Olin Corporation

Good morning, and welcome to Olin Corporation's fourth 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 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 fourth quarter results. Before we begin, I'll remind you that this discussion, together 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 Olin's 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 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 note, though, that in order to give each analyst an opportunity, we will limit participants to one question with no follow-ups. I'll now turn the call over to Ken Lane and kick us off.

Ken Lane Thanks, Steve, and thank you all for joining us today. Starting with slide three, I hope everyone was able to participate in our December Investor Day, whether in person or virtually. We laid out our value creation strategy that optimizes our core businesses by maintaining our focus on a value-first commercial approach and streamlining our assets to achieve greater than $250 million in cost reductions by 2028. We expect to achieve $20 to $30 million of these savings in 2025. We also explained how we will grow our core by focusing on adjacent high-return options, all while being disciplined with our capital allocation framework. Olin has a great legacy, a leading set of businesses and assets, and a bright future. During our investor day, we guided the fourth quarter adjusted EBITDA at the low end of our range. However, as we close the quarter, The downward pressure on our share price created an unexpected benefit to adjusted EBITDA, and hurricane barrel costs came in lower than we expected. In epoxy, seasonally lower demand was a headwind during the fourth quarter. However, this was partially offset by continued price improvement. In Winchester, domestic and international military demand remained strong. However, near-term commercial headwinds persist as commercial retailers continue to trim inventories and consumer disposable income remains challenged. Now let's take a closer look at our chlorophyll-I products and vinyls results on slide four. CAPV sales were up 9% sequentially on higher volume in the absence of Hurricane Beryl and improved pricing. Our CAPV results also benefited as final Hurricane barrel spending came in approximately $8 million below expectation during the quarter. Although we are in the midst of a prolonged industry trough, Olin continues to realize higher value than experienced previously. We continue to be disciplined with our operating rates as we navigate this challenging environment. Global caustic soda remains tight as European variable costs rise, Asian demand shows improvement, and we are coming up on the turnaround season. Combined with seasonally lower merchant chlorine demand, we expect tightness to continue through the first quarter. At Investor Day, we announced our intention to enter the US PBC market via a tolling partnership. This has key strategic benefits, including upgrading a portion of our significant EDC capacity and unlocking incremental caustic soda volume. Longer term, this will facilitate our strategic assessment of the PBC market, and how we would employ our industry-leading cost position to create higher value. We have received initial shipments and will realize first sales in the first quarter. Our Gulf Coast plants recently weathered winter storm ENSO with no material interruptions. However, many of our customers were not as fortunate, which will present a slight headwind in the first quarter. Moving to slide five, we'll take a look at our fourth quarter and full-year epoxy results. Olin's epoxy sales were roughly flat sequentially, with improved resin pricing offset by seasonally weaker demand in both the U.S. and Europe, seeing weaker demand from the building and construction, automotive, and consumer electronics markets. Notably, during the third and fourth quarters, our team successfully completed the planned turnaround at our Stade Germany facility. It was completed safely on time and on budget. Fourth quarter epoxy adjusted EBITDA increased by more than 50% sequentially, largely in the absence of hurricane barrel impacts. During the first quarter, we expect improving demand as limited restocking begins, and we see some seasonal improvement in our formulated solutions business. U.S. hydrocarbon feedstock costs remain favorable versus rest of the world. However, Asian epoxy producers facing higher feedstock and freight costs continue to increase the flow of unfairly subsidized epoxy resin into the U.S. and Europe. We expect both a final U.S. and provisional EU anti-dumping decision during the first half of the year. Slide six provides an update on our Winchester business. Fourth quarter Winchester sales were flat sequentially as the growth of lower margin domestic and international military demand and military project spending was offset by lower commercial ammunition sales. Commercial ammunition demand continues to be weak as retailers continue destocking. As a reminder, U.S. ammunition retailers built significant inventories during the first half of 2024 ahead of looming propellant shortages and the U.S. presidential election. Retailers continued reducing their inventories as consumer spending slowed, resulting in lower Winchester sales. We expect this trend to continue in the first half of 2025. The weak near-term commercial demand has been partially offset by strong domestic and international military demand. Demand for white flyer clay targets is robust and will soon benefit from the launch of our EcoFlyer line, the next evolution of clay targets. After one year since closing, we're excited to see the continued exceedance of our expectations of this acquisition. And now let's take a look at Winchester's announced acquisition of Ammo, Inc.' 's assets on slide seven. As we announced on January 21st, Winchester entered into a definitive agreement with Ammo, Inc. to acquire its small-caliber ammunition manufacturing assets. This bolt-on acquisition should be immediately accretive to adjusted EBITDA, which is directly in line with our acquisition strategy for Winchester that we discussed during our December Investor Day. The acquisition includes a state of the art production facility in Manitowoc, Wisconsin, with a talented group of skilled employees, which will enable greater specialization and participation across high margin specialty calibers. At the same time, Winchester's near full integration across the ammunition value chain will provide economy of scale and synergies across safety, manufacturing, and procurement. Our plants will immediately share best practices and rebalance our system to optimize the new assets. We anticipate a fully realized synergy benefit of $40 million within three years after closing. As a result, we expect to achieve a multiple of less than two times once the assets are fully integrated, which meets our criteria that any investment must offer better returns than buying back a share of Olin stock. We expect to close the transaction during the second quarter. Let me now turn the call over to Todd Slater to walk us through some financial highlights. Todd Slater Thanks, Ken.