Olin Corporation · NYSE:OLN
Olin — CIBC World Markets 2nd Annual Industrials Conference (October 2007)
28 slides from Olin's conference presentation, Oct 2, 2007
Slide 1: CIBC World Markets 2nd Annual Industrials Conference
Exhibit 99.1 CIBC World Markets 2nd Annual Industrials Conference October 2, 2007 1
Slide 2: Olin Representatives
Olin Representatives Joseph D. Rupp Chairman, President and CEO John E. Fischer Vice President & Chief Financial Officer John L. McIntosh Vice President & President, Chlor-Alkali Products Larry P. Kromidas Assistant Treasurer & Director, Investor Relations lpkromidas@olin.com (618) 258 - 3206 2
Slide 3: Company Overview
Company Overview Olin Revenue: FY 2006 6Mo 2007 $3,152 EPS (Diluted): $$1,605 2.06 Pretax $ .79 Operating Inc.: $ 201 $ 71 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 serve Providing excellent customer service and advanced technological • solutions Following our customers glob
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: Second Quarter 2007 Results
Second Quarter 2007 Results • Chlor Alkali operating rates at 97% during the quarter, highest in last 10 years. Demand for both chlorine and caustic • remains strong. ECU netbacks increase from Q1 Metals volumes decline in automotive, electronics and building products segments, higher prices lift ea
Slide 7: Third Quarter 2007 Outlook
Third Quarter 2007 Outlook • Chlor Alkali expects improved ECU netbacks over Q2 offset by higher transportation and seasonally higher electricity costs; • operating rates in mid-90% range Metals earnings to decline from Q2 due to normal planned internal and customer plant shutdowns. LIFO inventory r
Slide 8: Pioneer Acquisition
Pioneer Acquisition • Synergistic, bolt-on acquisition that enhances our chlor-alkali – franchise – #3 in chlor-alkali, up from #4 in North America – Enhances geographic coverage – Improves overall cost position • #1 in industrial bleach in North America Further low-cost expansion opportunities in t
Slide 9: Pioneer Acquisition (Continued)
Pioneer Acquisition (Continued) • • Purchase price of $35 per share, or about $415 million Pioneer cash used to repay their debt, Olin will finance transaction • through use of cash and short-term debt Expect to realize $20 million in synergies in the first 12 months following acquisition and $35 mi
Slide 10: Olin's Chlor Alkali Strategy
Olin’s Chlor Alkali Strategy • Be the preferred supplier to the Merchant Chlor Alkali Market • in addition to being the low cost producer Goal is to increase the value of the Chlor Alkali Division to Olin – Corporation through: – Full utilization of existing capacity – Low-cost capacity expansion Co
Slide 11: Olin Is The 3rd Largest Producer in North America
Olin Is The 3rd Largest Producer in North America • Olin has 1.99 Million tons ECU Capacity Per Year (1) • (Source: CMAI) A $10 / ECU Change Equates to a $17 Million Change in Pretax Income at Full Capacity, or $.15 per share @ 35% tax rate Source: CMAI Chlor Alkali Report (1) Includes 50% of SunBel
Slide 12: Pioneer Acquisition Moves Olin Up to #3 Producer
Pioneer Acquisition Moves Olin Up to #3 Producer and . . . 5,000 4,780 4,000 3,484 3,000 1,992 2,000 1,856 880 1,000 471 430 371 0 Dow Occidental Olin PPG Formosa Georgia Gulf Bayer AG Mexichem Diaphragm Membrane Mercury Other 12
Slide 13: Enhances Olin's Operational and Geographical Platform
. . . Enhances Olin’s Operational and Geographical Platform Chlorine -000- of Short Tons Capacity McIntosh, AL 401 Becancour, Quebec (1) 340 Dalhousie, NB Niagara Falls, NY 281 Tacoma, WA Charleston, TN 270 Becancour, Quebec St. Gabriel, LA (2) 246 McIntosh, AL (50% Sunbelt) 146 Niagara Falls, NY He
Slide 14: Chlor Alkali Products
Chlor Alkali Products • 2005 & 2006 Q3’05 $515 record years, peak ECU netback in Q1‘06: Q1’06 $590 Q3’06 $540 Q1’07 $500 Q4’05 $545 Q2’06 $560 Q4’06 $520 Q2’07 $510 • • Further Caustic price increases announced in Q2 and Q3 • Higher transportation and energy costs $1 change in Natural Gas MMBTU incr
Slide 15: North America Chlor Alkali Forecast
North America Chlor Alkali Forecast North America Chlor Alkali Capacity North America Chlor Alkali Capacity Reductions 2000 Through 2005 Expansions 2000 Through 2005 Short Tons as Short Tons as Company Location Chlorine Company Location Chlorine Vulcan C-A Geismer, LA 210,000 Dow Plaquemine, LA 375,
Slide 16: North America Chlor Alkali Announced Capacity Changes 2006 through 2010
North America Chlor Alkali Announced Capacity Changes 2006 through 2010 North America Chlor Alkali Capacity North America Chlor Alkali Capacity Announced Reductions Announced Expansions Short Tons as Short Tons as Company Location Chlorine Company Location Chlorine Dow (completed) Ft. Saskatchewan 5
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, and the balance is • renegotiated annually or semi-annually Man
Slide 18: Olin Chlor-Alkali's Bleach Growth Strategy
Olin Chlor-Alkali’s Bleach Growth Strategy • • Two Tier Approach – Organic Growth Bleach expansions at Olin’s four existing chlor-alkali • sites – Acquisitions and Joint Ventures Pioneer purchase increases bleach output by 130 million gallons • or 95,000 ECU’s per year • West Coast – Canada • Trinit
Slide 19: Metals
Metals • Olin is the leading manufacturer of copper alloy strip, and • a leading manufacturer of brass rod in the U.S. – Olin possesses leading technology position – 37 U.S. patents for High Performance Alloys 40 U.S. patents on various proprietary processing and • technical capabilities Olin is the
Slide 20: Metals
Metals • The average price of copper increased from $3.37/lb in Q2’06 to $3.46/lb in Q2’07 resulting in increased metal melting • loss costs and higher working capital needs Improved product pricing of 14% as compared to Q2 2006 partially • offsets higher costs Restructuring actions from 2006 improv
Slide 21: Winchester Products
Winchester Products Products End Uses Winchester ® sporting Hunters & recreational shooters, law enforcement ammunition -- agencies shot-shells, small caliber centerfire & rimfire ammunition Small caliber military Infantry and mounted weapons ammunition Industrial products -- 8 Maintenance applicati
Slide 22: Winchester
Winchester • Profits of $5.6 million reflect best second quarter since 1994. • Nine price increases announced since the beginning of 2004 • to offset higher metal prices Continued increase in metal prices, especially lead, prompts 15% price increase effective September 1st by Winchester, • Remington
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Slide 24: Financial Highlights
Financial Highlights • Q2 cash and short-term investments of $257 million exceed • outstanding debt by nearly $10 million $31 million of cash generated over 1st 6 months during a seasonally • normal cash usage period $180 million of voluntary pension contributions in Q3’06 ($80MM) and Q2’07 ($100MM)
Slide 25: Financial Highlights (continued)
Financial Highlights (continued) • Q2 pension expense of $8.3 million includes a $.5 million curtailment charge and is $2.5 million lower than Q2’06 pension • expense Favorably settled all IRS audits through 2002 resulting in a $22 • million reduction in tax expense in 2006 2007 effective tax rate e
Slide 26: Investment Rationale
Investment Rationale • – Continued strong performance based on – Relatively high ECU prices, Pioneer acquisition Cost reductions, better pricing, inventory liquidation gains – and restructuring in Metals Cost reductions, price increases and increased U.S. • Military revenue in Winchester • Strong fi
Slide 27: Forward-Looking Statements
Forward-Looking Statements This presentation contains estimates of future performance, which are forward-looking statements and actual 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
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