Olin Corporation · NYSE:OLN
Olin — Credit Suisse Basic Materials Conference 2015
25 slides from Olin's conference presentation, Sep 15, 2015
Slide 1: Credit Suisse Basic Materials Conference September 16, 2015
Credit Suisse Basic Materials Conference September 16, 2015
Slide 2: Forward-Looking Statements
Forward-Looking Statements 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 projection
Slide 3: SEC Disclosure Rules Important Notices and Additional Information
SEC Disclosure Rules Important Notices and Additional Information In connection with the proposed combination of Olin with the chlorine products business of The Dow Chemical Company (“TDCC”), Blue Cube Spinco Inc. (“Splitco”) has filed with the Securities and Exchange Commission (the “SEC”), and the
Slide 4: The "New Olin" Highlights
The “New Olin” HighlightsTransformative transaction to acquire D ow’s Chlorine Products (“DCP”) nearing completion “New Olin” will have unmatched scale, vertical integration and product diversity Experienced management team on board to drive integration and achieve synergy targets ($200 MM/yr. - $30
Slide 5: DCP Transaction Update
DCP Transaction Update Sign definitive agreement with Dow Expiration of waiting period under U.S. antitrust regulations Foreign anti-trust clearances Receipt by Dow of Private Letter Ruling Effectiveness of S-4 registration statements Olin proxy statement mailing Olin shareholder vote on share issua
Slide 6: Introducing "New Olin": The Global Leader in Chlorine Derivatives
Introducing “New Olin” The Global Leader in Chlorine Derivatives With Unmatched Scale, Integration, & Diversification #1 Chlor-alkali capacity globally #1 North America bleach and acid producer #1 Global supplier of epoxy materials #1 Integrated chlorinated organics producer Global top quartile chlo
Slide 7: The "New Olin" Diversified Business Mix
The “New Olin” Diversified Business Mix 2014 pro forma EBITDA by business ($billions) Dow Chlorine Products Epoxy 12% Global Chlorinated Organics 18% Chlor Alkali & Vinyl 70% + Olin Chemical Distribution 4% Winchester 37% Chlor Alkali 59% = Pro forma "New Olin" Winchester 14% Global Chlorinated Orga
Slide 8: "New Olin" Management Team Additions
"New Olin" Management Team Additions Olin management team complemented by key DCP personnel Pat Dawson President Epoxy Over 30 years of Dow experience Clive Grannum President Chlorinated Organics 25 years of chemical industry experience combined with Rohm & Haas and Dow John Sampson Vice President M
Slide 9: Significant Upside From Synergies
Significant Upside From Synergies Detailed planning continues; expect to realize savings by end of third year Cost synergies breakdown Expected Annual Value Logistics & procurement Increased procurement efficiencies Elimination of duplicate terminals and optimization of freight to terminals Reductio
Slide 10: Significant Upside From Synergies
Significant Upside From Synergies Detailed planning continues; expect to realize savings by end of third year Logistics & Procurement Benefit from combined distribution and logistics networks Expect to reduce overall rail mile shipments $50MM run-rate after 3 years Operational Efficiencies SG&A head
Slide 11: Best In Class Cost Position
Best In Class Cost Position DCP weighted Average Olin weighted Average ~20% cost advantage North American Chlor-Alkali Cost curve Cumulative North America Production (1,000 MT) Production Cost ($/ECU MT)
Slide 12: Success Factors Go Beyond Assets, Feedstocks, and Markets
Success Factors Go Beyond Assets, Feedstocks, and Markets Olin experience and customer intimacy + DCP scale, manufacturing excellence and derivatives experience = Winning combination Olin and DCP share compatible corporate cultures “New Olin” will retain a strong customer and partner in Dow via two-
Slide 13: Introducing "New Olin": The Global Leader in Chlorine Derivatives
Introducing “New Olin” The Global Leader in Chlorine Derivatives With Unmatched Scale, Integration, & Diversification (as of 2016) Brine Integration Power Integration Ethylene Integration In-House Cell Technology and Services Diverse Chlorine Outlets 1 via capacity reservation off-take agreements wi
Slide 14: "New Olin" Will Leverage Its Industry-Leading Chlor-Alkali Foundation
“New Olin” Will Leverage Its Industry-Leading Chlor-Alkali Foundation Industry-Leading Scale + Cost-advantaged ECUs DCP brings large scale plants which complement Olin’s regional plant advantage DCP’s low-cost position drives high asset utilization & provides opportunities to optimize Olin’s asset n
Slide 15: Transformation to Lowest Cost ECU Producer
Transformation to Lowest Cost ECU Producer Current Olin “New Olin” Average plant capacity 280 KTA 700 KTA Salt source ~70% ~90% brine Energy source ~55% hydro or gas 0% integrated ~85% hydro or gas ~60% integrated Cell-services Outsourced In-house North America ECU cost curve 3rd Quartile 1st Quarti
Slide 16: Leap-Frogging Competition to Gain Access to Ethylene
Leap-Frogging Competition to Gain Access to Ethylene Ethylene Integration in 2016 Ethylene Integration Path Cracker Scale1 Upfront capacity reservation fee with cost-based pricing. Olin accesses ethylene capacity as demand grows Timing: 4Q15 Not integrated today; building JV cracker to serve VCM cus
Slide 17: PVC Producers Drive for Ethylene Integration to Improve Profitability
PVC Producers Drive for Ethylene Integration to Improve Profitability Changes to vinyl supply/demand and shale gas have shifted chlorovinyls chain margins towards ethylene Olin is positioned for success in the PVC Chain Source: IHS Olin benefits from ethylene integration beginning Day 1 without proj
Slide 18: End-Use Breadth Provides Diversification & Flexibility
End-Use Breadth Provides Diversification & Flexibility to Offset Economic Headwinds Unparalleled Downstream Diversification Number of Chlorine Uses 19 12 10 5 1 1 "New Olin's" Chlorine Use Diversity Merchant HCI EDC VCM Allyl Epi LER MDI PO PG Bleach Ag Perc Tric M1 M2 M3 Tet VDC "New Olin's" End Us
Slide 19: Geographic Expansion Provides Further Diversification & Flexibility
Geographic Expansion Provides Further Diversification & Flexibility to Offset Economic Headwinds Immediate Expansion of Geographic Footprint “Current Olin” ~$2B Revenue “New Olin” ~$7B Revenue U.S.95% RoW5% NAA70% EMEA12% LAA8% APAC10%
Slide 20: The "New Olin" ECU Sales
The “New Olin” ECU Sales Olin ~$7B Revenue “New Olin” Sales (% of 1H15 Revenue) End-Use diversity reduces volatility Merchant chlorine and caustic sales decline from approximately 40% of total revenue to approximately 20% of “New Olin” total revenue Chlorine Derivatives1 (50%) EDC/Vinyl Epoxy Chlori
Slide 21: Dow Chlorine Products Acquisition
Dow Chlorine Products Acquisition Investing for best in class production capabilities and end-use diversity $3,150MM net new debt to finance acquisition $100-$150MM Implementation & Restructuring $200MM synergy capture CAPEX $680MM/yr. EBITDA from stand-alone Dow Chlorine Products $200MM/yr. EBITDA
Slide 22: Winchester EBITDA & Cash Flows Support "New Olin"
Winchester EBITDA & Cash Flows Support “New Olin” Profit improvement through growth and cost reduction reduces cyclicality Growth in shooting sports has increased installed customer base 49% growth in new shooters from 2009 to 2014 2/3rds are in the 18 to 34 age group and 50% are female Growth has b
Slide 23: "New Olin" Anchored by Stable Cash Flow Foundation
“New Olin” Anchored by Stable Cash Flow Foundation Provided by Winchester, Bleach & Dow Relationship Winchester’s growth prospects remain attractive Commercial backlog at Q2 2015 was 2x the Q2 2012 backlog Centerfire relocation cost savings will increase thru 2017 FY 2015 earnings on pace to exceed
Slide 24: Financial Priorities Moving Forward
Financial Priorities Moving Forward Maintain capital structure that provides financial flexibility to invest for organic growth and reward shareholders Ample cash generation to satisfy: Capital expenditures for maintenance, growth opportunities and synergy attainment Working capital fluctuations Deb
Slide 25: Introducing "New Olin": The Global Leader in Chlorine Derivatives
Introducing “New Olin” The Global Leader in Chlorine Derivatives With Unmatched Scale, Integration, & Diversification #1 Chlor-alkali capacity globally #1 North America bleach and acid producer #1 Global supplier of epoxy materials #1 Integrated chlorinated organics producer Global top quartile chlo