Olin Corporation · NYSE:OLN
Olin — Investor Day (February 2019)
101 slides from Olin's investor day presentation, Feb 12, 2019
Slide 1: Investor Day 2019: The Olin Advantage
Exhibit 99.1 Investor Day 2019 The Olin Advantage February 12, 2019
Slide 2: The Olin Advantage agenda
The Olin Advantage John Fischer Chlor Alkali/Vinyls Industry and Investment Outlook –IHS Markit John Mulholland Structural Changes in Chlor Alkali Driving Value Creation Opportunities John Fischer Chlor Alkali Products and Vinyls Positioned to Benefit from Structural Changes Jim Varilek Poised to Ca
Slide 3: Forward-Looking Statements
Forward‐Looking Statements This presentation includes forward‐looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to analyses and other information that are based on management’s beliefs, certain assumptions made by management, forec
Slide 4: The Olin Advantage
The Olin Advantage John E. Fischer Chairman, President and CEO
Slide 5: Today's Speakers
Senior management team committed to delivering significant growth and value creation Today’s Speakers Damian Gumpel John E. Fischer James A. Varilek Valerie Peters John L. McIntosh Brett A. Flaugher Teresa M. Vermillion Chairman, President & Vice President, Global Executive Vice President & Vice Pre
Slide 6: Successful 2018 driven by solid performance across chemical businesses
Successful 2018 driven by solid performance across chemical businesses 2018 Adjusted EBITDA* 2018 Free Cash Flow* (in millions) (in millions) $1,265 $587 2018 2018 6 *Refer to GAAP to non‐GAAP reconciliations
Slide 7: Structural changes in chlor alkali leading to value creation opportunities
Structural changes in chlor alkali leading to value creation opportunities Structural changes in Strong industry position and chlor alkali sector leading cost advantage driving growth expected to yield significant opportunities EBITDA growth over next several years 7
Slide 8: Chlor Alkali/Vinyls Industry and Investment Outlook
Chlor Alkali/Vinyls Industry and Investment Outlook John Mulholland Vice President, Strategy Consulting Oil Markets, Midstream, Downstream & Chemicals February 12, 2019 © 2019 IHS Markit. All Rights Reserved.
Slide 9: IHS Markit Disclaimer
Olin | Project Franklin | Final Report – Part I | December 2018 Disclaimer This written material (“Material”) was produced by IHS Global Inc. and/or subsidiaries and affiliates of IHS Markit (collectively referred to as “IHS”). The Material contains information and analysis of IHS (“IHS Information”
Slide 10: Chlor Alkali/Vinyls Industry Outlook
Chlor Alkali/Vinyls Industry Outlook 10 © 2019 IHS MarkitTM. All Rights Reserved.
Slide 11: Chlorine demand forecast to increase through 2030
Chlorine demand is forecast to increase by 21 million metric tons between 2018 and 2030. World: Chlorine Supply & Demand Global Chlorine Supply & Demand 150.0 Forecast ∆ Demand = 21 Million MT AAGR% = 3.1 AAGR% = 2.8 AAGR% = 2.0 Million Metric Tons Metric Million 0.0 98 00 02 04 06 08 10 12 14 16 18
Slide 12: Vinyls drive half of global chlorine demand growth
Vinyls will drive approximately half the growth of global chlorine demand through 2030. 2017 Global Chlorine Demand: 74 Million Metric Tons Global Chlorine Demand Inorganics Polycarbonates Inorganics Polycarbonates Epichlorohydrin Pulp & Pulp & Epichlorohydrin TDI Paper TDI Paper MDI Chlorinated 25
Slide 13: Global caustic soda demand forecast to grow through 2030
Global caustic soda demand is forecast to grow 23 million dry metric tons from 2018 to 2030. World: Caustic Soda Supply & Demand Global Caustic Soda Supply & Demand 150.0 Forecast ∆Demand = 23 Million DMT AAGR% = 3.2 AAGR% = 2.8 AAGR% = 2.0 Million Dry MetricTons 0.0 98 00 02 04 06 08 10 12 14 16 18
Slide 14: Caustic soda consumption tied to industrial activity
Caustic soda consumption is closely tied to industrial activity and has a consistent demand profile through 2030. Alumina growth will lead consumption with an additional 7 million DMT/yr. by 2030. 2017 Global Caustic Soda Demand: 77 Million Dry Metric TonsGlobal Caustic2030 Demand Global Caustic Sod
Slide 15: PVC demand forecast to increase through 2030
PVC demand is forecast to increase by 21 million metric tons between 2018 and 2030. World: PVC Supply & Demand Global PVC Supply & Demand 100.0 Forecast ∆ Demand = 21 Million MT AAGR% = 4.2 AAGR% = 2.4 AAGR% = 3.1 Million Metric Tons 0.0 98 00 02 04 06 08 10 12 14 16 18 20 22 24 26 28 30 Demand Name
Slide 16: Chlorine demand growth has exceeded capacity growth
Chlorine demand growth has exceeded capacity growth since 2013 and will accelerate through 2030 if additional capacity is not added. Incremental Chlorine Supply andChlorine Demand Supply & Demand Growth 25 + 1 + 13 - 17 -6 Million Metric Tons 0 1998-1998 - 2007 2008-2008 – 2012 2013-2013 - 2017 2018
Slide 17: Global operating rates projected to reach sold out by 2023
Global operating rates have improved since 2012 and are projected to reach sold out conditions by 2023. GlobalGlobal Chlo Chlor-Alkalir-Alkali OOperatingperatin Rateg Rates 110% Sold out Operating Rate 50% 98 00 02 04 06 08 10 12 14 16 18 20 22 24 26 28 30 Source: IHS Markit © 2018 IHS Markit 17 © 2
Slide 18: Summary of Industry Outlook
Summary of Industry Outlook • Chlorine demand is forecast to increase by 21 million metric tons between 2018 and 2030, with approximately half the growth from vinyls. • Caustic demand is forecast to increase by 23 million metric tons between 2018 and 2030. • PVC demand is expected to increase by 21
Slide 19: Chlor Alkali/Vinyls Investment Outlook
Chlor Alkali/Vinyls Investment Outlook 19 © 2019 IHS MarkitTM. All Rights Reserved.
Slide 20: World-scale CA-PVC integrated facility cost and build time
A world-scale CA-PVC integrated facility built in NAM would produce 1 million MT of PVC per year, take 4-5 years to build, and require $5-6 B of capital. Ethane Cracker Ethylene Water Salt Brine Well Chlorine PVC Chlor-Alkali Vinyls Natural Gas Electricity 1 Million MT Cogeneration Caustic Soda $ 5,
Slide 21: PVC demand growth requires integrated world scale plants
2030 PVC demand growth requires 21 integrated world scale plants, which will also satisfy approximately half of the forecast caustic demand growth. 2018-2030 PVC Required World Scale Capital Required per World Total Required Expenditure Demand Growth (MT) Plants1 Scale Plant ($US B)1 ($US B) 21 mill
Slide 22: Relative capital cost by region
From a capital cost perspective, China is the most attractive location followed by North America and the Middle East. Relative Capital Cost by Region (NAM=100%) WEP SAM MDE NAM China 0% 50% 100% 150% Region Project Configuration and Cost Differences NAM, MDE Ethane-based cracker, brine well China, W
Slide 23: Regional cash costs favor Middle East and North America
From a cash cost perspective, the Middle East and North America are the most attractive locations because of low cost feedstock and fuel. Regional ECU Cash Costs (2018) Regional PVC Cash Costs (2018) 440MAX 900MAX China NAM Differential = $165/MT China NAM Differential = $233/MT $/US MT $/US MT 00 0
Slide 24: Product pricing impact on project returns
Using a basis of $500/MT caustic and $800/MT PVC, the internal rate of return for a world scale facility is less than 10%. To achieve more attractive returns, product prices must increase. Product Pricing Impact on Project Returns 2000 IRR7.6% % 1500 10% 1000 15% 500 Basis: 20% Caustic = $500 PVC Pr
Slide 25: Summary of Investment Outlook
Summary of Investment Outlook • The outlook for chlorine, caustic and PVC is improving and will require investment. • A world-scale CA-PVC integrated facility built in NAM would produce 1 million MT of PVC per year, take 4-5 years to build, and require $5-6 billion of capital. • 2030 PVC demand grow
Slide 26: Structural Changes in Chlor Alkali Driving Value Creation Opportunities
Structural Changes in Chlor Alkali Driving Value Creation Opportunities John E. Fischer Chairman, President and CEO
Slide 27: Structural changes leading to long-term growth opportunities
Structural changes in chlor alkali leading to value creation from long‐term growth opportunities Structural changes in chlor Minimal global capacity Large proportion of production alkali sector provides additions and by large, integrated producers growth opportunities on announcements to meet after
Slide 28: Growing leadership position with world-scale assets and cost advantage
Growing leadership position driven by world‐scale assets, advantaged cost position, and broad portfolio of chlorine derivatives and outlets 28
Slide 29: Broadest chlorine derivative portfolio
Positioned to capture industry growth with the broadest chlorine derivative portfolio 19 19 Chlorine 15 MDI Propylene Oxide Derivative Outlets Vinylidene Chloride Propylene Glycol Perchloroethylene Ag Trichloroethylene Merchant M1 –Methyl chloride Hydrochloride M2 – Methylene chloride Bleach 8 M3 –
Slide 30: Opportunities to benefit from price and volume growth
Opportunities to benefit from price and volume growth Earnings Expansion HCl + Merchant Chlorinated Caustic EDC Epoxy Bleach Chlorine Organics Soda 30
Slide 31: Robust earnings expansion expected
Expect robust earnings expansion driven by industry leading position, advantaged cost structure and structural changes $2,000 Adjusted EBITDA Volume growth (in millions) Higher pricing $1,750 Margin expansion $1,500 $1,250 $1,265 $1,000 $945 $838 $750 $500 2016 2017 2018 2019 Near‐Term Target Long‐T
Slide 32: Chlor Alkali Products and Vinyls Positioned to Benefit from Structural Changes
Chlor Alkali Products and Vinyls Positioned to Benefit from Structural Changes James A. Varilek Executive Vice President and President, Chlor Alkali Products and Vinyls and Services
Slide 33: Un-matched global chlor alkali portfolio
Un‐matched global chlor alkali portfolio to benefit from healthy demand growth forecasted on both sides of ECU Largest, low cost global chlor alkali producer: Broadest portfolio of chlorine • #1 chlor alkali producer derivatives with 19 outlets • #1 merchant EDC supplier • #1 chlorinated organics po
Slide 34: Management of chlorine and caustic soda
Active and effective management of chlorine and caustic soda – products with different supply and demand dynamics Caustic Brine Electrolysis Chlorine Hydrogen Soda 1.1 tons Caustic Soda (Sodium Hydroxide) Electro‐Chemical Unit (ECU) 1.0 tons Chlorine 0.03 tons Hydrogen Gas 34
Slide 35: Size, scale and industry leading cost structure
Significant size, scale and industry leading cost structure provide leverage to increasingly attractive chlor alkali market dynamics Global Chlor Alkali Capacity IHS Estimated Chlor Alkali Cost Structure (in thousand metric tons) (ECU cash costs $/ton) 6,000 $400 5,000 $350 4,000 $300 3,000 $250 2,0
Slide 36: Wide array of chlorine outlets
Strong platform with wide array of chlorine outlets well‐ positioned to capture future growth from chlorine envelope Olin Chlorine Value Add Chlorine Outlets Chlorinated HCl + Bleach Merchant Chlorine Organics Epoxy (9% ‐ 11%) Vinyls (20% ‐ 23%) Dow (30% ‐ 35%) (7% ‐ 9%) (20% ‐ 23%) (6% ‐ 8%) • Viny
Slide 37: Merchant chlorine expected to tighten
Merchant chlorine expected to tighten as chlorine continues shift to integrated derivatives, leading to higher value for chlorine North America Merchant Railcar Chlorine Supply and Demand (in thousand tons) 2,500 • North American merchant chlorine supply and demand expected to be in balance by 2020
Slide 38: Largest HCl producer in North America
Largest HCl producer in North America positioned to capitalize on growth opportunities 2018 Merchant HCl Industry Demand Olin HCl Volume (as a percentage of 1.8MM tons) (sales volume DST) 250,000 ~9% CAGR Food Others 200,000 19% 15% Steel 150,000 13% Oil & Gas 100,000 24% CaCl2 50,000 13% Brine 0 16
Slide 39: Largest and lowest cost bleach producer
Largest and lowest cost producer of bleach in North America with long‐term growth opportunities Olin Bleach Sales (in short tons) • Ongoing water treatment shift to 350,000 bleach • Bleach commands a price 300,000 premium to the ECU ~11% CAGR 250,000 • Non‐integrated bleach producers shifting to buy
Slide 40: Positioned to capture EDC demand growth
Uniquely positioned to capture EDC demand growth Global EDC Industry Production Merchant EDC Supply and Demand (in thousand tons) (in thousand tons) • Olin is the largest global 6,000 supplier of EDC Merchant 6% + 2mmt 5,000 • of new EDC merchant New PVC plants demand potential contemplated in Asia
Slide 41: Next generation refrigerants driving chlorinated organics opportunity
Growth of next generation refrigerants driving significant opportunity for chlorinated organics HydroFluoro‐Olefin (HFO) Feedstock • Solvents and refrigerants are the major versus Feedstock Supply outlets for chlorinated organics (in thousand tons) • Solvents demand is regional and stable 500 450 •
Slide 42: Long-term contracts with Dow deliver value
Long‐term contracts with largest customer Dow continue to deliver value to Olin Vinyl Chloride Monomer (VCM) • Olin produces VCM for Dow pipeline customer • Current Ethylene toll agreement through 2020 • Olin will have a direct, long‐term contract with VCM • pipeline customer starting in 2021 • Chlo
Slide 43: Global leader in chlor alkali positioned for growth
Global leader in chlor alkali and well‐positioned for growth Debottlenecking expansion Chlorine‐derivative growth opportunities available to augment opportunities chlorine capacity by ~20% • Low‐cost incremental growth across • Bleach multiple locations • HCl • Targeted to meet increased chlorine de
Slide 44: Un-matched global chlor alkali portfolio summary
Un‐matched global chlor alkali portfolio to benefit from healthy demand growth forecasted on both sides of ECU Structural changes Olin has leadership Olin’s chlor alkali platform underway, driving positions in each is well‐positioned for growth opportunities chlorine derivative growth in the near, o
Slide 45: Poised to Capture Value from Growth in Caustic Soda Demand
Poised to Capture Value from Growth in Caustic Soda Demand Damian Gumpel Vice President Global Caustic, KOH & Vinyls
Slide 46: Well-positioned to profitably grow with structural changes
Well‐positioned to profitably grow with structural changes Global supply and demand expected Security of supply commands a premium to tighten through 2030 as caustic demand grows ahead of supply Largest direct caustic soda supplier Poised to expand caustic margins to growing Americas market with fro
Slide 47: Caustic soda diverse base and healthy outlook
Caustic soda has diverse base and healthy outlook 2018 World Caustic Soda Demand (as a percentage of total 80MM tons) Pulp & Paper ~12% Raw Materials Processing Aid • Sodium lauryl sulfate (soap) • Alumina (infrastructure, construction, consumables) Alumina • Sodium cyanide (mining, nylon) ~20% • Pu
Slide 48: Global supply and demand expected to tighten through 2030
Global supply and demand expected to tighten through 2030 Global Caustic Soda Demand (in dry metric tons) • Steady demand growth tied to consumables, 23MM to 30MM population, and disposable income of caustic demand potential – e.g.: Transportation, food packaging, shipping boxes, soap, textiles, bab
Slide 49: Caustic soda leader with opportunities to grow direct business
Caustic soda leader with opportunities to grow customer direct business Olin Merchant Caustic Sales by Region (as a percentage of sales) Rest of World • Largest global membrane grade producer • Largest direct supply network in North America Latin • Largest in‐region supply network in Latin America A
Slide 50: Essential caustic soda supplier with largest supply network
Essential caustic soda supplier to North America with the largest supply network • Largest production and terminal system of any North American producer • Strategic supplier to key regions and segments: — Pulp and paper across Southeast — Chemical and general manufacturing in Midwest Production Site
Slide 51: Capitalizing on Latin American demand growth
Truck based Strategically positioned to capitalize on Latin market American demand growth by directly serving growing regional consumers • 2018 caustic soda demand ~4MM dry metric tons; 2MM dry metric tons imported (~95% from U.S. Gulf Coast)1 • Imports expected to grow to 3.5MM dry metric tons/year
Slide 52: Well-positioned to profitably grow with structural changes
Well‐positioned to profitably grow with structural changes Global supply and demand expected Security of supply commands a premium to tighten through 2030 as caustic demand grows ahead of supply Largest direct caustic soda supplier Poised to expand caustic margins to growing Americas market with fro
Slide 53: Break
Break
Slide 54: Leading Epoxy Platform Extending the Chlorine Envelope
Leading Epoxy Platform Extending the Chlorine Envelope Pat D. Dawson Executive Vice President and President Epoxy and International
Slide 55: Leading Epoxy position enhancing the chlorine portfolio
Leading Epoxy position enhancing the chlorine portfolio Epoxy is a critical component Poised to capitalize on Largest, most integrated of chlorine envelope, improving global supply and low‐cost producer with consuming 10% of total Olin demand fundamentals global reach chlorine produced Significant c
Slide 56: Two fully integrated, cost advantaged epoxy value chains
Two fully integrated, unique and cost advantaged epoxy value chains UPSTREAM MIDSTREAM Feedstocks Caustic • High barriers to entry: Allylics — Complex chemistry Aromatics Chlorine LER Allyl — Complex integration Chloride Epichlorohydrin Liquid Epoxy — High investment costs Resin • Greenfield investm
Slide 57: Leading low cost producer of epoxy
Leading low cost producer of epoxy Stade, Germany Only EPI producer Lowest cost structure in North America in Europe Freeport, TX • Olin has low capital cost opportunities to expand • Freeport, Texas site is the lowest cost producer of EPI and LER in North America and globally • Stade, Germany site
Slide 58: Assets strategically aligned for global reach
Assets strategically aligned for global reach • R&D Labs • Regional 58 Offices
Slide 59: Chlorine moving down the epoxy value chain
Chlorine plays a key role and provides opportunities to drive increasing returns as it moves further down the value chain UPSTREAM MIDSTREAM DOWNSTREAM Allyl Liquid Epichlorohydrin Hardeners Chlorine Chloride Epoxy Resin Epoxy Dispersions Blends Solid Brominated Epoxy Resin Epoxy Novolacs Diluents K
Slide 60: Epoxy end uses in growing sectors
Epoxy has many end uses in growing sectors and no substitute in many critical applications Corrosion Protection Coatings Composites • Marine/Protective • Wind • Powder • Aerospace • Automotive • Industrial Electrical Insulation • Metal Coatings • Transportation • Packaging • Recreational Lightweight
Slide 61: Downstream portfolio expected to grow significantly
Downstream portfolio is expected to grow significantly Electrical Laminates Wind Formulated Products • Downstream has the highest margins and highest growth rates • Emphasis on high growth products and applications • Projected to grow at 7% CAGR1 1 61 Olin estimates
Slide 62: Global capabilities provide opportunities for growth
Global capabilities provide opportunities for growth Global Epoxy Resin Consumption (in thousand tons) 4% CAGR 3,316 Olin Participation: 3,000 2,838 • North American assets are leveraged for 2,500 growth • European asset has advantaged cost 2,000 position along with flexibility and scale to sell glo
Slide 63: EPI and LER supply and demand projected tight by 2021
EPI and LER supply and demand projected to be tight by 2021 (excluding China) Global EPI Supply and Demand (excluding China) Global LER Supply and Demand (excluding China) 100% 1,800 96% 1,350 95% 1,600 1,200 92% 90% 94% 1,050 1,400 80% 92% 900 1,200 rate 70% 90% 750 1,000 (thousands) 600 60% 800 88
Slide 64: Continued improvement in Epoxy segment earnings
Expect continued improvement in Epoxy segment earnings over the longer term as industry fundamentals continue to strengthen Adjusted EBITDA* (in millions) $400 $350 $300 $250 $200 $155 $150 $106 $100 $82 $83 $50 $5 $0 2014 2015 2016 2017 2018 Near‐term Long‐term 64 *Refer to GAAP to non‐GAAP reconci
Slide 65: Leading Epoxy position enhancing the chlorine portfolio
Leading Epoxy position enhancing the chlorine portfolio Epoxy is a critical component Poised to capitalize on Largest, most integrated of chlorine envelope, improving global supply and low‐cost producer with consuming 10% of total Olin demand fundamentals global reach chlorine produced Significant c
Slide 66: Business Operations Drive Reliability and Growth
Business Operations Drive Reliability and Growth John M. Sampson Senior Vice President Business Operations
Slide 67: Business operations drive reliability and growth
Business operations drive reliability and growth Focus on maintaining industry‐ Targeted approach to reliability leading cost position Leverage broad chlorine envelope Positioned to increase chlorine and invest prudently in assets and and chlorine derivative capacity high return growth projects with
Slide 68: Clear funding priorities for value preservation and generation
Clear and defined funding priorities to drive value preservation and value generation STRATEGIC CATEGORY FUNDING FOCUS • Improve and secure basic operations: – Brine supply Building Blocks – Electrolysis cells – Energy (power supply, rectifiers, major turbine overhauls) • Safely and reliably operate
Slide 69: Long-term capital spending plan
Long‐term capital spending plan increasingly focused on growth opportunities within existing asset base, while maintaining high levels of asset reliability Chemical Spending Plan (in millions) $450 $400 $350 $300 $250 $200 $150 $100 $50 $0 Average 2016 ‐ 2018 2019 2020 Post‐2020 Building Blocks Main
Slide 70: Investments in power and ethylene enhance low-cost position
Investments in power and ethylene enhance low‐cost position Investments in Power and Ethylene • Ethylene investments (in millions) – 20‐year agreements $500 – Ethane cost‐based arrangements $400 – Savings of ~$180 million in first three years vs. market‐based $300 ethylene $200 • Low‐cost power inve
Slide 71: Low-cost growth available to capitalize on structural change
Low‐cost growth available to capitalize on structural change HCl Chlorine/Caustic Near term: 1 –2 years 20‐25% in process Bleach 20‐25% Intermediate: 3 –4 years available as needed Across Olin’s Chlorine Envelope 50% Longer term: 4 –5 years market dependent 100% of growth targeted 1MM+ tons availabl
Slide 72: Business operations drive reliability and growth
Business operations drive reliability and growth Focus on maintaining industry‐ Targeted approach to reliability leading cost position Leverage broad chlorine envelope Positioned to increase chlorine and invest prudently in assets and and chlorine derivative capacity high return growth projects with
Slide 73: Solid Foundation and Improving Financial Outlook
Solid Foundation and Improving Financial Outlook Todd A. Slater Vice President and Chief Financial Officer
Slide 74: Solid foundation and improving financial outlook
Solid foundation and improving financial outlook Significant financial improvement Strong outlook for long‐term over the past three years earnings expansion Expected increase in levels of Balanced and disciplined cash flow going forward approach to capital allocation • Strategically invest in our bu
Slide 75: Financial results improved significantly over last three years
Financial results have improved significantly over last three years Revenue Adjusted EBITDA $1,265 Free Cash Flow (in millions) $6,946 (in millions) (in millions) $587 $6,268 $5,551 $945 $838 $376 $383 2016 2017 2018 2016 2017 2018 2016 2017 2018 +25% +50% +56% 75 Refer to GAAP to non‐GAAP reconcili
Slide 76: Prudent approach to capital allocation
Prudent and consistent approach to capital allocation • Capital investment Capital Allocation 2018 (in millions) – Sustain and enhance businesses Share Repurchases $50 million – Long‐term cost‐based ethylene supply contracts – Organic growth projects Dividends $134 million • Optimizing balance sheet
Slide 77: Balance sheet optimization underway
Balance sheet optimization underway Net Debt (in millions) $3,433 • Refinancing in 2017 and 2018 lowered debt towers and extended maturities to 2030 $3,052 • Repaid $440 million of debt since the acquisition $2,800 – $2,750 • Expecting to prepay $250 million to $300 million of debt in 2019 • Focus o
Slide 78: Interest expense savings through refinancing
Significant interest expense savings expected through refinancing acquisition‐related bonds Total Annual Interest Expense (in millions) • Expect to call $1.2 billion of 10.00% and Potential $50 million $243 – $70 million decline1 9.75% bonds issued for Dow debt exchange in October 2020 • Interest ex
Slide 79: Free cash flow yield versus chemical sector
Free cash flow yield 150 basis points better than the broader chemical sector Free Cash Flow Yield 9.0% 8.0% 7.7% 7.0% 6.1% 5.9% 5.9% 6.0% 5.0% 4.2% 4.5% 4.0% 3.0% 2.0% 1.0% 0.0% 2016 2017 As of 9/30/18 Olin Peer Average Source: FactSet 79 Peers include IPHS, RYAM, KRA, ASIX, TROX, FOE, KRO, IOSP, C
Slide 80: Focused on improving adjusted EBITDA generation
Focused on improving adjusted EBITDA generation $2,000 Adjusted EBITDA Volume growth (in millions) Higher pricing $1,750 Margin expansion $1,500 $1,250 $1,265 $1,000 $945 $838 $750 $500 2016 2017 2018 2019 Near‐Term Target Long‐Term Target Industry Position Cost Advantage Structural Changes 80 *Refe
Slide 81: Path to $2 billion and beyond
Path to $2 billion and beyond Adjusted EBITDA (in millions) ~$2 billion $2.5 billion+ $3,000 $2,500 ~$120 $2,000 ~$100 ~$75 ~$150 ~$225 $1,500 ~$75 $1,265 $1,000 $500 $0 2018/2019 VCM Caustic Soda Epoxy Volume Operating In Progress Additional 2B Chlorine and Caustic Soda ‐ Total EBITDA Recovery and
Slide 82: Solid foundation and improving financial outlook
Solid foundation and improving financial outlook Significant financial improvement Strong outlook for long‐term over the past three years earnings expansion Expected increase in levels of Balanced and disciplined cash flow going forward approach to capital allocation • Strategically invest in our bu
Slide 83: Question & Answer Panel
<Slin Question & Answer Panel
Slide 84: Closing Remarks
Closing Remarks John E. Fischer Chairman, President and CEO
Slide 85: Value creation strategy well-defined
Value creation strategy well‐defined and underscored by structural changes and clear operational and financial plans Adjusted EBITDA Grow industry‐leading positions (in millions) in core business segments Volume growth $2,000 • Chlor Alkali Higher pricing $1,750 • Caustic Soda • Epoxy Margin expansi
Slide 86: Appendix
lin Appendix
Slide 87: Non-GAAP Financial Measures – Adjusted EBITDA
Non‐GAAP Financial Measures – Adjusted EBITDA (a) Olin's definition of Adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization) is net income (loss) plus an add‐back for depreciation and amortization, interest expense (income), income tax expense (benefit), other expense (in
Slide 88: Non-GAAP Financial Measures by Segment
Non‐GAAP Financial Measures by Segment (a) (In millions) Year Ended December 31, 2018 Income (loss) Non-Recurring Depreciation and before Taxes Item (b) Amortization Adjusted EBITDA Chlor Alkali Products and Vinyls $ 637.1 $21.5$ 473.1 $ 1,131.7 Epoxy 52.8 - 102.4 155.2 Winchester 38.4 - 20.0 58.4 (
Slide 89: Non-GAAP Financial Measures – Free Cash Flow
Non‐GAAP Financial Measures –Free Cash Flow (a) Olin's definition of Free Cash Flow is the total of net cash provided or required by operating activities less capital expenditures and adjusted for other non‐cash items, operating activities which are not direct financing activities, or other cash tim
Slide 90: Non-GAAP Financial Measures – Net Debt to Adjusted EBITDA
Non‐GAAP Financial Measures –Net Debt to Adjusted EBITDA (a) Olin's definition of Net Debt to Adjusted EBITDA is Net Debt divided by Adjusted EBITDA. Net Debt at the end of any reporting period is defined as our current installments of long‐term debt plus long‐term debt less our cash and cash equiva
Slide 91: Full year 2019 adjusted EBITDA expected comparable to 2018
Full year 2019 adjusted EBITDA expected to be comparable to record full year 2018 Adjusted EBITDA (in millions) $1,265 2019 Forecast Assumptions: + Higher chlorine, EDC and chlorine derivative pricing + Lower turnaround costs of ~ $35 million + Higher Epoxy volumes and lower raw material costs ‐ Low
Slide 92: 2019 Cash flow forecast
2019 Cash flow forecast Debt reduction remains top priority for free cash flow Cash Taxes 2 Capital (in millions) $1,265 ($90) Spending 3 Adjusted EBITDA1 ($400) Working One‐time 5 4 Capital Items $0 6 ($80) Interest ($220) Free Cash Flow Free Cash Flow Priorities: 1. Ongoing debt repayments $475 2.
Slide 93: Chlor alkali annual EBITDA sensitivity
Chlor alkali annual EBITDA sensitivity Price Driver Price Change Annual EBITDA Impact (in millions) Chlorine $10/ton $10 Caustic $10/ton $30 EDC $.01/pound $20 Annual EBITDA Impact Cost Driver Price Change (in millions) Natural Gas $1/mmBtu $45 to $55 Ethane $.01/gallon $3 93
Slide 94: Olin caustic soda price realization
Olin caustic soda price realization Fundamental Principle • A $10 per ton change in Olin’s caustic soda selling price changes annual Adjusted EBITDA by approximately $30 million Export Sales • Typically range between 20% and 25% of caustic sales • Sold on a combination of negotiated sales and export
Slide 95: Chlor alkali products and vinyls industry conditions
Chlor alkali products and vinyls Industry conditions • Seen signs of stabilization in export caustic soda pricing • Expect domestic and export caustic soda prices to improve from current levels in 2019 • Expect improvement in chlorine pricing in 2019 • Structural supply and demand fundamentals in th
Slide 96: EDC pricing history
EDC pricing history 2000 – December 2018 24 EDC Spot Export Prices 22 20 • Pricing has recovered from31% the 5 year 18 lows experienced in December 2017 16 • Full year 2018 USGC pricing has pound 14 improved approximately 3 cents, or per 30% over full‐year 2017 pricing 12 Cents 10 • A 1 cent change
Slide 97: Liquid Epoxy Resin Pricing
Liquid Epoxy Resin Pricing • Global liquid epoxy resin pricing declined in 4Q18 as raw material costs, particularly benzene and propylene, declined • Full year 2018 liquid epoxy resin prices were up year‐over‐year – North America up approximately 30% – Europe up nearly 15% – Asia up approximately 35
Slide 98: Raw Material Costs - Benzene & Propylene Pricing
Raw Material Costs ‐ Benzene & Propylene Pricing January 2016 to December 2018 Benzene Pricing 0.60 0.50 pound 0.40 per • Sequentially, U.S. and European US$ 0.30 benzene and propylene prices declined 0.20 Jan‐16 Apr‐16 Jul‐16 Oct‐16 Jan‐17 Apr‐17 Jul‐17 Oct‐17 Jan‐18 Apr‐18 Jul‐18 Oct‐18 • 4Q18 U.S
Slide 99: Maintenance Turnaround Costs
Maintenance Turnaround Costs1 Chlor Alkali Products & Vinyls Epoxy (in millions) (in millions) $180 $176 $70 $66 $160 $60 $140 $128$125 $50 $45 $120 $43 $100 $95 $40 $30 $80 $30 $23 $54 $21 $60 $18 $19 $44 $47 $20 $40 $40 $35 30 $30 56 $23 $20 $19 $10 15 $20 28 33 49 $14 $8 $4 $4 $2 $1 $2 $0 28 $0 Q
Slide 100: 2019 forecast assumptions
2019 forecast assumptions (in millions) 100
Slide 101: Information technology integration update
Information technology integration update (in millions) $250 • During 2017 began implementing new enterprise resource planning, manufacturing and engineering systems, and related IT infrastructure $200 • Objective to standardize business processes, while maximizing costs effectiveness, efficiency an