Olin (OLN) 27 Oct 222022 Q3 Earnings call transcript

Good morning, and welcome to Olin Corporation's Third Quarter 2020 Earnings Conference Call. Good morning, and welcome to Olin Corporation's Third Quarter 2022 Earnings Conference Call. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Steve Keenan, Olin's Director of Investor Relations. Steve. ahead, go Please

Good and Jay. joining you us today. morning, you, thank everyone, for Thank

let you forward-looking from session me along begin, note differ or we Before remind materially performance. future that associated include regarding Please and actual expectations will could of with these that slides the and follows, those question-and-answer are projected. that that statements estimates statements the discussion, this results

without yesterday's our limitations that factors cause results under projections could and section are on be events. from our A XX-K described earnings slides the Some recent of the section available transcript past release. our of in to actual of Factors third Risk Form differ in today's website press Investors will copy most and quarter in the

and Scott release available Scott we after some are now to Scott which Sutton. Our and are your questions. over releases. me Todd data turn and will happy will CFO. CEO; I'll the be financial other Slater, this call information With press Olin's make Sutton, morning to press take under remarks, earnings brief Olin's

Steve, good Thanks, The delivering on to Olin opportunities. and everyone. all is team morning about

with We before opportunities X I'll number us. have one. start major opportunity,

opportunity the perform indicate. to We recessionary conditions, than history are experiencing and show will different Olin is remarkably may

the temporarily delivering These activities our to market, to our EDC major next worry value, partners participation focus support the of that Don't cratered, morass PBC advanced others. core different. than the channel whole optimize storied recession did participate to outlook we lifted but all free march worry we third of side value. $X.X necessary did replenishments preserving on liquidity in our Asia other on back tested and The Similarly, This prices team weak Winchester to value forecast load from X epoxy remarkably ECU, respectful is of out theme Olin cash necessary liquidity poised set and creating by through the where had the more based not instead to we don't that on quarter. participation Over quarters, to the we the in market are our billion the side. and while flow. come to value ECU of lowered challenges lift way the the levered while is pull of these a had brand the which by large our

demonstrate flow. the our it We to we Opportunity multiply of every #X are value the cash free levered leader, is and day. recession

XX% months reduced share over over by XX We months. XX% the and X have last count our by last the

runway cash on We is A possible repurchases continue million reduced couple $XXX $X.X to our and outcome share our left deploy have share our levered share repurchase a of a to of towards that in free years. count authorization. flow is billion

post-recession normalized cash $XX-plus by free billion flow band. expected free The levered levered being more is $X.X outcome share Our of cash than per to possible flow. be

sheet, which quest. value us. excellent them every balance in plan these I really X employees more OLED we have an is are importantly, to it united the We can't opportunities a committing and in Supporting And day. best the before enough. we'll capital thank leadership maintain. an high-value team allocation business investment-grade drive

we'll now. that, with So take your questions

[Operator Instructions].

from The Vertical Research first comes Partners. with question McCarthy today Kevin

also affirmed range recession for updated your forth case EBITDA the guidance scenario. a put fourth you guidance Scott, for but quarter,

downside upside develop or these either what the on think and markets as of the you through do the As see the cycle? you move we sources biggest here, are variability unfold

over going Well, portfolio. the entering downs next lots the we it across you're case right. product which we There's already Kevin, now. and of have our guidance, recession be happening to reaffirmed ups year see

on where or a we know, the you run the side we ECU. be weak model based contrarian weak our market participation a As let of market

a you've that So quarters be mean, market quarters to about, things likely we happen. good and of may could be down fundamentals going to pricing year. Kevin, the able of have some shoulder deliver those to example, totality. couple in than But now. low is order to alarm be pricing cash high more for balanced the there go flow $X across billion right kind has really ECU really on are to the really What segment take whole support no from of because in seen to EDC, free more I we focus levered

So there's going to be some volatility

the talk then about Nevertheless, in support market. volumes effort that operating in what progressing That how and I see throttling here to an you know chlor on succeeding. alkali the appears rates in and your quarter back effort to October? be But epoxy And you're you utilization can were

all order resin XX% the of to those Well, Yes. level. preserve equivalent value. of remember, in production doing said we're move down epoxy maybe our in case least were could we're instead rates, what to I'll at you rates, share to recession we running all think below operation company that about the you facilities, there with of our that operating whole And if

come I we the have rest true. just of the plenty say would room of across company to so our recession make And left prediction

question Global. comes Hassan Alembic next from The with Ahmed

be look, recessionary QX tends revisit mean, just particularly and I I QX weak. like. the to I in conditions guidance, of to seasonally understand light the wanted

guys is to kind to over But billion for of consistently You below of talked markets, conditions. a midpoint guidance EBITDA, range the given. your even EDC, have still QX the $X.X trough of $X about come guys trough up the have that there you with, which $X.XX lower were I billion be in conditions I being be end sort call of guidance, the if annualize of it, epoxy obviously it certain billion

way your continue to they range. wanted comfortable get on guidance that I are, of with with trough EBITDA So conditions to how I you evolving mean the sort the take just guys be

annualized for quarters as still guidance of advance it's been preparing been guidance really that a our free mean, window this range. delivers Olin are the may that equation And say, factors are I and quarters that I you're set range X will it's the has sure that of not fact, not look, to course, right make to value caution hesitate than mean happen top in I mean, it we're in right world to exactly order rest I to show actions decline. do before. to I sort that different recession We're X take lower factors X quarter, certainly that doesn't last understand did we to the conclusion, year, of in though. traditionally we've the of now. I quarter the going all fourth fourth than of going extraordinary plays just Yes. weak or now on flow the level right, in our get yet, having on the though experience even value the that cash will the in for out. as but the again that we proper to could

firm housing, or investor weakening, well. look, caustic industrial into will up obviously, sort concerns cost tends get chlorine. one that, Obviously, of both affect production of But fairs to chlor a go on of Scott, sort one U.S. we weak. PVC recession, If is take the market, very right? and has be I of around that, So that pushbacks pricing the up been following of for alkali to sort pricing, as

an mean and comfortable will for very down? pricing you So caustic in the that how not I at sort are of least that environment, go chlorine

in little exactly don't even PVC VCM our of words, we see PVC bit And to very Yes. now, their chasing of a just and they're the business opposite what's that weak. the And right? the of unfortunately, right? derivative the And is other the into exactly This destroy participate or willing PVC side much incremental case. players central has theme exactly that tactic, sell this you and chlorine strong course, model. take the opposite that theme of the become value as central setup happening value in side being marketplace. volume, We I is under they're In caustic and to mean EDC long-term ECU. chase

the caustic as and to chlorine both that prices. And don't see much that side. we participate of sides vinyls prices And So you lifting materialize rising in both the ECU. improve tends with

think summary is demand that between ECU concern ECU. the conditions relative sides that each all of drops the point the it's of that on the not underlying on the of biggest both I side because difference the we exploit

total is So demand wide, the of between do the quality can difference drop actually those yet where well. we can markets which

KeyBanc with Next Markets. question Alexi Capital Yefremov from comes

QX? for were in or all your And higher. Scott, but price And some lower per Europe and $XXX this I'm we seen natural outlook recently nominations you what's you power ton for also saw there that European caustic Europe, in how and sizable in might increased sure -- gas help -- prices caustic think?

caustic the to in pricing stay is elevated. mean, Europe likely I Well,

I the take of think are a Asia trying of the that China that lot more to the out of factors material gap. moving equation arbitrage and out advantage of side on other there's

the the I'm costs Asia So Europe we next long to time, think through may same the elevated pricing that temporarily that's do energy flows pressure conditions winter know now. down. that same not demand that probably the does we come persist. tend way. beginning have course I At that saying is probably to way the other when moving the of recover, all the reality back those and go see recover have volumes drove a year, time, have the in at But trade go as still we But it over to

all fairly through see to net-net, that, stay Europe So you're likely elevated.

demand going quarter year-over-year has And demand? has perhaps last been few and October caustic market, relative the a how on trending to normalized to how in basis back domestic months, third

supply those Yes. caustic relative are arising I some Well, are down fine. marketplaces. has demand our weakening been factors year-over-year in volumes to there mean, of all

matters back on the not get All Alexia, isolation. matter doesn't likely that to it's in again, But quality just of that each markets ECU. -- side the really go So to relative is I'd the necessarily of stronger.

we value that what's difference the there. from. And So difference make our is where again,

from Mike Fargo. Sison Wells with comes question next The

that cab volumes terms -- have fundamental down volume your one if to volume did declines with flat should think way are? are Just about would that curious up your it, you the -- been ECU improve, and What declines in guess XXXX. year-over-year? EBITDA of -- the the in And epoxy your PCI your do too, I could and is think

Yes.

because demand may from if of to it's to you a And in gap that Olin eat be volumes at little you're not liquidity buy the we a asking the in eat it if sales than what's that decline -- tends the and less so shortfalls decline sort from fill the of a bit. out completely standpoint in out standpoint. marketplace because in go to production We moment, about fundamental Olin marketplace, those remember, likely Mike,

So see volume volume to as you're than more big the see our decline you'll our as aren't the production in marketplace, decline declines down declines. more volume our in our still the going sales marketplace, production down the sales than but

Okay. When of parts caustic 'XX. And it look then -- again you seeing the from happen up of you're what going great potentially right? went -- the months? here. why a last go it Recession, And to the it's did to Can it less to up like maybe X go history again next looked little 'XX X potential us as over like And seems at the to maybe give up last I time?

that caustic of when global Well, satisfy though good has derivatives demand, trying the for when the mean, run a either of chlorine just caustic demand the declined even industrial chlorine demand to declines side find that or sort caustic for bit. production Vinyls that and PBC Yes. dramatically on to and The relative supports sort not home enough the demand to intermediates it producers substantially. declines runway, that I that there's PVC a of the out

same up that yes, it's situation. we impossible end not So that back in

next comes Mitsch Research. Fermium Frank question with from The

share very Obviously, the been company And in second Olin's XX% impressive years. were quarter could a -- pace impressive the into I'm buyback in environment, might midterm the you've be? anticipate a at the after lower in a count you as of you a to levels quarter. curious a entering see what very to few investors indicated very third fact that we're that buybacks just year clear and given that recessionary Scott,

at shape. we've cash levered here. Yes. most share great Yes. That's quarter, as looking flow what of I fourth most looking mean, Sure. at year. to going what toward target that's in of mean I mean free what Frank, our that's I for this sheet our the repurchases. we're and done balance we're next year is well. In we're

making we're a arrangement, We expanded to a even can commitment hold have metrics stay -- the We those recession. liquidity grade. keep through new can though investment we

any preclude option. it So doesn't

And so many can. shares buying as certainly we us from as doesn't it preclude

So going flow, $X.X cash toward that if of go free levered you is to billion believe most that of share repurchases.

-- then the terms also actions. of $XX indicated of million near that of I'm might recessionary And it costs flow, fantastic. EBITDA, cash is looking at scenario restructuring that term? you so, that curious that what Fantastic, in that be something include? restructuring if at or looking could And you're in

That Frank, some this expect to made would of will next million well start that restructuring be other costs such is that investments in Todd. restructure. early ventures joint costs $XX the include year. That we as the as includes small as

So of that's all kind encompassed in number. that

Viswanathan Arun Markets. RBC Capital with from comes question next The

attribute 'XX, you kind some at as from Or million XX% maybe look guess into you or When bottom quarters? consider couple the should How you EBITDA seasonality? of about the And to you of of XQ midpoint. of say, XX% decline, much $XXX QX level how around think the profitability would levels would QX about think next QX to I into QX? and sequentially, or as improvement that for a looks we

Todd. is this Arun,

at quarter. with As see the the holiday normally the see -- fourth operations, is shutdowns Winchester typically quarter you weakest you Winchester, I'll you facilities. think start Winchester, And seasonal about our

quarter, -- over the in that seasonality. demand. see of epoxy and especially a the talk that in So And Winchester Hemisphere, significant But is the you you clearly, a about it's in the you about value business, fourth lower construction seasonality, strategy. the think in is decline Northern effect quarter Epoxy volume traditionally, fourth when really

So than there In more -- those the much seasonal has is other that more factor don't of around as of you turnarounds. in some for do level bleach the out a significant items typically see well. Epoxy that chlor-alkali seasonality really and the demand to seasonal summer, space, chlor-alkali are

follow-up. that? you I Okay. of kind you caustic assets consider you're already the on doing weaker be other just that chlor of operating appears And elaborate recessionary seeing you your Or relatively strength stay It side. at if when I as still you I could because chlor-alkali. industrial Are the mainly just that at Are mean, Could given in tight to ask continues soda, supply a the just mean, are Europe, noted, that, XX% can just And rate? in activity? same you operating point? the that maybe you epoxy at utilization in maybe levels. alkali on and this you elaborate

demand first the mean demand. of right? declined has your than more mean I Yes. part and Yes. question there, declining definitely down is supply is Europe in that I just

China I the You that. to down. only in need So events, do recessionary have I combination continue certain have that, broad situation mean, room that withdraw lot unprecedented our really from in to the this do of need conditions that's expectation right? right? demand the long-term we With we No. getting is if to do assets our of locked worse mean points of we a core market alkali from Europe. to

Europe demand really war. crippled You've the got by

has Now down to to smash got got do to of next some certain point over months. the at to inflation. to a We're it's what U.S. have points assets likely the turn XX do

The America. next Bank question of Steve comes Borm from with

Alerian is Steve. filling This in for

Winchester. I So wanted ask firstly, on to

didn't overstocked, in your mentioned participate price in in a be do little had But you drove volumes I QX. see to increase a a you the previously for bit You have and that QX. channel lot slides,

you actually, Russian little is And And supplies competitive the impact and North think the potential should as refresh at And America? So the pricing can situation bit think -- restocking pressures? stand a things on balance should a I what's prices? moment? for the how with about where rationale of raising channel mean we we about supply-demand in

just just channel point time. Yes, has the very I you would channel just and it overfilled. would right? And become go levels. mean or I sure. a that for to back has returned principally in channel and the It's I now long more in back higher really ago. than differently, it first trying normal level. the is years to It's quarter, still participate the a inventory the X to others starved demand there in maybe to we stock happened third the much normalized overstocked closer as made, get as By was the way, ammunition that restate And yet. was not normalized didn't channel much to

board, Winchester we'll demand. necessarily some communicated, have on have not It's price certain been a across So increases those selective and items bear in the in it's high have undervalued but that products.

the applied still demand in than years X logic are increases where demand really a then changes that that ago. in price largest to the but to still that's channel, out used Russian higher or before. That's And military and years than be no it's the consumer couple still law same was because where was are the broad had it over more enforcement imports Winchester through much it year fundamentals fits, ago. logic business of last clearing of import the there's higher importer. happening we've The Russia So and excellent situation ammunition. been

a investment? that to of green see in I also touch hydrogen term -- do going little correctly, that you you're understand And business want to And there talk There I can require not with as St. how JV blackpower also a I the incremental was will part think you confirm produce firstly Olin's Perfect. portfolio? longer a -- power Okay. if bit flat the and And you bit if sell little this as if to on from Gab. base hydrogen. can

Yes, yes.

efficient St. used with and today hydrogen less venture arrangement may that's use already way. second in Plug Gabriel our in this And produced will be Power, so this being a is joint

to base does molecule. fuel still facilities able The the that be minimize to investment get to has the and what is operate liquefaction the to sale uses. build distribute joint hydrogen venture to So

a minor some investment. there's It's So pretty investment. still

Next have very arrangements hydrogen X%, steps today. are that the X are already produced interesting. we existing we All maybe X% those or

at an modify it opportunity or different So there's replicate many to even this sites.

The Spector is next question Joshua from UBS. with

gas on out year what the The out quarter hedge what level? as next to It's Chris at I to -- was into done natural fourth and and curious to for you've Perrella Josh. costs

is this Chris, Yes. Todd.

source are XX% about program. that's generally We natural are, as a active rolling and quarter hedged heavily very gas know, we -- an have fuel a for out, hedger you power. directionally our of We as for X-quarter

So you can XXXX of already hedges. we portion that imagine with a have covered active

All shoulder rate, And your flexing earlier to now? then where into your and to on EDC rate about hold down the the sort seasons. expectation are value for quarter, chlor-alkali cash comments rate steady right. protect Is epoxy the chlor first and the assuming of to the operating that they alkali flow stays

just said Well, say shifts the even to participation look, it's out choose we too our limited certainly specific, going to the in chain. that the changes our there's production relative as rate without that that would impossible in vinyls not I buy getting we further to limit marketplace. be we've already participation that Chris, that and And enter of liquidity And XXXX. we

Blair question is from TPH. The next with Matthew

flowing coming quite really like hedges on QX? a propylene It the through benefit XXXX? bit do a as about epoxy epoxy to and potentially Or had you to be in I looks have feedstock think Would into a question that down benzene in QX. this and feedstocks. are

this is Todd. Matthew,

once really, does first costs. start an we the about therefore, those you the see from on that in Epoxy third quarter. the America, quarter. around our international in globe costs that And you'll down -- come costs lower think especially But the basis, in have As lower benefit North

with Angel Stanley. from is question Castillo Next Morgan

for remain guess peers that throttling But This is on you back as seeing are you're disciplined I production you've here? value. Alyssa Angel. to maintain mentioned your

only is, only to I Scott say that reasonable peers. there's is marketplace. here. Yes. it's What value where much is wouldn't the participating I really will about a in that have say

to pretty -- make our So in we're to that. have we rate changes significant do operating having sometimes

on speak there. behalf Olin's I'll So

appetite we've the there. of is pipeline talked for wondering then M&A repurchases, share kind what Got about but and I'm it. the And overall

Yes. that we I near of into What discussions. some not joint mean question of alliance certainly that I is as that and type venture the of lot possible. is even that turns targets, A in consider M&A term, out most activities. opportunities. that And capital near-term have the and will candidates it's is M&A low potentially or say

multiple So one we've ventures. announced a alliance. couple joint We announced at of unannounced other least alliances. completed We've

cash continue large a year. form that maintaining it we've free expect shareholder-friendly acquisition got directing all so kind of any towards I the as of and and over levered complete taking pretty to materialize move now, returns in policy flow share unlikely almost then of to repurchases arrangements those direct our our kind we right And of And dividend. next the it's of to

next Credit question John comes from with Suisse. The Roberts

X, your It's an to ability Matt Slide economic downturn. on through indicate Scaroni for John. you On repurchase shares

takes some Given your during it or to the flow potential cash would debottleneck, projections capital and purchases? allocate capacity growth instead and nearing a a towards considering where there time supply-demand of add that generation point you to of look is speculation time, and recession

expand yes, Yes. Olin you're see going Matt, base production capability. its not to

over tons In than years, more X taken of we've production X capability. last fact, million out the

capital to we growth to of projects. -- going we're that not don't direct have base need any toward So kind

from ventures However, that level with joint does as existing existing of alliances free in assets, trough to do as sort grow be there's well. a to levered acquire flow going billion year, of our do additional assets $X.X cash opportunities

today's really, But pull that be capital. And repurchasing And value so shares. is repurchasing world. of the it of with that competitive of shares has some the compete value in with to all none could of on that

follow-up September, of And either any terms since dynamics dynamics? Have or behavior market. you in the seen in just the of on then change helpful. epoxy selling That's is my buying end

place. would stays principal in same I say trend the

We've there. the temporarily With shortfall, yet China demand trade expanding but seen flows at traditional reversed. running assets still

used import U.S. hasn't or changed. U.S. of would Europe produced moderation lot material -- be good China that for news of other there's is into the that that is there. in So And to been I used to coming ending material Asia in or really change the that up Europe. of either countries and a of and the the in a to say lot rate some is

so that advanced And Olin that a of value a solution all epoxy customers group with footprint that settled material there, probably the and there's the way value out we've and below carries some making the that's also footprint fact resin COX its that's COX of stability our of China.

So there's some moderation there.

The Research from with Kevin next comes question McCarthy Vertical Partners.

I on just Are more we impact Mississippi levels should we're had movement reading about? Scott, hearing just follow-ups. a low or or either be Olin about restrictions few really the Or that meaningful is River. barge industry immaterial? the having thinking that water on on any

I immaterial. it's Yes. not mean Kevin,

rearranged is It's to logistics change to some impact. a bit. there be So causing have

For Olin, less impactful. a perhaps it's little

the up just would that that is if hurricanes top I occurred, think mean the thing experienced. concern that I to ever to perhaps nagging all would equivalent strike mother worry this river say going beyond rail That this to own barge of and system, about we've a the it's strike. actually issue be on really I real of disruption rail

Interesting.

dormant quarters efforts Are Secondly, exploration would of think or potential had those least you extent? at discuss stage? resin or active you discussions your PVC I ago, How partnership. describe few Scott, at a publicly or this a

discussions in a haven't more expect there. VCM interested something multiple contemporary active or that with that, right are more that, through the would we found enough, that moment that we and decline just expect that. out Well, for while little of PVC Interesting attractiveness I that not the also Yes. there's there may than say what that parties. setup materialize we PBC. say the all It's around delivers for just I would

an ECU expect through We expansion business of our that.

may, one, And Todd. then if last for I

I of change on press transpired Can you liabilities. think related benefit release there? the elaborate just of indicated million release $XX what to deferred tax a tax your and

did noncash under Sure, It It's was a book resulting million tax entity third necessary. and -- $XX entity -- of liquidation. we a just quarter, over the acquisition ago, liquidating Kevin. us related in longer Thanks years benefit question. it benefit did created to just under XX from an the realize no really a legal for

a able that from So the liability remove recognize to and perspective, book we're income.

is Petrie question with next Eric Citi. from The

your In bottom-up million chlorine chlorine merchant that or pricing next that year? upgrade the did of $XXX reset TiOX from bill in include exclude XXXX, you provided versus the

Yes.

I I XXXX. of items. think mean result low the to good over inclusive number total after news And the is Eric, it in from it's probably year turn here probably of we So all actual those XXXX the that calendar the is little compared -- is a

you Okay. And then, caustic Scott, are compare wondering And industry? I the could better seeing that exports? how in was your participation soda opportunity if parlaying currently you comment Or to on does volume?

the market. Well, a purchaser been of without giving of We've export any in world. the liquidity specific export numbers, course, in we participate also always

X Water think of we'll the molecules Alliance we've The that chlor-alkali there you world. venture means trader -- day, liquidity in idea the announced we're is become to the of Mitsui. Blue about in manager our joint largest That world. being the that If largest target

a say to it's for of just heavy and would use we our run us, I it effectively focus So point model.

concludes the question-and-answer session. no questions, our like As there Scott Sutton I conference closing are further would to comments. this for back to turn over

it would look, for everyone say, we'll joining with wrap the up call, thanks that. Right. I Well, and to just

attending Thank you today's for presentation.

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