Olin Corporation

Good morning and welcome to Olin Corporation's third quarter 2024 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by a zero. Following today's brief opening comments, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. 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. Please go ahead, Steve.

Thank you, Operator. Good morning, everyone. We appreciate you joining us today to review Olin's third quarter results. Before we begin, I'll remind you that this discussion, together with the associated slides and question and answer session that follows, will include statements regarding estimates or expectations of future performance. Please note these are forward-looking statements and that Olin's 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 third quarter earnings press release. A copy of today's transcript and slides will be available on our website in the Investors section under Past Events. Our earnings press release and other financial data and information are available under Press Releases. With me this morning are Ken Lane, Olin's President and CEO, and Todd Slater, Olin's CFO. We'll start with our prepared remarks, then we look forward to taking your questions. I'll now turn the call over to Ken Lane.

Thanks Steve and good morning everyone. Olin's third quarter was significantly impacted by operational disruptions as a result of hurricane barrel damage. I want to thank our team at the Freeport site for their efforts to restart our assets which were shut down in early July due to the hurricane. Multiple plants are now returning to normal operations. The Olin team worked through the difficult times safely and expeditiously while facing hurricane related challenges at home and in their communities. Now turning to our third quarter results on slide three. The quarter unfolded slightly better than expected for our chemicals businesses, excluding the impact of Hurricane Beryl, which came in at $110 million versus our initial estimate of $100 million during the quarter. We will have some residual hurricane impact in the fourth quarter due to additional downtime and the completion of some less critical infrastructure repairs. Excluding the impacts from Hurricane Beryl, Chlorophyll-I products achieved a solid quarter with sequential improvement. The aftermath of recent hurricanes also drove third quarter demand for bleach and hydrochloric acid higher in support of water treatment and cleaning end uses. During the third quarter, caustic prices increased supported by some demand improvement in export markets, as well as continued constraints in supply related to global industry planned and unplanned outages. The epoxy prices and margins continue to slowly improve, though volumes remain weak. We remain focused on delivering cost reductions during a very challenging market environment. Our third quarter epoxy resin volumes were sequentially lower as we started our planned Stata Germany turnaround. Third quarter Winchester commercial ammunition volume fell significantly short of our expectations. Due to softness and consumer demand at our customers' retail outlets, Retailers are now slowing their purchases to normalize inventories by year end. This headwind is partially offset by continued strength in defense demand. Turning to slide four, let's take a closer look at our chloralkali and vinyls business. With Hurricane Barrel behind us, our Freeport plants are returning to normal operations. Caustic soda is the strong side of the ECU, and with global industry supplies constrained, Olin will stay focused on our value-first commercial model to meet demand. Caustic soda demand continues to be strong, with alumina and pulp and paper leading the way. South American demand has been the most robust, with two recent world-scale pulp and paper plant startups. Index pricing for U.S. Gulf Coast caustic exports finished the third quarter up by over $100 sequentially, a 30% improvement over the second quarter index. North American merchant chlorine demand remains steady, with positive trade press outlooks for vinyls and titanium dioxide heading into 2025. We expect agricultural-related consumption to pick up seasonally late in the fourth quarter. Chlorinated water treatment is expected to slow seasonally, then pick up again during the first quarter. Our EDC participation remains disciplined. EDC values are up slightly year over year, in line with PVC, but we remain diligent to keep our EDC position value-driven. For a look at our epoxy business, let's turn to slide five. During the third quarter, we began our planned Stata Germany outage, which occurs once every six years and is proceeding on plan and budget for completion in the fourth quarter. As the largest and only integrated producer of epoxy in the European Union, Stata remains an important asset for Olin and that value is expected to increase as we realize contractual cost savings in 2026. Despite improving margins, resin and formulated solution volumes remain challenged in both the US and Europe. The inflow of China's subsidized epoxy continues unabated, even with local production costs rising in Asia on tightening glycerin feedstocks. In September, the U.S. International Trade Commission announced preliminary countervailing duties for epoxy imports, which only impacted China. We hope the U.S. ICC's upcoming November anti-dumping duties will level the playing field across Korea and Taiwan and appropriately value domestic production of these critical materials and stem the flow of unfairly subsidized Asian imports. In parallel, The European Union is also evaluating epoxy anti-dumping duties with preliminary determinations expected in mid-2025. I'll now turn to slide six for a Winchester review. Third quarter commercial ammunition demand was disappointing. Cautious of propellant shortages and hopeful for a strong second half demand, our retailers bought heavily during the first half of 2024. Now with consumer demand remaining stubbornly sluggish, retailers have pivoted to reducing inventory in advance of year-end. We expect destocking to continue through the fourth quarter. Rising propellant and metal costs remain the headwind for our commercial ammunition business. Winchester recently announced ammunition price increases ranging from 5% to 10% to offset these rising costs. Our new White Flyer Clay Target business continues to exceed expectations and has been a welcome offset to weaker commercial ammunition sales. In contrast to the commercial business, Winchester's military sales across all value chains, domestic, international, and project-based, continue to show strength. Construction is now underway for the Army's Lake City next-generation squad weapon ammunition facility. This project, while fully funded by the U.S. Army, will grow Winchester's Lake City revenue base and expand our global defense participation. Our defense-related revenue is expected to grow as a percentage of Winchester sales in the coming years. Now I'll hand it over to Todd for our financial highlights before I wrap up.