Olin Corporation

Good morning, and welcome to the Olin Corporation's second 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 you joining us today to review Olin's second 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 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 second 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 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'll 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 Olin's President and CEO, Ken Lane. Ken?

Thank you, Steve, and thanks to everyone for joining us today. I'll start with slide three in our second quarter highlights. Second quarter of 2025 provided another proof point for our value-first commercial approach as we continue to preserve value across our integrated ECU products, despite this being the seventh quarter in a row of trough demand conditions. In the face of this lengthy downturn, North American chlorine index values remain stable and higher than any prior trough. Epoxy resins faced ongoing strong import competition, partially offset by our growing formulated solutions business. The second quarter outlook we provided anticipated our chemicals businesses would deliver flat sequential results, overcoming a $32 million sequential headwind from planned turnarounds. However, unplanned operating events limited our results to the lower end of our second quarter outlook. Winchester continued to see strength in the defense business, while headwinds from customer destocking, lower commercial pricing, and higher raw material costs negatively impacted our commercial business results in line with what we had expected. Despite the chemical operational headwinds, our teams executed well, generating operating cash flow of more than $212 million, easily funding Winchester's second quarter acquisition of our new Manitowoc, Wisconsin ammunition facility paying down $39 million of debt, and buying back $10 million of Olin shares. Now let's turn to slide four and review our chloroply products and vinyls results. Caustic soda remains the strong side of the ECU. Global demand for caustic soda into alumina remains robust, with continued expansion of Latin American pulp and paper capacity more than offsetting reductions to U.S. capacity. Domestic caustic soda demand remains stable as seasonal water treatment, mining, and agricultural demand strengthens. We expected second quarter EDC values to present a small headwind, but the price decline was much steeper than expected. Olin's cost-advantaged North American ethylene and EDC positions provide some insulation during these trough conditions, allowing us to continue operating profitably on an integrated basis. As I mentioned earlier, during the quarter, we experienced several unplanned operating events that caused earnings to be at the low end of our expectations. One of our core values is to operate our facility safely and reliably, and we are taking actions to significantly improve in both areas, as you'll hear about shortly. We continue to view tariff impacts as generally neutral to our chloralkali business. This balance may shift if we see an increase in retaliatory tariffs, especially across South America, a key destination for our caustic soda and EDC exports. Our PBC tolling initiative continues to develop as we successfully broaden our product and customer portfolio. We're committed to finding the highest value, most capital efficient long-term option for our PBC market participation leveraging our fully integrated VCM asset. Now let's turn to slide five for a brief look at our epoxy results. Our formulated solutions business sequentially grew both in volume and margin. Lower resin material costs in the second quarter were partially offset by sequentially higher operating costs. Epoxy faced a second quarter adjusted EBITDA headwind of approximately $7 million for the Stata maintenance turnaround. Building and construction, automotive, and consumer electronics remain weak in both the US and Europe. In spite of that, Olin's second quarter epoxy resin volume improved year over year as customers shifted more of their requirements back to Olin, focusing on the reliability and security of supply that we offer as the last remaining fully integrated epoxy producer in North America and Europe. As a reminder, An important next milestone in our epoxy self-help strategy will be the initiation of the Stade Germany key supplier contract, delivering more than half of our $80 million 2028 epoxy structural cost reduction target, starting on January 1, 2026. Slide 6 provides an update on our Winchester business. Winchester's defense business continues to grow. based upon strong domestic military ammunition demand, international military ammunition shipments, and our Lake City government-funded next-generation squad weapon project. However, our commercial ammunition business remains challenged. Costs have increased, retail channel inventories remain high, and consumer demand is being impacted by weak discretionary spending. All of these factors contribute to a highly competitive environment resulting in lower commercial pricing and margin weakness. None of these challenges are structural, but the confluence of the three create an unprecedented perfect storm of our commercial ammunition business. Turning to our recent Manitowoc, Wisconsin ammunition plant acquisition, we expect this acquisition to generate $5 million of incremental adjusted EBITDA during the second half of 2025. And after our first three months of ownership, have strengthened our confidence in delivering $40 million of EBITDA by year three. Let's turn to slide seven for a deeper look into our Beyond 250 cost savings project. As I mentioned earlier, the foremost value for Olin is our commitment to safe and reliable operations, cornerstone of our strategy to create long-term value. Overall, we anticipate our efforts will result in 2025 year-end run rate cost savings of $70 to $90 million. As part of our Optimize the Core strategic pillar, BEYOND 250 includes rightsizing our CAPV and epoxy manufacturing facilities, accelerating a performance-driven culture, and leveraging continuous improvement and operational excellence initiatives. Through all of this, we will identify and implement best practices throughout our operations in both Chemicals and Winchester. To accelerate our objectives, we've enlisted industry-leading specialists with the necessary talent and expertise. Our Freeport, Texas site is piloting this transformation, taking the lead for our chemicals businesses. This effort was launched during the second quarter. Beyond 250, we'll strip away various remnant costs left behind by our earlier asset closures. We anticipate this effort to be a significant driver of value. As a result, our manufacturing footprint will be more flexible, fit for purpose, and standardized across all Olin sites, yielding lower costs and increased reliability. Our teams are already gaining momentum as we begin to streamline our maintenance practices, reduce our contractor reliance, and ultimately achieve a performance-driven culture. Also contributing to the cost savings, Winchester has implemented a parallel efficiency program and is on track to deliver on their commitments made during our investor day. I'll now turn the call over to Todd Slater to walk us through some financial highlights.