Olin Corporation · NYSE:OLN
Olin — KeyBanc Capital Markets Basic Materials & Packaging Conference 2015
26 slides from Olin's conference presentation, Sep 2, 2015
Slide 1: KeyBanc Capital Markets Basic Materials & Packaging Conference
KeyBanc Capital MarketsBasic Materials & Packaging ConferenceSeptember 3, 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: Additional Information and Where to Find It
SEC Disclosure Rules Additional Information and Where to Find ItIn connection with the proposed combination of Olin with the chlorine products business of The Dow Chemical Company (“TDCC”), Blue Cube Spinco Inc. (“Spinco”) has filed a registration statement on Form S-4 and Form S-1 containing a pros
Slide 4: Olin to Acquire Dow's Chlorine Products: Transaction Overview
Olin to Acquire Dow’s Chlorine Products Transaction OverviewReverse Morris Trust structureTotal value of $4.8 billion, consisting of approximately: 1) $1.7 billion in common stock (assumes $20.00 OLN share price), 2) $2.1 billion in cash and cash equivalents, 3) $0.6 billion in assumed debt, and 4)
Slide 5: Olin to Acquire Dow's Chlorine Products: Ownership
Olin to Acquire Dow’s Chlorine Products OwnershipElecting Dow shareholders will receive approximately 87.5 million shares of Olin common stockOlin shares outstanding post-close will be approximately 165 millionElecting Dow shareholders will own approximately 52.7% and existing Olin shareholders appr
Slide 6: Reverse Morris Trust Structure
Reverse Morris Trust Structure Non-electingS/Hs Electing Dow S/Hs Dow DCP DCP stock OlinS/Hs Olin DCP ~47.3% Dow ~52.7% OlinS/Hs Olin Merger sub DCP stock Dow DCP Olinstock Merge Non-electingS/Hs Dowstock Electing Dow S/Hs Non-electingS/Hs Electing Dow S/Hs Step 2: Merger Step 1: Split-off1 Step 3:
Slide 7: Strategic Benefits
Strategic Benefits Creates Leading Producer of Chlorine Derivatives and Caustic SodaLeading global chlor alkali producer with 6.2 million tons of chlorine capacity#1 global seller of membrane caustic soda and chlorinated organics#1 global supplier of epoxy materials#1 North American seller of chlori
Slide 8: Creates Chlorine-Based Products Leader
Creates Chlorine-Based Products Leader 8 Chlorine global capacity: ~90,000 kMT Source: CMAI 2014 average capacities in kMT1 Includes 100% of Dow Mitsui Chlor Alkali joint venture chlorine capacity2 Capacity in Brazil, Germany and Australia not in scope of transaction Post-separation2 DCP1 +DCP1 Top
Slide 9: Diversified Geographic Footprint
Diversified Geographic Footprint Chlor–Alkali & Vinyl Epoxy Global Chlorinated Organics Supporting assets Zhangjiagang, ChinaCER Gumi, South KoreaCER Guaruja, Sao Paulo, BrazilLER, CER Pisticci, ItalyCER Roberta, GACER Rheinmünster, GermanyCER Terneuzen,NetherlandsCumene Baltringen, GermanyCER Stade
Slide 10: Diversifies Olin's Business Mix
Diversifies Olin’s Business Mix ~$0.68 billion $0.34 billion ~$1.0 billion + = Dow Chlorine Products Olin Pro forma New Olin 2014 pro forma EBITDA by business ($billions) Source: Olin and Dow management
Slide 11: Top Tier Low Cost Structure
Top Tier Low Cost Structure Stable and Low Cost Raw MaterialsElectricity – 85% of the energy to generate electricity will come from natural gas and hydroelectric sources after the acquisitionSalt Brine – 80% of the brine requirements will be supplied from owned and operated mines that are connected
Slide 12: Significant Synergies
Increased procurement efficienciesElimination of duplicate terminals and optimization of freight to terminalsReduction of net acquisition cost for purchased causticSavings from trucking and rail fleet optimizationCOGS reduction opportunities Logistics & procurement SG&ACost optimizationEnergy utiliz
Slide 13: Olin Stand Alone Performance
Olin Stand AlonePerformance
Slide 14: Company Overview
Company Overview All financial data are for the 3 and 6 months ended June 30, 2015 and the 12 months ended December 31, 2014. Data are presented in millions of U.S. dollars. Winchester Chlor Alkali A Leading North American Producer of Chlorine and Caustic Soda Q2‘15 1H‘15 FY‘14Revenue: $ 271 $ 540 $
Slide 15: Chlor Alkali Process
Chlor Alkali Process ECU = Electrochemical Unit; a unit of measure reflecting the chlor alkali process outputs of 1 ton of chlorine, 1.13 tons of 100% caustic soda and .03 tons of hydrogen. North American Position Percent of 2014 Revenue #2 #1 Industrial #1 Merchant #1Burner Grade 51% 13% 4% 11% 20%
Slide 16: Growing EBITDA
Growing EBITDA Strategic AcquisitionsPioneer, 2007SunBelt JV, 2011KA Steel, 2012Investments in less Cyclical Chlor Alkali Co-productsSodium Hypochlorite (Bleach)Hydrochloric Acid (HCl)Potassium Hydroxide (KOH)Improved Winchester ProfitabilityRelocation of Centerfire operations to MSVolume growth rea
Slide 17: Diverse Customer Base
Diverse Customer Base Olin Corporation Chlorine Caustic Soda
Slide 18: Bleach Growth is a Key Objective
22% CAGR Bleach Growth is a Key Objective Bleach sells at a premium to the ECU and, while seasonal, is not cyclicalOlin bleach volumes have delivered steady growth since 2006We expect additional growth to continue as bleach railcars extend our delivery rangeIn 2014, Olin converted 10% of its ECUs in
Slide 19: Growing HCl Volumes
Growing HCl Volumes Olin is the leading producer of burner-grade HCl with 5 production locations in North AmericaOlin HCl volumes have grown steadily since 2006Distribution strategy is expected to increase volumes and raise netbacksWe forecast that HCl volumes will continue to grow HCl continues to
Slide 20: EBITDA Improvement
EBITDA Improvement Olin Bleach, HCl and KOH initiatives have reduced the cyclicality of our business, and at the same time, increased profit margins2014 sales of co-products represented 32% of total Chlor Alkali salesTrough EBITDA levels have improved approximately $200 million during the 2009-2010
Slide 21: Chemical Distribution
Chemical Distribution KA Steel, purchased in August 2012, established Olin as the largest caustic distributor in the U.S. with an infrastructure that provides a strong fit with Olin’s chlor alkali assets:Mature supply relationships90,000 tons of caustic storage in a network of 26 terminalsExpanded g
Slide 22: Winchester Strategy
Brands Winchester StrategyCenterfire relocation:$24 million of cost savings in 2014Expect $35 million of cost savings in 2015Expect $35-$40 million lower annual operating costs beginning in 2016New product development:Continue to develop new product offeringsMaintain reputation as a new product inno
Slide 23: Strong Correlation Between Firearms & Ammunition Sales
Strong Correlation Between Firearms & Ammunition Sales Data CorrelationsU.S. Commercial Ammunition Mfr. Shipments & NICS Checks: +93% (1999-2014)U.S. Commercial Ammunition Mfr. Shipments & U.S. Firearms Production: +82% (1992-2013)NICS Checks & U.S. Firearms Production: +96% (1999 – 2013) Increased
Slide 24: Growing Shooting Sports Participation Has Increased Installed Base
Growing Shooting Sports Participation Has Increased Installed Base
Slide 25: Winchester Is Growing
Winchester Is Growing We expect Winchester’s 2015 earnings to exceed 2014 earnings as a result of:Cost savings from the centerfire relocation to Oxford, MSA significant increase in the number of sport shootersPistol and rimfire ammunition demand remains robustCommercial backlog at Q2 2015 was 2 time
Slide 26: Profit Outlook
Q2 2015 Adjusted EBITDA was $126.8 millionFull year 2015 Adjusted EBITDA is expected to be in the $330 to $360 million rangeChlor Alkali Products full year 2015 segment income is expected to decline compared to 2014 primarily due to weaker caustic soda demand Chemical Distribution 2015 full year seg
Olin — KeyBanc Capital Markets Basic Materials & Packaging Conference 2015 on 6ix