Olin Corporation

Good morning, and welcome to the O-Link Corporation's first quarter 2025 earnings conference call. All participants will be in a 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 truly appreciate your joining us today to review Olin's first quarter results. Please keep in mind that today's 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 Bolin'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 first 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 related 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 some prepared remarks, then we look forward to taking your questions. In order to give everyone an opportunity, we will limit participants to one question with no follow-ups. I'll now turn the call over to Poland's President and CEO, Ken Lane.

Thanks, Steve. And thank you to everyone joining our call today. Let's start with a few first quarter highlights on slide three. Looking across the global macro environment, economic uncertainty continues to dominate the narrative. Against this backdrop, everyone here at Olin continues to focus on the path we laid out during our investor day, while closely managing the factors within our control and advancing our value creation strategy. As a result, we're increasing our cost reduction target to $50 to $70 million related to productivity and structural cost improvements for full year 2025. During the first quarter, our core alkali products and vinyls business exceeded expectations as several planned and unplanned industry outages reduced first quarter chlorine and caustic soda supply. In response, we delayed the planned first quarter outage at our chloralkali facility in Freeport, Texas to meet customer needs and were pleased to help many customers during the tight market conditions. This is in line with our value-first commercial approach, and as we've consistently said, Olin is ready to raise operating rates to meet demand at fair values. We view this as a positive cue point for our chloralkali loaded spring that will be more apparent as we emerge from this extended trough environment. During the first quarter, we also saw stable ECU values continue with positive pricing trends into the second quarter. In our Winchester Division, domestic and international military ammunition volume continues to grow while commercial sales continue to be weak as retailers destock, coupled with lower consumer sales. Also during the first quarter, Olin took advantage of historically narrow spreads and successfully refinanced our nearest debt tranche through a bond issue and bank refinancing. This pushed our nearest debt tower out to 2029 and positions us very well to weather the uncertain environment we see today. As we manage through this challenging economic environment, we're taking important steps to advance our strategy and strengthen our business. Slide 4 reviews several of our recent actions. Our Optimize and Grow the Core strategy, introduced during our December Investor Day, outlines our path forward, and we took several steps to advance that strategy in the first quarter. Continuing our commitment to a value-first commercial approach, accelerating structural cost reductions, and maintaining our disciplined capital allocation framework, all while not losing focus on the high-value growth opportunities laid out in December. As an example, we made solid progress to implement our Winchester growth strategy. I'm pleased to report that Winchester has been awarded a three-year contract extension to continue operating the Lake City GOCO ammunition facility through 2030. Additionally, We closed the acquisition of Ammo Inc.' 's ammunition assets. We've also been focused on enhancing our organizational accountability. We've aligned each employee's incentives with our corporate goals and strengthened our equity plans to increase engagement and retention. Also, we consolidated our chemicals commercial talent to our Houston office to facilitate greater cross-collaboration and teamwork And finally, we established Clayton, Missouri as our Winchester headquarters. Now let's turn to slide five to review our core outfly products and vinyls results. First quarter CAPV EBITDA was up slightly with increased chlorine and caustic volumes as we continue to focus on value and push for price gains on each side of the ECU. We expect caustic to remain the stronger side of the ECU and see positive pricing trends going into the second quarter. As mentioned earlier, we delayed the start of our planned Freeport, Texas turnaround to opportunistically capture spot demand created by planned and unplanned industry outages. During the first quarter, we reengaged with several flooring customers seeking interim supply. The turnaround delay is reflected in our updated expense data on slide 17. This delay will result in $33 million higher sequential turnaround expense. Despite this headwind, we still expect to deliver sequentially similar, more alkali-adjusted EBITDA in the second quarter. As we continue to navigate this unusually long trough, Olin's ECU values and volumes have proven remarkably resilient across the past six quarters as we implement our disciplined value-first commercial approach. PBC was another highlight in the quarter as we delivered our first shipments of Olin PBC during March, marking a key milestone for our PBC business development. In addition to our entry into the PBC market, we're adding value to every ton of EDC we toll with Chem 1. As we discussed at our December Investor Day, we're exploring potential long-term PBC strategic opportunities, including long-term commercial arrangements, available production technologies, and the evaluation of joint venture partners. With respect to current tariffs, we do not expect the direct impact on CAPB to be significant. Olin's export sales, mainly caustic soda and EDC, are generally sold to low tariff countries. One potential positive effect may be to tighten U.S. caustic supply as tariffs challenge the economics of Asian imports to the U.S. West Coast and European imports to the US East Coast. Now let's turn to slide six for a brief look at our epoxy results. First quarter epoxy sales improved sequentially, reflecting an increase in both resin prices and volumes. However, the margin benefits of improved pricing were more than offset by higher costs. Last month, the US Commerce Department issued their final epoxy anti-dumping decision. Olin was encouraged that the anti-dumping duty percentages for selected countries were raised beyond the preliminary determination. However, we remain concerned that the Commerce Department lowered the duty percentages for certain countries, in particular South Korea. The European Union announced their provisional epoxy resin anti-dumping duties during the first quarter and expects to conclude the investigation by issuing definitive measures during the third quarter 2025. Today, South Korea, the largest importer of epoxy resins to the European Union, unfortunately remains exempt. Bulk epoxy resins subject to anti-dumping duties represent less than 25% of our overall epoxy division sales. Current anti-dumping duties provide minimal upside value. We will continue to advocate for fair trade practices here and in Europe, pursuing every available avenue. Looking ahead, building and construction, automotive, and consumer electronics demand remain weak in the U.S. and Europe. We are seeing mild seasonal demand improvement, but nothing we would consider as demand recovery. Second quarter epoxy results will include a planned Stade Germany turnaround estimated to present a $10 million sequential headwind. As a result, epoxy earnings are expected to remain negative. Slide 7 provides an update on our Winchester business. Winchester domestic and international military sales continue to grow as anticipated. Military project spending accelerated through the first quarter and is expected to continue gaining momentum throughout 2025. Commercial ammunition demand continues to be weak. We're seeing mid-single digit pullback across sporting goods, hunting, and gun sales. However, commercial ammunition sales have declined more than the sporting goods category. Ammunition retailers are destocking in parallel with consumers. You may recall that ammunition retailers built very high inventories during the first half of last year in advance of expected propellant shortages and the presidential election. Lower out-the-door retail sales have made destocking a lengthier process, Winchester costs for metals are rising due to tariffs and tight supply. Propellants also continue to present a cost headwind. Although Winchester buys most metals locally, we still realize tariff-related price inflation on the domestic price of steel, aluminum, and copper. At the same time, tariffs may also provide a tailwind for Winchester, as ammunition imports will now carry at least a 10% penalty, and in order to reduce U.S. trade imbalances, country-level tariff negotiations are promoting the increase of defense-related US exports, including small-caliber ammunition. Now turning to slide eight. This past month, we were pleased to close on the acquisition of Ammo Inc.' 's manufacturing assets. Winchester's timing for the purchase of this state-of-the-art ammunition production facility was ideal. We were able to acquire a modern plant with a skilled workforce at a highly attractive adjusted purchase price of $56 million. We've begun integrating this new plant to optimize production across our assets in order to begin realizing our target synergies and extending our scale benefits to this new production site. As detailed during our December Investor Day, Winchester is an iconic brand and an excellent platform for growth. In addition to being immediately accretive The shell case expertise we acquired will support a new area of growth for Winchester. The value creation potential of our Winchester platform is significant, and this acquisition absolutely exceeds our investment hurdles at less than approximately 1.5 times adjusted EBITDA, including synergies. Let me now turn the call over to Todd Slater to walk us through some financial highlights.