Olin Corporation · NYSE:OLN
Olin — Buckingham Research Group Annual Boston Chemical Technology Conference 2006
27 slides from Olin's conference presentation, Jun 26, 2006
Slide 1: Buckingham Research Group Annual Boston Chemical Technology Conference
Exhibit 99.2 * * * * Buckingham Research Group Inc. * Annual Boston Chemical * Technology Conference June 27, 2006 1
Slide 2: Attending Today
* Attending Today Joseph D. Rupp Chairman, President and Chief Executive Officer John E. Fischer Vice President and Chief Financial Officer John L. McIntosh President, Chlor Alkali Products Larry P. Kromidas Assistant Treasurer and Director, Investor Relations 2
Slide 3: Company Overview
* Company Overview Olin FY 2005 Q1 2006 Revenue: $2,358 $725 Pretax Operating Inc.: $ 226 $ 54 EPS (Diluted): $ 1.86 $ .47 Metals Chlor Alkali Winchester Specialty Copper-Based Products North American Producer of North American Producer of & Related Engineered Materials Chlorine and Caustic Soda Amm
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 choose to serve • Providing excellent customer service and advanced technological solutions • Following our cus
Slide 5: Olin Corporate Strategy
* Olin Corporate Strategy Olin Corporation Goal: Superior Shareholder Returns TRS in Top Third S&P Mid Cap 400 ROCE Over Cost of Capital Over the Cycle 1. Build on current leadership positions in Chlor-Alkali, Metals and Ammunition • Improve operating efficiency and profitability • Integrate downstr
Slide 6: 2005 Highlights
* 2005 Highlights • Significant improvement in Chlor Alkali Products Pricing • Unprecedented cost increases in natural gas and commodity metals • Corporate restructuring and relocation completed • Environmental recoveries of $50 million for costs incurred and expensed in prior periods • Voluntary pe
Slide 7: First Quarter 2006
* First Quarter 2006 • Record ECU netbacks resulted in record quarterly Chlor Alkali Products earnings of $73.9 million • Continued cost increases for copper and zinc hindered Metals results • Metals restructuring charge of $15.7 million substantially offset by $13.5 million LIFO inventory gain • Hi
Slide 8: Second Quarter 2006 Outlook
* Second Quarter 2006 Outlook • Chlor Alkali Products lower ECU netbacks in second quarter versus first quarter, but higher than 2005 levels • Metals earnings are projected to be lower than the first quarter of 2006 due to higher copper, natural gas and other costs • Winchester expected second quart
Slide 9: Olin's Chlor Alkali Strategy
* Olin’s Chlor Alkali Strategy • Be the preferred merchant supplier to non-integrated chlor alkali customers • Continue to drive cost improvements through manufacturing and logistic optimization • Continue our partnership philosophy with our customers • Significant opportunities to increase the valu
Slide 10: Olin Chlor Alkali Products
* Olin Chlor Alkali Products Products End Uses Chlorine / Caustic Soda Pulp & paper processing, chemical manufacturing, water purification, manufacture of vinyl chloride, bleach, swimming pool chemicals & urethane chemicals Sodium Hypochlorite Industrial & institutional cleaners, Water treatment, co
Slide 11: Olin Has Leading Capacity Share in Eastern U.S.
* Olin Has Leading Capacity Share in Eastern U.S. th Other • 4 Overall in U.S. Capacity Bayer 11% 2% • Largest Producer East of Georgia Gulf 3% Dow the Mississippi River 32% Pioneer 5% • Olin Has 1.24 Million tons Formosa ECU Capacity Per Year (1) 6% • A $10 / ECU Change Olin 8% Equates to an $11 Mi
Slide 12: North America 2005 Chlorine Demand
* North America 2005 Chlorine Demand Water Treatment Others United States 6% 14% Vinyls 93% 38% Pulp & Paper 1% Inorganics 6% Chlorinated Mexico Inter. 2% 9% Canada Organics 5% 26% Domestic Demand = 12.4 Million Metric Tons 12 Houston London Singapore Dubai Prepared exclusively for Olin
Slide 13: North America 2005 Caustic Soda Demand
* North America 2005 Caustic Soda Demand Others United States Water Treatment 3% 10% 86% Pulp & Paper Inorganics 24% 23% Mexico Alumina 4% 4% Organics Canada Soaps/Detergents/ 25% 10% Textiles 11% Domestic Demand = 13.0 Million Dry Metric Tons 13 Houston London Singapore Dubai Prepared exclusively f
Slide 14: North America Chlor Alkali Forecast
* North America Chlor Alkali Forecast North America Chlor Alkali Capacity North America Chlor Alkali Capacity Reductions 2000 Through 2006 Expansions 2000 Through 2006 Short Tons as Short Tons as Company Location Chlorine Company Location Chlorine Dow Plaquemine, LA 375,000 Vulcan C-A Geismer, LA 21
Slide 15: Chlor Alkali Products
* Chlor Alkali Products ECU Netbacks 2005 2006 1st Quarter $ 485 $590 2nd Quarter $ 505 3rd Quarter $ 515 4th Quarter $ 545 • Chlorine and Caustic contracts resetting in 2006 • Hurricanes did not damage any Olin plants, but disrupted customers and rail lines • Higher transportation and energy costs,
Slide 16: U.S. Chlor-Alkali Annual ECU Economics
* U.S. Chlor-Alkali Annual ECU Economics Dollars Per Metric Ton April 2006 Forecast Dollars Per Short Ton 900 816 Market Price Methodology Forecast 800 726 700 635 600 544 500 454 400 363 300 272 200 181 100 91 0 0 00 01 02 03 04 05 06 07 08 09 10 Contract Chlorine (Chem, FOB USGC) Contract Caustic
Slide 17: Olin's Chlor Alkali Contracts
* Olin’s Chlor Alkali Contracts • Olin contracts nearly 100% of its chlorine and caustic sales • On about two-thirds of the chlorine and caustic volumes, prices change quarterly, with a combination of formula-based and negotiated pricing, the balance is renegotiated annually or semi-annually • Many
Slide 18: Olin's Energy Position
* Olin’s Energy Position • Olin’s electricity costs have increased over the last five years, but have remained well below Natural Gas generated electricity prices • Olin purchases power from Utilities that generate electricity principally from coal, nuclear and hydro sources • We, and others, believ
Slide 19: Metals
* Metals • Olin is the leading manufacturer of copper alloy strip and brass rod in the U.S. • Our large size provides economies of scale and manufacturing efficiencies • Olin possesses leading technology position • Olin is a leader in copper alloy R&D • Olin is the leading copper based sheet and str
Slide 20: Metals
* Metals • Volumes in the first quarter were up 11% for the strip business, but down 5% in rod over the fourth quarter of last year • Higher natural gas prices and metal melting losses due to higher copper prices reduced earnings by $4.2 million from first quarter 2005 to first quarter of 2006 • Act
Slide 21: Metals Outlook
* Metals Outlook • Earnings improvement opportunities through the likely combination of plant closures, realignments and headcount reductions to be completed in 2006 • Aggressively pursuing energy surcharges and price increases to combat the unprecedented cost increases in copper and zinc • Limited
Slide 22: Winchester Products
* Winchester Products Products End Uses Winchester ® sporting Hunters & recreational shooters, law ammunition -- shot- enforcement agencies shells, small caliber centerfire & rimfire ammunition Small caliber military Infantry and mounted weapons ammunition Industrial products -- 8 Maintenance applic
Slide 23: Winchester
* Winchester • Higher sales volumes to commercial, military and law enforcement customers were more than offset by increased copper, lead, steel and resin costs • Price increases announced for 2006 to offset higher commodity prices • Cost improvements through relocation of rimfire operations to Oxfo
Slide 24: Financial Highlights
* Financial Highlights • 2005 cash generation supported by use of approximately $60 million of net operating loss carryforwards • Recovery of $50 million of environmental costs offset higher legal and legal related costs • Repaid $52 million of debt in 2005, modest amounts due in 2006 • $6 million v
Slide 25: Financial Highlights (continued)
* Financial Highlights (continued) • 2006 pension expense expected to increase by approximately $10 million over 2005 • Pension plan frozen to new salaried and East Alton bargain unit employees • Expensing $3 million of stock options begins 2006 • 2006 effective tax rate expected to be in the 37% ra
Slide 26: Investment Rationale
* Investment Rationale • Improved performance based on – Relatively high ECU prices – Cost reductions and restructuring in Metals – Cost reductions and increased Military revenue in Winchester • Strong financial discipline • Commitment to investment grade credit rating • At recent price levels, divi
Slide 27: Forward-Looking Statements
* Forward-Looking Statements This presentation contains estimates of future performance, which are forward-looking statements and results could differ materially from those anticipated in the forward-looking statements. Some of the factors that could cause actual results to differ are described in t
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