Olin Corporation

21 earnings conference call. All participants will be in listen-only mode. Since you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch-tone phone. To enjoy your question, please press star then two. Please note, today's event is being recorded. I would now like to turn the conference over to Steve Keenan. and was Director of Investment Relations. Please go ahead, Steve.

Thank you, Rocco. Good morning, everyone, and thank you for joining us today. Before we begin, let me remind you that this discussion, along with the associated slides and the question and answer session that follows, will include statements regarding estimates or expectations of future performance. Please note that these are forward-looking statements and that actual results could differ materially from those projected. Some of the factors that could cause actual results to differ from our projections are described without limitations in the risk factors section of our most recent Form 10-K and in yesterday's fourth quarter earnings press release. A copy of today's transcript and slides will be available on our website in the investor section under past events. Our earnings press release and other financial data and information are available under press releases. With me this morning are Scott Sutton, Olin's CEO, and Todd Slater, Olin's CFO. Olin's business presidents will rejoin our first quarter earnings call. Scott will begin with some brief remarks, after which we will be happy to take your questions. I'll now turn this call over to Scott Sutton.

Thanks, Steve. 2021 was a solid year for Olin. I'm extremely proud of the complete Olin team for establishing that this company can deliver expected profitability and cash flows. Driving that 2021 performance stake in the ground was critical to our future improvement, as there were many temptations to a falling back into a historical peak trough experience. However, we resisted all of those temptations and instead demonstrated the commitment to our leadership model of lifting Olin's system value above all else. Now, and as called out on slide number three, It is time to demonstrate that we have broad control over improving our value delivery in 2022 and that we have multiple 2022 and 2023 growth vectors in all three of our businesses. As shown on slide number four, we set our market participation according to the weaker side of the ECU. And consequently, we were able to lift our value on both sides of the ECU through 2021. We won't sell into a poor quality market. And in fact, we are pressing that principle more than ever heading into 2022, as shown on slide number five. Instead of choosing to produce and sell incremental volume and negatively impact our market quality, we are instead reducing our capacity utilization and purchasing product liquidity from the market to satisfy our participation level. This is one tool to prevent a traditional negative cycle for Olin and bridge to the future favorable supply-demand structural thematic. Slide number six shows our increased purchase of global liquidity as our parlaying activities grow. For the moment, those parlaying activities primarily serve to complement our leadership model of lifting our system value, but those activities will additionally serve all and well in the future as we grow and we require volume produced outside of our asset perimeter. The favorable supply-demand structural thematic is upon us, and as shown on slide number seven, as the world appears to be under-investing in ECU capacity on the order of 17 world-scale ECU plants over the next six years. This forecasted under-investment comes at a time when clear, positive demand megatrends solidify, as shown on slide number eight. This same scenario impacts epiclorohydrin as well as base ECUs. Moving to slide number nine, The impacts, activities, and outcomes for Olin are clear. The forward structural thematic suggests demand growth is much greater than supply growth. We have taken many actions to improve our system value, and we expect to become the world leader in global liquidity as well. The result is that Olin defeats the cycle, expects to deliver $8 billion of levered free cash flow over the next five years, approximately equal to our current market capitalization, and achieves the improved valuation multiple we deserve. All three of our businesses succeed in materializing their clear growth vectors. Winchester grows shooting sports participation via the Shoot United mission and grows its military business via the demands of the next generation squad weapons. Epoxy grows its upstream value impact in both aromatics and epiclorohydrin and grows its downstream value impact via additional engineered solutions volume into clean energy, composites, and infrastructure. And CAPV becomes the largest buyer of global liquidity and grows by matching our significant excess vinyl upstream capability in EDC and VCM with the right PVC players. These and other growth vectors will become a key subject of future earnings calls. None of this is 100% possible without a platform that is sustainable at Olin. We must have the right ESG program, so we have decided to raise the bar on some of our targets shown on slide number 10, after having met many of our initial ESG goals earlier than targeted. There is more to come here as our stakeholders continue to ask for enhancements in our ESG public profile, and we will continue to upgrade our contemporary scorecard on slide number 11. So, that concludes my opening comments. So, Rocco, we're now ready to take questions.