Olin Corporation · NYSE:OLN
Olin — Investor Day (February 2016)
116 slides from Olin's investor day presentation, Feb 9, 2016
Slide 1: Investor Day
INVESTOR DAY New York, New York February 9, 2016 TM Exhibit 99.1
Slide 2: Safety Briefing
Safety Briefing St ag e EXIT EXIT EXIT EXIT EXIT 2
Slide 3: Agenda This Afternoon
1:00 PM Introduction Larry P. Kromidas, Assistant Treasurer & Director of Investor Relations 1:05 PM Strategic Overview and Key Considerations for Success Joseph D. Rupp, Chairman & Chief Executive Officer John E. Fischer, President & Chief Operating Officer 1:45 PM Chlor Alkali Products and Vinyls
Slide 4: Forward-Looking Statements
Forward-Looking Statements 4 This communication includes forward-looking statements. These statements relate to analyses and other information that are based on management’s beliefs, certain assumptions made by management, forecasts of future results, and current expectations, estimates and projecti
Slide 5: Strategic Overview
STRATEGIC OVERVIEW Joseph D. Rupp Chairman & Chief Executive Officer
Slide 6: Strategic Actions to Create Today's Olin
Strategic Actions to Create Today’s Olin 6 Leading Chlor Alkali Assets Leading Ammunition Business 2007 2008 2010 2011 2012 2015 • Winchester Relocation / Cost Reduction Initiative Announced • Announced Conversion / Closure of Mercury Cell Plants • First Hy-Pure® Bleach Plants Begin Operations • Pur
Slide 7: Maximizing Profit by Leveraging the Chlorine Envelope
Maximizing Profit by Leveraging the Chlorine Envelope 7 OLD 3 Olin increases its chlorine end uses from 3 to 19 with the acquisition of Dow’s chlorine derivatives businesses 19 NEW
Slide 8: Significantly Expanded Chlorine Use Diversity
Significantly Expanded Chlorine Use Diversity 8 3 Merchant HCI Bleach 19 Merchant HCI Bleach Ethylene Dichloride VCM Allyl Chloride Epichlorohydrin Liquid Epoxy Resin Vinylidene Chloride Perc Tric M1 M2 M3 Carbon Tetrachloride MDI Propylene Oxide Propylene Glycol Ag 5 Merchant HCI Bleach Ethylene Di
Slide 9: Diversification Across End Uses Served
Diversification Across End Uses Served 9 Construction Agriculture Coatings Paper & Pulp Pharmaceuticals Refrigerants Food Packaging Surfactants
Slide 10: Creates Unparalleled Scale, Geographic Reach and Product Diversity
Creates Unparalleled Scale, Geographic Reach and Product Diversity 10 Olin is the Leading Chlor Alkali Supplier Globally • Chlor alkali producer • Seller of membrane grade caustic soda • Supplier of epoxy materials • Seller of chlorinated organics #1 Global • Seller of chlorine • Seller of industria
Slide 11: Creates the Global Leader of Chlorine-Based Products
Creates the Global Leader of Chlorine-Based Products 6,191 4,320 3,430 2,363 2,249 2,249 1,871 1,886 1,719 Chlorine Global Capacity: ~90,000 Kilo Metric Tons Source: CMAI 2014 average capacities in kMT 1: Includes 100% of Dow Mitsui Chlor Alkali joint venture chlorine capacity 2: Capacity in Brazil,
Slide 12: Diversified Businesses Drive Portfolio Balance
Diversified Businesses Drive Portfolio Balance 12 • Chlorine • Caustic • Vinyls • Bleach • Hydrochloric Acid • Chlorinated Organics Segment Breakdown Pro Forma Revenue Winchester 12% Epoxy 33% Chlor Alkali Products and Vinyls 55% Chlor Alkali Products and Vinyls Epoxy Winchester
Slide 13: Focus On Near-Term Portfolio Potential
Focus On Near-Term Portfolio Potential 13 TARGET: 2-3 YEARS Achieve EBITDA of $915 million to $985 million in 2016 Integrate Chlor Alkali Products and Vinyls and Epoxy businesses Deliver cost synergies of $250 million and revenue synergies of $100 million by 2019 Reduce net debt to EBITDA to 2.5x –
Slide 14: Team Aligned to Drive Results
Thomas J. O’Keefe Vice President & President, Winchester Division Team Aligned to Drive Results 14 John L. McIntosh Executive Vice President & President, Chemicals & Ammunition John M. Sampson Vice President & Vice President, Manufacturing & Engineering, Chlor Alkali Vinyls, Epoxy & Global Chlorinat
Slide 15: Key Considerations for Success
KEY CONSIDERATIONS FOR SUCCESS John E. Fischer President & Chief Operating Officer
Slide 16: Key Considerations for Success
16 Key Considerations for Success 1.Portfolio Balance 3.Cost- Advantaged Position 4.Market Dynamics 5.Synergy Potential 2.Reduced Cyclicality Chlor Alkali Epoxy Winchester Low-Cost Energy Low-Cost Brine Membrane Ethylene • Upside from Caustic • Upside from EDC Prices • $250 million in Cost Synergies
Slide 17: 3x Increase Portfolio Balance: Revenue by Segment
3x Increase Portfolio Balance: Revenue by Segment 17 Legacy Olin Olin Today Winchester 12% Chlor Alkali 55% Epoxy 33% Winchester 33% Chlor-Alkali 54% Chemical Distribution 13%
Slide 18: Olin Has Lowered Cyclicality in its Portfolio
18 Olin Has Lowered Cyclicality in its Portfolio Olin exposure to merchant chlorine and merchant caustic soda pricing less than 20% of revenue Long-term contracts with Dow provide stable cash flows Industrial bleach provides non-cyclical cash flows Chlorinated Organics uses by-product streams to ser
Slide 19: Reduced Exposure to Merchant Chlorine and Caustic
Reduced Exposure to Merchant Chlorine and Caustic Olin exposure to merchant chlorine and merchant caustic soda pricing less than 20% of revenue 19 Legacy Olin To ta l R ev en ue Merchant Chlorine and Caustic Soda Revenue not Exposed to Merchant Pricing 40% 60% $2 billion <20% >80% $6 billion Olin Ex
Slide 20: Advantaged Cost and Raw Material Position
Electricity Brine Ethylene 20 Advantaged Cost and Raw Material Position 85% of energy from natural gas and hydroelectric sources 80% of brine requirements met by internal supply 20 year supply agreements with Dow
Slide 21: Low Cost Energy and Brine Sources
21 Facility Capacity Energy Sources Brine Source Freeport, TX 3,289 Natural Gas Owned Plaquemine, LA 1,070 Natural Gas Owned McIntosh, AL 778 Coal & Nuclear Owned Niagara Falls, NY 300 Hydro Brine by Pipeline St. Gabriel, LA 246 Natural Gas Brine by Pipeline Charleston, TN 218 Coal, Hydro & Nuclear
Slide 22: Current Caustic Prices Near Trough Levels
Current Caustic Prices Near Trough Levels 0 100 200 300 400 500 600 700 800 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Contract Netback North American Caustic Soda Prices $/ D ry M et ri c To n 22Source: IHS
Slide 23: Ethylene Prices Have Also Contracted
Ethylene Prices Have Also Contracted 0 200 400 600 800 1000 1200 1400 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Contract, Net Transaction North American Ethylene Prices $/ M et ri c To n 23Source: IHS
Slide 24: EDC Spot Export Prices
EDC Spot Export Prices Ce nt s Pe r Po un d 0 5 10 15 20 25 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Average EDC Prices Are Near Historical Bottom Source: IHS
Slide 25: Annual EBITDA Sensitivity
25 Product Price Change EBITDA Impact Chlorine $10/ton $10 million Caustic $10/ton $30 million EDC $.01/pound $20 million Annual EBITDA Sensitivity
Slide 26: Upside Potential through Significant Realizable Synergies
Upside Potential through Significant Realizable Synergies $250 Logistics & Procurement • Increased procurement efficiencies • Elimination of duplicate terminals and optimization of freight to terminals • Reduction of acquisition cost for purchased raw materials • Savings from trucking and rail fleet
Slide 27: Upside Potential through Significant Realizable Synergies
Upside Potential through Significant Realizable Synergies $250 Logistics & Procurement Operational Efficiencies Asset Optimization Accessing New Segments & Customers Capital Investment Synergies Breakdown ($M) 2016 2017 2018 2019 Projected 40-60 100-110 180-200 250 Projected Year-End Run Rate 70-80
Slide 28: Continued Improvement of Epoxy Segment
28 Continued Improvement of Epoxy Segment 0 50 100 150 200 250 300 350 2011 2012 2013 2014 2015 2016 Mid-Cycle EBITDA ($M)
Slide 29: Projected 2016 EBITDA vs. S-4 Filing
29 Projected 2016 EBITDA vs. S-4 Filing Corporate and Other 2014 S-4 Projected 2016 (mid-point of guidance) Corporate and Other Chlor Alkali Products and Vinyls Epoxy Winchester • Synergies • Natural Gas • Caustic Soda Pricing • EDC Margins • Hydrochloric Acid • Chlorinated Organics - - - - - + + Ep
Slide 30: 2016 Projected EBITDA Range
2016 Projected EBITDA Range Earnings Potential of Combined Portfolio 30 EBITDA Potential: Mid-Cycle $915-985 million $1.5 billion + $950 million Chlor Alkali Mid-Cycle EDC Price Recovery Continued Epoxy Improvement Synergies
Slide 31: Chlor Alkali Industry Overview
CHLOR ALKALI INDUSTRY OVERVIEW Joseph D. Rupp Chairman & Chief Executive Officer
Slide 32: Key Takeaways
SUNSETTING OF MERCURY PLANTS CHLORINE AND CAUSTIC SODA PRICES AT A TROUGH MARKET WILL TIGHTEN CAPACITY REDUCTION Key Takeaways 32
Slide 33: The Chlorine Envelope
The Chlorine Envelope 33 Epoxy Brine (NaCl) Power Caustic Soda (NaOH) Chlorine (CI2) GCO (Perc/Tric/CMP/VDC) Epichlorohydrin Allyl Chloride EDC / VCM Chlor-Alkali Bleach HCl Merchant
Slide 34: Olin Chlor Alkali End Uses
34 Olin Chlor Alkali End Uses Caustic SodaChlorine Epichlorohydrin 4% Inorganic Chemicals 15% Organic Chemicals 11% Urethanes 35% Vinyls 26% Water Treatment 9% Alumina 11% Distribution 9% Epichlorohydrin 1% Exports 7% Inorganic Chemicals 7% Organic Chemicals 12% Pulp & Paper 19% Urethanes 16% Soaps
Slide 35: 2015 Global Chlor Alkali Capacity and Operating Rates
35 2015 Global Chlor Alkali Capacity and Operating Rates 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 0 10,000 20,000 30,000 40,000 50,000 Northeast Asia North America Western Europe Indian Subcont Middle East South America Southeast Asia CIS & Baltic States Central Europe Africa Chlorine Capacity Ca
Slide 36: North American Chlorine Capacity and Operating Rates
36 North American Chlorine Capacity and Operating Rates North America: Chlorine Supply and Demand 0 5 10 15 20 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 100% 90% 80% 70% 60% M ill io n M et ri c To ns O pe ra ti ng R at e Domestic Demand Production Operating Rat
Slide 37: Olin Capacity Reduction Timeline
37 Olin Capacity Reduction Timeline Olin announces capacity reductions of 250k to 450k short tonsNovember 2015 March 2016 Q2 2016 Olin announces plant and capacity reductions Final approval for capacity reduction plans Capacity curtailment completed at all announced locations October 2015 February 2
Slide 38: Europe Becomes a Net Caustic Importer
38 Europe Becomes a Net Caustic Importer (800) (600) (400) (200) 0 200 400 600 800 0 200 400 600 800 1000 1200 1400 1600 kM T Import Export Balance Europe Caustic Import/Export Balance 0 4 8 12 M M T Mercury cell Diaphragm Asbestos cell Membrane cell Diaphragm cell Europe Chlorine Capacity • 2.8 mil
Slide 39: Olin's Exposure to China and Chinese Exports is Minimal
39 Olin’s Exposure to China and Chinese Exports is Minimal 176 217 272 316 316 ME US China WE NEA • Input costs (electricity and salt) are higher in China than in the U.S. • Freight costs play a major role • Chinese exports into the 12 million ton U.S. market were ~70,000 tons (<1%) ECU Cash Cost Fa
Slide 40: Key Takeaways
SUNSETTING OF MERCURY PLANTS CHLORINE AND CAUSTIC SODA PRICES AT A TROUGH MARKET WILL TIGHTEN CAPACITY REDUCTION Key Takeaways 40
Slide 41: Legacy Chlor Alkali Business Overview
LEGACY CHLOR ALKALI BUSINESS OVERVIEW John McIntosh Executive Vice President of Olin Corp. President of Chemicals & Ammunition
Slide 42: Legacy Olin Chlor Alkali Value Proposition
PROVIDES A BALANCED ENERGY PORTFOLIO FACILITATES BLEACH, HCl AND KOH BUSINESS PARTICIPATION REGIONAL PLANT PROFILE GEOGRAPHIC ADVANTAGE LOGISTICS ADVANTAGE Legacy Olin Chlor Alkali Value Proposition 42
Slide 43: Legacy Olin Assets and Products
Santa Fe Springs, CA Tracy, CA Henderson, NV Becancour, Quebec Niagara Falls, NY Augusta, GA McIntosh, AL St. Gabriel, LA Charleston, TN Lemont, IL Legacy Olin Assets and Products 6 Chlor Alkali Plants 10 Bleach Plants 1 Potassium Hydroxide Plant 1.9 million tons of chlorine capacity Merchant Chlori
Slide 44: Legacy Olin Plants: Becancour and Charleston
44 Legacy Olin Plants Becancour, QC Charleston, TN • Diaphragm plant with low cost power from Hydro Quebec • Largest HCl capacity in the Olin system • Caustic sold to Canadian pulp and paper customers • Right-sized and converted to membrane cell technology in 2011 • Only potassium hydroxide plant in
Slide 45: Legacy Olin Plants: Henderson and McIntosh
45 Legacy Olin Plants Henderson, NV McIntosh, AL • Diaphragm plant with hydro power from Colorado River Commission • Bleach and HCl capacity • Both diaphragm and membrane technology • Largest legacy Olin plant with low cost footprint and owned brine source • Caustic sold to southeastern U.S. pulp an
Slide 46: Legacy Olin Plants: Niagara Falls and St. Gabriel
46 Legacy Olin Plants Niagara Falls, NY St. Gabriel, LA • Membrane plant with low cost hydro power from NY Power Authority • Brine supplied by pipeline • Largest bleach capacity in the Olin system • Converted to membrane technology in 2008 • Electricity principally natural gas based with brine deliv
Slide 47: Olin Bleach Growth Initiative
47 Olin Bleach Growth Initiative Market Strengths •Added value to ECU margin •Supply and demand is regional •Demand is not cyclical 2006 2007 2008 2009 2010 2011 2012 2013 2014 22% CAGR Olin Bleach Historical Sales Volume (DT)
Slide 48: Olin HCl Growth Initiative
48 Olin HCl Growth Initiative Olin HCl Historical Sales Volume (DT) 2006 2007 2008 2009 2010 2011 2012 2013 2014 Market Strengths •Added value to Chlorine margin •Absence of seasonality •Diverse end uses 14% CAGR
Slide 49: Olin Potassium Hydroxide (KOH)
49 Olin Potassium Hydroxide (KOH) Market Strengths •Higher historical margin compared to Caustic •Reliable year-round demand •Easy to transport and store 2006 2007 2008 2009 2010 2011 2012 2013 2014 Olin KOH Historical Sales Volume (DT) 9% CAGR
Slide 50: Chemical Distribution Asset Footprint
50 Chemical Distribution Asset Footprint • Distribution infrastructure is a strong fit with Olin’s chlor alkali assets: −80,000 tons of storage capacity −Expands geographic coverage −Logistical advantages • Access to new customers, regions and industry segments • Network is capable of supporting hig
Slide 51: Legacy Olin Chlor Alkali Value Proposition
PROVIDES A BALANCED ENERGY PORTFOLIO FACILITATES BLEACH, HCl AND KOH BUSINESS PARTICIPATION REGIONAL PLANT PROFILE GEOGRAPHIC ADVANTAGE LOGISTICS ADVANTAGE Legacy Olin Chlor Alkali Value Proposition 51
Slide 52: Acquired Chlor Alkali Assets
ACQUIRED CHLOR ALKALI ASSETS John Sampson Vice President of Olin Corp. Vice President of Manufacturing & Engineering
Slide 53: Ingredients for Success
EXCEPTIONAL FEEDSTOCK POSITION CRITICAL TO ENABLE THE ENVELOPE WORLD LEADING TECHNOLOGY HIGH QUALITY ASSETS GLOBALLY EFFECTIVE LOGISTICS Ingredients for Success 53
Slide 54: The New Olin
The New Olin 54 Chlor Alkali And Vinyl Chlorinated Organics Epoxy Supporting Assets Zhangjiagang, China Gumi, South Korea Guaruja, Sao Paulo, Brazil Pisticci, Italy Roberta, GA Rheinmünster, Germany Terneuzen, The Netherlands Baltringen, Germany Stade, Germany Freeport, TX Plaquemine, LA Russellvill
Slide 55: Three Integrated Sites
Three Integrated Sites 55 Freeport, TX Plaquemine, LA Stade, Germany • Largest chlor alkali complex in the world • Low cost power via owned co-gen power plants • Brine reserves • Integration enhances efficiency of byproduct management • Deep-water access • Over 1 million tons of chlorine capacity •
Slide 56: Four Tenant Sites
Four Tenant Sites 56 Guaruja, Brazil Rheinmüenster, Germany Ternuezen, The Netherlands Zhangjiagang, China
Slide 57: Five Stand Alone Sites
Baltringen, Germany Roberta, GA Five Stand Alone Sites 57 Gumi, South Korea Pisticci, Italy Russellville, AR
Slide 58: Chlorine Envelope
Chlorine Envelope 58 Epoxy Brine (NaCl) Power Phenol Acetone Caustic Soda (NaOH) Chlorine (CI2) Bisphenol-A GCO (Perc/Tric/CMP/VDC) Epichlorohydrin Allyl Chloride EDC / VCM Chlor-Alkali Cumene
Slide 59: Low Cost Integrated Brine And Power Capabilities
Fr ee po rt , T X Pl aq ue m in e, L A • 13 mine wells and several decades worth of reserves • Pipelines directly to Freeport with surplus capacity • 3 mine wells with brine mining capacity and several decades worth of reserves • Pipelines directly to Plaquemine with surplus capacity • Dedicated lea
Slide 60: Leader in Technology
• Industry-leading by-product management • Unique ability to recapture both the chlorine and carbon value - reducing feedstock costs and avoiding disposal costs • Highly experienced team – plant design, technology, and IP management • Designed all of the acquired plants • Supports Chlor Alkali, Epox
Slide 61: World-Class Cell Technology and Services
• In-house capabilities at Freeport and Plaquemine • Cell fabrication and maintenance carried out at Russellville, AR • Acquired plants are fully independent of third-party service providers Russellville, AR Plaquemine, LA Freeport, TX Third Party Services Serving Multiple Chlor Alkali Sites World-C
Slide 62: Highly Efficient Global Logistics Capability
Highly Efficient Global Logistics Capability 62 Ability to Rapidly Access Global Markets as Attractive Situations DevelopDistribution Designed for Low Cost Rail Truck Access to Deep-Water Ports, Railcars, River Systems, Trucks and Other Logistical Networks
Slide 63: Ingredients for Success
EXCEPTIONAL FEEDSTOCK POSITION CRITICAL TO ENABLE THE ENVELOPE WORLD LEADING TECHNOLOGY HIGH QUALITY ASSETS GLOBALLY EFFECTIVE LOGISTICS Ingredients for Success 63
Slide 64: Acquired Chlor Alkali Business
Jim Varilek Executive Vice President of Olin Corp. President of Chlor Alkali Vinyls & Services ACQUIRED CHLOR ALKALI BUSINESS
Slide 65: Unique Value Proposition
Unique Value Proposition 65 ENABLES LOW COST POSITIONING ACROSS THE INTEGRATED BUSINESS GLOBALLY ADVANTAGED COST POSITION WITH TOP-TIER INTEGRATED PRODUCER ECONOMICS LEADING INDUSTRY POSITIONS WITH UNPARALLELED SCALE DIVERSIFIED END USE PORTFOLIO WITH UNMATCHED BREADTH OF CHLORINE OUTLETS
Slide 66: The Chlorine Envelope
The Chlorine Envelope 66 Epoxy Brine (NaCl) Power Caustic Soda (NaOH) Chlorine (CI2) GCO (Perc/Tric/CMP/VDC) Epichlorohydrin Allyl Chloride EDC / VCM Chlor-Alkali
Slide 67: Global Size and Scale Provides Significant Competitive Advantages
Global Size and Scale Provides Significant Competitive Advantages Note: Vertically integrated facilities produce chlor-alkali and vinyl, epoxy and/or global chlorinated organics. 67 Vertically Integrated Facilities Freeport, TX Plaquemine, LA Aratu, Brazil
Slide 68: Regional ECU Cash Cost Curve
Regional ECU Cash Cost Curve Competitive Position on Global Cost Curve 68 • Electricity is 80% of chlor alkali variable production cost • North American shale gas provides for low cost electricity resulting in a significant advantage over other operating regions • Ensures that North American produce
Slide 69: Acquired Plants Among the Lowest-Cost in North America
Acquired Plants Among the Lowest-Cost in North America 69 North American Chlor Alkali Landscape Cumulative North American Production (1,000 MT) Pr od uc ti on C os t ($ /E CU M T) Cost position range for European & Asian producers Plaquemine (Diaphragm) Freeport (Diaphragm) Freeport (Membrane) Sourc
Slide 70: Terminal Facility Low Cost Position and Distribution Network
Terminal Facility Low Cost Position and Distribution Network Enables Access to Global Markets 70 Access to deep-water ports, rail logistics and a terminal system for merchant products East Asia South Africa Western Europe Latin America Australia Marine Vessel Inland Barge Caustic Soda Terminal Produ
Slide 71: Improved Profitability Driven by Chlorine Pull-Through
Improved Profitability Driven by Chlorine Pull-Through Chlorine Outlets Caustic Soda LiberatedEnd Product Diversity Global Chlorinated Organics Epoxy Sales to Dow EDC / VCM Ch lo r A lk al i Pr od uc ts a nd V in yl 71 Chlorine Pull-Through = Caustic Soda Sales
Slide 72: Relationship with Dow as a Buyer
Relationship with Dow as a Buyer Primary Product Chlorine / Cell Effluent Aromatics GCO VCM 72 Key Sales Contracts to Dow from New Olin • Executed under long term cost-based contracts • Minimum term of 7 years • Includes minimum and maximum amounts • Predictable and consistent EBITDA
Slide 73: Relationship with Dow as a Seller
Relationship with Dow as a Seller 73 Primary Product Ethylene Propylene Benzene Key Supply Contracts from Dow to New Olin • Long term cost-based agreements • Logistical advantages of pipeline integration • Reliable supply of key materials
Slide 74: Advantaged Ethylene Arrangement
Advantaged Ethylene Arrangement 74 •A series of three supply agreements with Dow •Pipeline supply without operating or start-up risk •Producer economics Tranche Effective Date Annual Volume (MT) Cost (M) #1 Acquired at closing Up to 180,000 $300-$325 #2 Available ~12/31/17 Up to 160,000 $270-$290 #3
Slide 75: Global Chlorinated Organics Business Highlights
Replacement Asset Value of ~$1 Billion Global Chlorinated Organics Business Highlights • Largest global chlorinated organics producer – Low-cost operations – Strong channel relationships – Best-in-class technologies • Diverse product suite anchored by premium products • Uniquely positioned to capita
Slide 76: Chlorinated Organics Provides a Diverse Set of Chlorine Outlets
Chlorinated Organics Provides a Diverse Set of Chlorine Outlets 76 Feedstocks Products End Uses Value Drivers Low-Cost ECU Chlorinated By- Products (HCI, RCI) Hydrocarbons (Methanol etc.) Chlorinated Organics Low-cost energy and feedstocks Superior manufacturing technology and processes Breadth o
Slide 77: Global Chlorinated Organics' Global Presence
Global Chlorinated Organics’ Global Presence Enables Product Sales in All Geographies 77 Freeport, TX M1 M2 / M3 VDC Tric Stade, Germany M1 M2 / M3 Perc Tric •World class asset size and technology •Only producer with assets on two continents •Most extensive global network •Flexible configuration GCO
Slide 78: Global Chlorinated Organics Value Proposition
Global Chlorinated Organics Value Proposition 78 Sales of value-added products Differentiated product, service or market position Global footprint 1 Generate Caustic Soda sales Unbalanced user of chlorine Use low-cost chlorine and channel expertise to liberate caustic 2 Upgrade by- products
Slide 79: The New Olin Chlor Alkali Products and Vinyls
The New Olin Chlor Alkali Products and Vinyls THE WORLD’S LEADING PRODUCER OF CHLOR ALKALI PRODUCTS AND VINYLS 79
Slide 80: Unique Value Proposition
Unique Value Proposition ENABLES LOW COST POSITIONING ACROSS THE INTEGRATED BUSINESS GLOBALLY ADVANTAGED COST POSITION WITH TOP-TIER INTEGRATED PRODUCER ECONOMICS LEADING INDUSTRY POSITIONS WITH UNPARALLELED SCALE DIVERSIFIED END USE PORTFOLIO WITH UNMATCHED BREADTH OF CHLORINE OUTLETS NOW, ON A CON
Slide 81: Epoxy Segment Overview
EPOXY SEGMENT OVERVIEW Pat D. Dawson Executive Vice President of Olin Corp. President of Epoxy & International
Slide 82: Largest and Most Integrated Epoxy Business in the World
POSITIONED TO MAXIMIZE VALUE THROUGHOUT EPOXY CHAIN INNOVATION CAPTURE ON DOWNSTREAM GROWTH APPLICATIONS LOWEST COST PRODUCER OF KEY EPOXY MATERIALS GLOBAL ASSET FOOTPRINT ALIGNED WITH TARGETED APPLICATIONS New Olin is the Largest and Most Integrated Epoxy Business in the World 82
Slide 83: Epoxy Value Chain Integrated and Low Cost to Serve
Benzene Caustic Propylene Chlorine Epoxy Value Chain Integrated and Low Cost to Serve 83 Coatings • Industrial • Marine • Protective • Automotive • Packaging • AGMF Electronics • Circuit Boards • Chips • Potting • Encapsulation Composites • Industrial • Recreational • Transportation • Aerospace Adhe
Slide 84: Epoxy Has Access to Attractive High Growth End Uses
Epoxy has Access to Attractive High Growth End Uses Around the Globe Select Epoxy End Use Growth Rates(’13-’18)2 Composites Civil Engineering, Adhesives Industrial Coatings Electrical Laminates 2016 3,200 2015 3,000 2014 2,900 2013 2,750 2012 2,550 2011 2,600 Epoxy Resin Consumption1 3% CAGR (’13-’1
Slide 85: Epoxy Assets Strategically Aligned
Gumi, South Korea CER Zhangjiagang, China CER Pisticci, Italy CER Rheinmünster, Germany CER Baltringen, Germany CER Stade, Germany BisA Allyl / Epi LER CERTerneuzen, The Netherlands Cumene Roberta, GA CER Freeport, TX BisA Phenol / Acetone Allyl / Epi LER CER Assets Strategically Aligned 85 Upstream
Slide 86: Integrated Aromatics Enhances Epoxy Profitability
Integrated Aromatics Enhances Epoxy Profitability 86 Aromatics • Aromatics managed as utility for stable supply • Cost-advantaged raw materials - Savings to epoxy due to lower cost refinery grade C3, propane sales, terminal savings • Cost plus contracts (Bis-A, cumene) provide stable, profitable bas
Slide 87: Leadership Positions in North America and Europe
Leadership Positions in North America and Europe 87 North America Europe China Asia Ex-China Olin 2% Nanya 16% Kukdo 29% Others 53% Olin 3% Nanya 16% Others 81% Olin 48%Hexion 38% Huntsman 14% Olin 38% Hexion 25% Huntsman 21% Others 16% Source: IHS Chemical Epoxy Resins CEH report (2014) Epoxy Resin
Slide 88: Innovation Investment and Application Priorities
Coatings and Civil Engineering Innovation Investment 88 Wind Energy and Composites Process R&D / Plant Support Application Priorities LAMINATES CIRCUIT BOARDS Electrical Laminates and Specialties
Slide 89: Epoxy Priorities for Success
Epoxy Priorities for Success Midstream Downstream Upstream Continue driving productivity and cost improvements Utilize advantaged cost position to outgrow the market (“sell out”) Upgrade mix to improve margin (“sell up”) 1 2 3 89
Slide 90: Epoxy Priorities for Success
90 Epoxy Priorities for Success 0 50 100 150 200 250 300 350 2011 2012 2013 2014 2015 2016 Mid-Cycle Epoxy Segment EBITDA ($M)
Slide 91: Largest and Most Integrated Epoxy Business in the World
EXCELLENT FLEXIBILITY TO MAXIMIZE VALUE THROUGHOUT ENTIRE EPOXY CHAIN INNOVATION CAPTURE DOWNSTREAM GROWTH APPLICATIONS LOWEST COST PRODUCER OF KEY EPOXY MATERIALS GLOBAL ASSET FOOTPRINT ALIGNED WITH TARGETED APPLICATIONS New Olin is the Largest and Most Integrated Epoxy Business in the World 91 PRO
Slide 92: Winchester
WINCHESTER Thomas J. O’Keefe Vice President of Olin Corp. President of Winchester Division
Slide 93: Driving Our Vision for Winchester
LEVERAGE THE WINCHESTER BRAND INTRODUCE MARKET-DRIVEN NEW PRODUCTS LEADING PRODUCT POSITIONS ACHIEVE LOW-COST STATUS Driving Our Vision for Winchester Winchester Ammunition is a leading supplier of high-quality, small-caliber ammunition and a leading supplier of related products for hunting and sho
Slide 94: Key Strengths
Key Strengths •Competitive product positions •150 year legacy of industry innovation •Leading Winchester brand •Favorable industry dynamics 94
Slide 95: Diversified Customer and Product Composition
Diversified Customer and Product Composition Trade Channels Centerfire Rimfire Shotgun Commercial (Domestic & International) Law Enforcement Industrial Military Australia 95
Slide 96: Favorable Industry Dynamics
Favorable Industry Dynamics NICS Background Checks (in millions) 96 8 8.1 9 9.5 9.4 10.8 13.8 14.8 13.1 14.2 0 2 4 6 8 10 12 14 16 0 2 4 6 8 10 12 14 16 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 NICS Background Checks1 1: Federal Bureau of Investigations, National Instant Background Check Sy
Slide 97: Favorable Industry Dynamics
Favorable Industry Dynamics NICS Background Checks (in millions) 971: Federal Bureau of Investigations, National Instant Background Check System 2: Estimated based on the NSSF Trade Statistics Program’s Ammunition Manufacturer Surveys, Department of Commerce U.S. Import Statistics, and internal Winc
Slide 98: Growing Target Shooting Participation
Growing Target Shooting Participation Female Participation is Increasing Target Shooters are on the Rise Handgun Shooting Tops the Chart New Shooters Are Younger 98Source: National Shooting Sports Foundation
Slide 99: Successful Product Development and Launches
Winchester Successful Product Development and Launches Over the past 5 years, Winchester has successfully launched new products featuring unique technologies and performance First rifle cartridge designed for deer hunting Innovation hex-shaped steel shot designed for waterfowl hunting Highest veloci
Slide 100: Successful New Product Launches
Successful New Product Launches DESIGNED TO PRODUCE LESS FELT RECOIL UNIQUE SHOT-LOK TECHNOLOGY Over the past 5 years, Winchester has successfully launched new products featuring unique technologies and performance 100
Slide 101: Browning Ammunition Launch
Winchester has launched a new brand of ammunition that capitalizes on the significant brand strength of Browning as a leader in firearms, accessories, and lifestyle products • Shelf space • Browning licensing relationship enriches Winchester’s mix • Utilize Winchester’s strength in manufacturing, pr
Slide 102: Military and Law Enforcement
Winchester has a deep heritage of being a leading supplier to U.S. Armed Forces and Law Enforcement Agencies: Military and Law Enforcement 102 • January 2016 - awarded 5 year 2nd source U.S. Military rifle contract • January 2016 - awarded 5 year Pistol Family U.S. Military contract • December 2015
Slide 103: Winchester Manufacturing Footprint
Winchester World Headquarters and Manufacturing Facilities East Alton, Illinois 904 Employees • East Alton Oxford, Mississippi 1,352 Employees Geelong, Australia 65 Employees Oxford Geelong Note: Employee totals reflect year-end 2015. Winchester Manufacturing Footprint Additional Plant Locations 103
Slide 104: Oxford Plant Relocation History
Oxford Plant Relocation History Rimfire Operations • Plant moved in 2005 • 260 employees Military Packing Operations • Relocated in 2008 • 100 employees Centerfire Pistol and Rifle Operations • 1,000 employees at conclusion of project 20132011 2012 2014 2015 2016 OCT JAN DEC JUN MAR AUG OCT LEAD MFG
Slide 105: Oxford Facilities
Oxford Facilities Oxford Centerfire Relocation Capper Assembly Area - Current • Cost Reduction - Centerfire Relocation: – Realized $35 million of cost savings in 2015 – Expect an additional $5 million of lower annual operating costs beginning in 2016 • New Product Development: – Continue to develop
Slide 106: Winchester's Strategy is Working
25 36 42 78 73 49 69 158 144 134 0 20 40 60 80 100 120 140 160 180 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Winchester’s Strategy is Working 106 6.7% 8.3% 8.6% 13.7% 13.3% 8.6% 11.2% 20.3% 19.5% 18.9% 2006-2010 Average EBITDA margin: 10.1% 2013-2015 Average EBITDA margin: 19.6%
Slide 107: Financial Overview
FINANCIAL OVERVIEW Todd Slater Vice President & Chief Financial Officer
Slide 108: Financial Policies and Objectives
357 consecutive quarterly dividend payments over 89 years of consistent distribution Financial Policies and Objectives 108 Prudent capital structure and commitment to conservative financial policy Unbroken record of quarterly dividends Focus on reducing net debt/EBITDA to 2.5 – 3.0x over the next 2
Slide 109: Projected 2016 EBITDA vs. S-4 Filing
109 Projected 2016 EBITDA vs. S-4 Filing Corporate and Other 2014 S-4 Projected 2016 (mid-point of guidance) Corporate and Other Chlor Alkali Products and Vinyls Epoxy Winchester • Synergies • Natural Gas • Caustic Soda Pricing • EDC Margins • Hydrochloric Acid • Chlorinated Organics - - - - - + + E
Slide 110: Chemical Turnaround Maintenance Cost
110 Chemical Turnaround Maintenance Cost Chemicals Turnaround Maintenance Cost ($M) 0 5 10 15 20 25 30 35 40 Q4 '15 Q1 '16 Q2 '16 Q3 '16 Q4 '16 Chlor Alkali Products and Vinyls Epoxy • Full year 2016 turnaround expense estimated at $100 million • Gulf-coast turnarounds are typically concentrated in
Slide 111: Corporate Costs
Corporate Costs 111 • Stable corporate costs averaging $50 million 2011 through 2015 • Comprised of: − Pension income to increase in 2016 by $10 million from 2015 − Olin legacy environmental costs, which are stable − Other, which include corporate administrative costs • 2016 estimate reflects higher
Slide 112: Debt and Interest Expense
Debt and Interest Expense 112 • Year end net debt of approximately $3.5 billion • $205 million debt maturing in 2016 expect to repay with available cash • $2.2 billion of pre-payable term loans • Targeting reduction of net debt/EBITDA to 2.5x - 3.0x in the next two years • Approximately 60% variable
Slide 113: Guidance Assumptions
Guidance Assumptions 113 2016 Forecast (M) Key Elements Capital Spending $240 to $280 Maintenance level of capital spending of $225 to $275 million annually Synergy Capital $60 Synergy projects include chlorine loading, bleach capacity and caustic soda evaporation Total $300 to $340 Depreciation & A
Slide 114: Strong 2016 Cash Flow
Adjusted EBITDA1 Integration Expenses Interest4 Dividend5 Free Cash Flow After Dividend Cash Taxes2 Capital Spending3 Free Cash Flow $950 ($6) ($6) ($320) ($40) ($180) $404 ($132) $272 (M) 1: Mid-point of Olin’s estimated Adjusted EBITDA range of $915 to $985 million for full year 2016 2: Estimated
Slide 115: Closing Remarks
CONTINUED SHAREHOLDER REMUNERATION THROUGH DIVIDENDS FOCUS ON OPERATING WITH INVESTMENT GRADE METRICS CONSERVATIVE FINANCIAL POLICY NET DEBT TO EBITDA 2.5x TO 3.0x IN 2 YEARS Closing Remarks 115
Slide 116: End slide
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