Olin Corporation · NYSE:OLN
Olin — Sidoti & Company Emerging Growth Institutional Investor Forum (October 2008)
26 slides from Olin's conference presentation, Oct 27, 2008
Slide 1: Sidoti & Company Emerging Growth Institutional Investor Forum
Sidoti & Company Emerging Growth Institutional Investor Forum October 28, 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: – 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 an 82 year continuous common dividend with above ave
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 Q3 • Original synergy forecast increased from $35 million annual rate to more than $45 million; or more than 10% of purchase price • Synergies of $8 to $10 million annually expected to be realized from the Q2 Dalhousie,
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 ECU Netback Environment
• Industry pricing environment has improved through: – Net capacity reductions of about 12% since 2000 – We expect the tight caustic market to continue which should provide a positive pricing environment into first half of 2009; the result of low chlor alkali industry operating rates due to soft vin
Slide 14: ECU Netback Outlook
Olin ECU Netback Outlook • Caustic price announcements totaling $620 per ECU through Q3 are supported by tight caustic supply and are expected to be realized in Q4 and into 2009 • Q3 ECU netback of $660 is 12% higher than Q2; we expect sequentially higher netbacks into the 1H 2009 • Higher ECU netba
Slide 15: Chlor alkali capacity changes by company
Company Location Tech ECU COMPLETED Dow Ft. Saskatchewan DIA 526,000 Dow Plaquemine, LA DIA 375,000 Formosa Plastics Baton Rouge, LA DIA 201,000 La Roche Gramercy, LA DIA 198,000 Oxy Vinyls LP Deer Park, TX DIA/HG 395,000 Georgia Pacific (3 locations) DIA/HG 24,000 Pioneer Tacoma, WA DIA/MB 214,000
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 • Utilizes both chlorine and caustic soda in an ECU ratio • Bleach commands a $100 to $200 price premium over ECU selling prices • Regi
Slide 17: Winchester Products and 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 Maintenance appli
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 2004 to offset higher metal prices • Other U.S. manufacturers, including Remington and ATK, have implemented similar price increases • Long-term contracts with military and law enforcement agencies now account for about 30% of total re
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 $200 million – Pension plan remains over-funded • Strong Profit Outlook – ECU price trend is favorable due to strength of caustic soda
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 an 82 year continuous common dividend with above average yield Investment
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 Western Cartridge Company to manufacture small arms ammunition acquires Winchester Repeating Arms 1940s & 1950s acquires cellophane, paper, lumber & powder-actuated tools businesses founded in Saltville, VA to produc
Slide 24: Production capacity
(1) Olin production capacity includes Sunbelt & other joint ventures. Source: CMAI - May, 2008
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
North American Caustic Soda Demand by End Use Others 9% Water Treatment 3% Pulp & Paper 24% Inorganics m% | Alumina 3% Organics 26% Detergents & Textiles 11% Source: CMAI, 2008 “Organics’ includes: MDI, TDI, polycarbonates, monosodium glutamate, and mare “Inorganics” includes: titanium dioxide (TiO2
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