Olin Corporation · NYSE:OLN
Olin — Wells Fargo Industrial & Construction Conference 2016
40 slides from Olin's conference presentation, May 9, 2016
Slide 1: Wells Fargo Industrial & Construction Conference
Wells Fargo Industrial & Construction Conference New York, NY May 10, 2016 TM Exhibit 99.1
Slide 2: Forward-Looking Statements
Forward-Looking Statements 2 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 3: Near-Term Strategic Priorities
Near-Term Strategic Priorities 3 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 – 3.0x by 2
Slide 4: Key Considerations for Success
4 Key Considerations for Success 1. Portfolio Balance 3. Cost-Advantaged Position 4. Market Dynamics 5. Synergy Potential 2. Reduced Cyclicality and Expanded Product Diversity Chlor Alkali and Vinyls Epoxy Winchester • Upside from Caustic • Upside from EDC Prices • $250 Million in Cost Synergies • $
Slide 5: 2016 Performance Highlights
2016 Performance Highlights Achieved Adjusted EBITDA of $215 million in the first quarter of 2016, at the top end of $195 million to $215 million guidance range Reiterating full year guidance range of between $915 million to $985 million Adjusted EBITDA in 2016 Forecasting second quarter 2016 Adjust
Slide 6: Chlor Alkali and Vinyls: Unique Value Proposition
Chlor Alkali and Vinyls: Unique Value Proposition LOW COST POSITIONS ACROSS INTEGRATED BUSINESS GLOBALLY AND REGIONALLY ADVANTAGED COST POSITION WITH TOP-TIER INTEGRATED PRODUCER ECONOMICS LEADING INDUSTRY POSITIONS WITH UNPARALLELED SCALE DIVERSIFIED END USE PORTFOLIO WITH UNMATCHED BREADTH OF CHLO
Slide 7: Significantly Expanded Chlorine Use Diversity
Significantly Expanded Chlorine Use Diversity 7 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 8: Reduced Exposure to Merchant Chlorine and Caustic
Reduced Exposure to Merchant Chlorine and Caustic Exposure to merchant chlorine and merchant caustic soda pricing less than 20% of revenue 8 Legacy Olin Merchant Chlorine and Caustic Soda Revenue not Exposed to Merchant Pricing 40% 60% $2 billion <20% >80% $6 billion Exposure to Merchant Chlorine an
Slide 9: Current Industry Conditions Near Trough Levels
Current Industry Conditions Near Trough Levels 0 100 200 300 400 500 600 700 800 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 NA Caustic Soda Prices (Contract Netback, $/Dry MT) 9 Source: IHS EDC Spot Export Prices (Cents per Pound) 0 5 10 15 20 25
Slide 10: Long-term Views on Caustic Soda
Long-term Views on Caustic Soda North American chlor alkali capacity reductions No major North American chlor alkali capacity additions announced Increasing North American caustic exports European mercury cell chlor alkali production sunset by the end of 2017 Growing caustic soda consumption within
Slide 11: Regional Advantaged Market Dynamics
11 Regional Advantaged Market Dynamics Source: IHS and Euro Chlor (800) (600) (400) (200) 0 200 400 600 0 200 400 600 800 1000 1200 1400 kM T Import Export Balance Europe Caustic Import/Export Balance • 2.8 million metric tons of mercury capacity in Europe is subject to conversion or closure by year
Slide 12: Advantaged Cost and Raw Material Position
Electricity Brine Ethylene Advantaged Cost and Raw Material Position 85% of energy from natural gas and hydroelectric sources 82% of brine requirements met by internal supply 20 year supply agreements with Dow Cumulative North American Chlor Alkali Production (1,000 MT) P ro d u ct io n C o st ($/ E
Slide 13: Olin is the Largest and Most Integrated Epoxy Business
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 Olin is the Largest and Most Integrated Epoxy Business in the World PROVEN LEA
Slide 14: 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 (2013-2018)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 (201
Slide 15: Epoxy Priorities for Success
Epoxy Priorities for Success 15 0 50 100 150 200 250 300 350 Epoxy Segment EBITDA ($M) Upstream Midstream Downstream Continue driving productivity and cost improvements Utilize advantaged cost position to outgrow the market (“Sell out”) Upgrade mix to improve margin (“Sell up”) Continued Improvement
Slide 16: Winchester is a Leading Supplier of Ammunition
LEVERAGE THE WINCHESTER BRAND INTRODUCE MARKET-DRIVEN NEW PRODUCTS LEADING PRODUCT POSITIONS ACHIEVE LOW-COST STATUS Winchester is a Leading Supplier of Ammunition and Related Products 16
Slide 17: Favorable Industry Trends: Growing Target Shooting Participation
Favorable Industry Trends: Growing Target Shooting Participation Female Participation is Increasing Target Shooters are on the Rise Handgun Shooting Tops the Chart New Shooters Are Younger 17 Source: National Shooting Sports Foundation
Slide 18: Achieving Lower Cost Status to Drive Improved Profitability
Achieving Lower Cost Status to Drive Improved Profitability Current Oxford Centerfire Relocation Capper Assembly Area • Cost Reduction - Centerfire Relocation: – Realized $35 million of cost savings in 2015 – Expect an additional $5 million of lower annual operating costs beginning in 2016 • New Pro
Slide 19: Winchester's Strategy is Working
25 36 42 78 73 49 69 158 144 134 0 20 40 60 80 100 120 140 160 180 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Winchester’s Strategy is Working 19 6.7% 8.3% 8.6% 13.7% 13.3% 8.6% 11.2% 20.3% 19.5% 18.9% 2006-2010 Average EBITDA margin: 10.1% 2013-2015 Average EBITDA margin: 19.6% ($M)
Slide 20: Olin's Financial Policies and Objectives
LONG-TERM FOCUS ON OPERATING WITH INVESTMENT GRADE METRICS FOCUS ON REDUCING NET DEBT/EBITDA TO 2.5 – 3.0X OVER THE NEXT 2 YEARS PRUDENT CAPITAL STRUCTURE AND COMMITMENT TO CONSERVATIVE FINANCIAL POLICY UNBROKEN 89 YEAR RECORD OF QUARTERLY DIVIDENDS Olin’s Financial Policies and Objectives 20 MAJOR
Slide 21: 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 22: 2016 Adjusted EBITDA Outlook
2Q $220 – $240 • Reduced Maintenance turnaround costs • Improved epoxy volumes • Increased synergy realization $215 $220 - $240 $435 - $455 $480 - $530 2016 Adjusted EBITDA Outlook 1Q16 2Q16 1H16 2H16 FY16 $915 - $985 2H $480 – $530 1Q $215 • Improving volumes from Q1 • Chlor alkali products pricing
Slide 23: 2016 Guidance and Mid-Cycle Potential
2016 Guidance Range Earnings Potential of Combined Portfolio 23 2016 Guidance and Mid-Cycle Potential $915 million - $985 million $1.5 billion + $950 million Chlor Alkali Mid-Cycle EDC Price Recovery Continued Epoxy Improvement Synergies Corporate and Other Epoxy Winchester Chlor Alkali Products and
Slide 24: Appendix
APPENDIX
Slide 25: The Chlorine Envelope
The Chlorine Envelope 25 Epoxy Brine (NaCl) Power Phenol Acetone Caustic Soda (NaOH) Chlorine (CI2) Bisphenol-A GCO (Perc/Tric/CMP/VDC) Epichlorohydrin Allyl Chloride EDC / VCM Chlor-Alkali Cumene Bleach HCl Merchant
Slide 26: Olin Chlor Alkali End Uses
Olin Chlor Alkali End Uses Caustic Soda Chlorine Epichlorohydrin 4% Inorganic Chemicals 15% Organic Chemicals 11% Urethanes 35% Vinyls 26% Water Treatment 9% Alumina 11% Distribution 9% Epichlorohydrin 1% Exports 7% Inorganic Chemicals 7% Organic Chemicals 12% Pulp & Paper 19% Urethanes 16% Soaps &
Slide 27: Non-GAAP Financial Measures
Non-GAAP Financial Measures(a) Olin's definition of Adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization) is net (loss) income plus an add-back for depreciation and amortization, interest expense (income), income tax expense (benefit), other expense (income), restructurin
Slide 28: Non-GAAP Financial Measures by Segment
Non-GAAP Financial Measures by Segment (In millions) Income (loss) before Taxes Depreciation and Amortization Other Adjusted EBITDA Chlor Alkali Products and Vinyls 68.1$ 101.9$ -$ 170.0$ Epoxy 8.2 21.7 - 29.9 Winchester 28.7 4.6 - 33.3 (In millions) Income (loss) before Taxes Depreciation and Amort
Slide 29: Chlor Alkali Products and Vinyls Segment Performance
1Q16 4Q15 ∆ Q/Q Sales $704.3 $681.1 3.4% Adjusted EBITDA $170.0 $150.6 12.9% Sales growth driven by higher volumes Adjusted EBITDA improvement driven by higher volumes and lower electricity costs Closed a combined total of 433,000 tons of chlor alkali capacity across Henderson, NV, Niagara Fal
Slide 30: Chlor Alkali Products and Vinyls Pricing and Volume Comparisons
Chlor Alkali Products and Vinyls Pricing and Volume Comparisons 1Q16 versus 1Q15 4Q15 Chlorine Caustic Soda N/A EDC N/A Bleach HCI 1Q16 versus 1Q15 4Q15 Chlorine Caustic Soda EDC N/A Bleach HCI Volume Comparison Pricing Comparison 30
Slide 31: Annual EBITDA Sensitivity
31 Product Price Change EBITDA Impact Chlorine $10/ton $10 million Caustic $10/ton $30 million EDC $.01/pound $20 million Annual EBITDA Sensitivity
Slide 32: Epoxy Segment Performance
1Q16 4Q15 ∆ Q/Q Sales $460.2 $429.6 7.1% Adjusted EBITDA $29.9 $30.7 (2.6)% Sales growth driven by higher volumes partially offset by lower prices Adjusted EBITDA slightly lower as improved volumes were offset by lower pricing Epoxy business to continue to improve during 2016 driven by volume
Slide 33: Winchester Segment Performance
Sales growth driven by increased shipments to commercial customers in the seasonally stronger first quarter Adjusted EBITDA improvement reflects higher commercial volumes and lower commodity and other material costs Operating efficiency initiatives to continue to materialize throughout 2016
Slide 34: Corporate & Other
1Q16 4Q15 Pension Income $12.2 $13.4 Environmental Expense $(2.7) $(2.6) Other Corporate and Unallocated Costs $(29.6) $(15.8) Restructuring Charges $(92.8) $(0.5) Acquisition-related Costs $(10.2) $(88.0) The corporate and other unallocated costs are consistent with our full year 2016 expectation
Slide 35: Full Year 2016 Forecast Key Elements
Full Year 2016 Forecast Key Elements Capital Spending $240 to $280 Maintenance level of capital spending of $225M to $275M annually Synergy Capital $60 Synergy projects include chlorine loading, bleach capacity and caustic soda evaporation Total $300 to $340 Depreciation & Amortization $345 to $355
Slide 36: Debt and Interest Expense
Debt and Interest Expense 36 • 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 37: Advantaged Ethylene Arrangement
Advantaged Ethylene Arrangement •A series of three supply agreements with Dow •Pipeline supply without operating or start-up risk •Producer economics Tranche Effective Date Annual Volume (tons) Cost (millions) #1 Acquired at closing Up to 180,000 $433* #2 Available ~ 4Q 2017 Up to 160,000 $230-$250
Slide 38: Low Cost Energy and Brine Sources
38 Low Cost Energy and Brine Sources Facility Capacity Energy Sources Brine Source Freeport, TX 3,030 Natural Gas Owned Plaquemine, LA 1,070 Natural Gas Owned McIntosh, AL 778 Coal & Nuclear Owned Niagara Falls, NY 240 Hydro Brine by Pipeline St. Gabriel, LA 246 Natural Gas Brine by Pipeline Charles
Slide 39: Free Cash Flow Estimate
Adjusted EBITDA1 One-time Items Interest Dividend Free Cash Flow After Dividend Cash Taxes2 Capital Spending3 Free Cash Flow $950 ($0) ($6) ($320) ($49) ($180) $401 ($132) $269 (M) 1: Mid-point of Olin’s estimated Adjusted EBITDA range of $915 to $985 million for full year 2016 2: Estimated using th
Slide 40: End slide
End slide TM
Olin — Wells Fargo Industrial & Construction Conference 2016 on 6ix