Olin Corporation · NYSE:OLN
Olin — Morgan Stanley 2006 Small Cap Executive Conference
22 slides from Olin's conference presentation, Jun 14, 2006
Slide 1: Morgan Stanley 2006 Small Cap Executive Conference
Exhibit 99.2 Morgan Stanley 2006 Small Cap Executive Conference June 15, 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 Year Ending Dec. 31, 2005 Revenue: $2,358 Pretax Inc. from Cont. Ops.: $226 Earnings Per Diluted Share: $1.86 Metals Chlor Alkali Winchester Specialty Copper-Based North American Producer of North American Producer of Products and Related Chlorine and Caustic Soda Ammunition En
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 • Following our customers globa
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 downstrea
Slide 6: 2005 Highlights
2005 Highlights • Significant improvement in Chlor Alkali Products Pricing • Unprecedented increases in natural gas and commodity metal costs • Corporate restructuring and relocation completed • Environmental recoveries of $50 million for costs incurred and expensed in prior periods • Voluntary pens
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 hindered Metals results • Metals restructuring charge of $15.7 million substantially offset by $13.5 million LIFO inventory gain • Higher year-o
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 quarter
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 value
Slide 10: Olin Has Leading Capacity Share in Eastern U.S.
Olin Has Leading Capacity Share in Eastern U.S. Bayer 2% th Mexichem Other • 4 Overall in U.S. Capacity 2% 8% Georgia Gulf • Largest Producer East of 3% Dow the Mississippi River Pioneer 32% 5% • Olin Has 1.24 Million tons Formosa 6% ECU Capacity Per Year (1) • A $10 / ECU Change Olin 8% Equates to
Slide 11: 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, O
Slide 12: 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 co
Slide 13: 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, believe
Slide 14: 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 the leading copper based sheet and strip distributor in the U.S. 14
Slide 15: 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 $2.1 million each from first quarter 2005 to first quarter of 2006 •
Slide 16: Metals Outlook
Metals Outlook • Earnings improvement opportunities through the likely combination of plant closures, realignments and headcount reductions to be completed in 2006 • Limited expansion of our China distribution facility by adding stamping capabilities • We believe that we are the low cost metals prod
Slide 17: 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 applicat
Slide 18: 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 Oxford
Slide 19: 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 • $6 million voluntary pension contribution in September 2005 • Repaid $52 millio
Slide 20: Financial Highlights (continued)
Financial Highlights (continued) • 2006 pension expense expected to increase by approximately $10 million over 2005 • Expensing $3 million of stock options begins 2006 • Pension plan frozen to new salaried and East Alton bargain unit employees • 2006 effective tax rate expected to be in the 37% rang
Slide 21: 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 current price levels, divid
Slide 22: 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 the
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