and Caustic Soda Industrial Bleach Burner Grade Hydrochloric Acid Small Caliber Ammunition • History of Successful Acquisitions and Delivering Synergies: Pioneer Companies – August 31, 2007 SunBelt – February 28, 2011 K. A. Steel Chemicals Inc.
Slide 4: Growing EBITDA
4 0.0 50.0 100.0 150.0 200.0 250.0 300.0 350.0 400.0 2006 2007 2008 2009 2010 2011 2012 2013 2014 Est 334 Growing EBITDA • Olin has successfully completed the immediately accretive acquisitions of Pioneer, SunBelt and KA Steel • Downstream bleach and HCl growth have increased earnings and margins •
Slide 5: Capital Projects Driving Earnings
5 • Bleach Initiative – HyPure® plants in McIntosh, AL & Niagara Falls, NY were completed in 2012; and a Henderson, NV plant was completed in 2013; all are operating at full rate – We are capable of converting more than 17% of our chlor-alkali capacity into higher margin bleach – In 2013, bleach con
Slide 6: Chlor Alkali Process
6 Chlor Alkali Process 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 .03 tons of hydrogen. North American Position Percent of 2013 Revenue #2 #1 Industrial #1 Merchant #1 Burner Grade 54% 12% 4% 10%
Slide 7: North American Chlor Alkali Producers & Technologies
7 North American Chlor Alkali Producers & Technologies 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 Dow Oxy* Axiall* Olin* Shintech Formosa Westlake Bayer PMV* U.S. Mag* Canexus* Iquisa Others N or th A m er ican C h lor ine Prod u ct ion C apac it y by P roduce r (0 0 0 ECU ) Other Mercury Salt
Slide 8: Diverse Customer Base
8 Diverse Customer Base Chlorine Caustic Soda North American Industry Olin Corporation Source: IHS and Olin 2013 demand. Chlorine: “Inorganics” includes: Titanium dioxide and bromine. Caustic Soda: “Organics” includes: MDI, TDI, polycarbonates, synthetic glycerin, sodium formate, monosodium glutamat
Slide 9: Olin's Geographic Advantage
9 Location 12/31/13 Chlorine Capacity (000s ST) McIntosh, AL 426 Diaphragm McIntosh, AL - SunBelt 352 Membrane Becancour, Quebec 297 Diaphragm 65 Membrane Niagara Falls, NY 300 Membrane Charleston, TN 208 Membrane St. Gabriel, LA 246 Membrane Henderson, NV 153 Diaphragm Total 2,047 Membrane 57% Diap
Slide 10: Industrial Bleach Initiative
10 Industrial Bleach Initiative • Appeal of Industrial Bleach – Bleach utilizes both chlorine and caustic soda in an ECU ratio – Growing demand is seasonal, but not cyclical – Bleach commands a premium price over an ECU • Olin Advantages – Regional nature of the bleach business benefits Olin’s geogr
Slide 11: Bleach Growth is a Key Objective
11 23% CAGR Bleach Growth is a Key Objective • Olin bleach volumes have delivered steady growth since 2006 • Key bleach target segments include waste and drinking water treatment, consumer products, food, farming and pool chemicals • Our capacity to convert ECUs into higher margin bleach now exceeds
Slide 12: Hydrochloric Acid
12 Hydrochloric Acid • Olin is the leading producer of Burner-grade HCl in North America with 5 manufacturing locations in the United States and Canada • Currently 25% of HCl supply is “Burner-grade” or “on-purpose” HCl • By-product HCl accounts for 75% of the market supply, but availability is subj
Slide 13: Growing HCl Demand
13 2006 2007 2008 2009 2010 2011 2012 2013 2014E Olin HCl Historical Sales Volume (DT) Growing HCl Demand North American HCl Supply • Burner acid expansions represent the majority of new supply coming online, approaching 13% of 2014 capacity • Burner operating rates are higher than by- product, supp
Slide 14: EBITDA Improvement
14 EBITDA Improvement • Capacity rationalization • Olin Bleach and HCl initiatives have reduced the cyclicality of the business, and at the same time, increased profit margins • More than half of Q3 2014 earnings came from bleach and HCl sales • Trough EBITDA levels have improved approximately $200
Slide 15: Chemical Distribution
15 Chemical Distribution • KA Steel is a chemical distributor uniquely focused on the products produced by Olin’s Chlor Alkali business • KA Steel has generated $45 million of after-tax cash flow in the first two years of ownership by Olin • Chemical Distribution 2014 EBITDA is forecast to double by
Slide 16: Chemical Distribution
16 Chemical Distribution • KA Steel caustic distribution infrastructure is a strong fit with Olin’s chlor alkali assets: • Mature supply relationships • 90,000 tons of storage capacity • Expanded geographic coverage • Logistical savings • Provides scale and flexibility • Access to new customers, reg
Slide 17: Winchester Brands and Strategy
17 Winchester Brands Winchester Strategy • Cost Reduction – Centerfire relocation: – $17 million of cost savings realized in 2013 – Expect $25 million of cost savings in 2014 – Expect $35-$40 million lower annual operating costs beginning in 2016 • New Product Development – Continue to develop new p
Slide 18: Strong Correlation Between Firearms & Ammunition Sales
18 Data Correlations • U.S. Commercial Ammunition Mfr. Shipments & NICS Checks: +94% (1999-2013) • U.S. Commercial Ammunition Mfr. Shipments & U.S. Firearms Production: +71% (1992-2012) • NICS Checks & U.S. Firearms Production: +93% (1999-2012) Strong Correlation Between Firearms & Ammunition Sales
Slide 19: Growing Shooting Sports Participation Has Increased Installed Base
19 Growing Shooting Sports Participation Has Increased Installed Base
Slide 20: Winchester Is Growing
20 0 20 40 60 80 100 120 140 160 180 2006 2007 2008 2009 2010 2011 2012 2013 9Mo'14 Winchester Is Growing • The surge that began in Q4 2012 continued through 2013 resulting in record full year EBITDA • Pistol and rimfire ammunition demand remains robust • Commercial backlog at Q3 2014 was approximat
Slide 21: Centerfire Relocation
21 Centerfire Relocation • The decision to relocate Winchester’s centerfire operations, including 1,000 jobs, was made on November 3, 2010 • The 500,000 square foot facility was opened in October 2011, the relocation of pistol ammunition manufacturing is complete, rifle manufacturing has been initia
Slide 22: Strong Balance Sheet
22 Strong Balance Sheet • Sept. 30, 2014 cash of $267 million reflects 9 months spending on: • $50 million of Capital Expenditures; • $80 million of normal, seasonal working capital needs; and • $92 million distributed to shareholders in the form of common stock dividends and common share repurchase
Slide 23: Full Year 2014 Outlook and Summary
23 • Full year 2014 EBITDA is expected to be $345 to $365 million • Focused growth in the less cyclical and higher value Bleach, HCl and Potassium Hydroxide co-products accounted for more than 50% of Chlor Alkali earnings in Q3 2014 • While we believe that we are in the trough part of a cycle, Chlor
Slide 24: Forward-Looking Statements
24 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 descri
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