Olin Corporation

Good morning and welcome to the Olin Corporation's fourth quarter 2025 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 the 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 2025 results. Please keep in mind that today's discussion, together with the associated slides, as well as the 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 fourth 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, Bolin's President and CEO, and Todd Slater, Olin's CFO. We'll start with some prepared remarks, and 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.

Thanks, Steve, and thank you to everyone for joining us today. Let's start with slide three and review our fourth quarter highlights. As we previously announced, our fourth quarter came in significantly below our expectations. In December, we experienced operational issues related to an extended turnaround of our Freeport, Texas chlorinated organics asset and third-party raw material supply constraints, both of which impacted our chloralkali assets. At the same time, we also experienced a sharp decline in chlorine pipeline demand in an already seasonally weaker quarter. During the quarter, we were able to preserve our ECU values by staying disciplined with our value-first commercial approach, and we also announced a long-term EDC supply agreement with Braskem, which provides a higher value to both parties by integrating the low-cost producer of EDC with the leader in PBC in Brazil. In addition, we've expanded our infrastructure footprint in Brazil, which enables us to grow our caustic sales there in 2026. In our epoxy business, we were able to contract for significant growth in our European business, which we'll begin to benefit from in the first quarter of 2026. This is a result of our commercial team's successful strategy to position Olin as the last integrated supplier of epoxy in Europe, providing reliable, secure supply to local customers in the face of continued headwinds from subsidized Asian producers. In our Winchester business, we took aggressive action to accelerate inventory reductions across our system and began efforts to right-size our cost structure in response to lower commercial ammunition demand. Cash generation is a high priority for Olin, especially in the trough environment that we're in. I'm very proud of how our team has responded And through actions that we took, we were able to generate $321 million of operating cash flow and hold net debt flat versus year-end 2024. Let's turn to slide four for a closer look at our chloralkali products and vinyls results. Macro conditions remain challenging. Merchant chlorine demand remains under pressure through this extended trough as subsidized Asian chlorine derivatives flood export markets. Since 2019, China exports of titanium dioxide, urethanes, epoxies, crop protection chemicals, and PVC have grown 300 to 600 percent, placing significant pressure on U.S. chlorine derivative customers. As you would expect in a trough environment, we are already seeing chloralkali capacity rationalization in Europe, Latin America, and the U.S., which should accelerate operating rates as demand recovers. Olin has done a great job of preserving our ECU values and remains committed to our value-first approach, and we are well-positioned when markets recover from the trough. As we look ahead to the first quarter, we'll continue to face headwinds related to power and raw materials. As a result of winter storm Fern, we proactively shut down several of our Gulf Coast assets, which will increase our first quarter costs. In addition, we'll see higher turnaround costs as we begin our VCM turnaround at our Freeport, Texas site. This is the single largest turnaround that Olin executes and occurs every three years. Global caustic soda demand remains healthy, led by alumina, water treatment, and pulp and paper. Olin ended 2025 with very low inventories, and we're seeing good momentum on our caustic soda price increase. As seasonal demand returns this spring, Already low inventories and planned industry turnarounds are expected to further tighten caustic supply. Our full-year 2026 chloralkali outlook remains challenging. We expect global vinyls pricing will remain under pressure. Rising U.S. natural gas, power, and feedstock costs will present a headwind in contrast to falling global oil prices, serving to erode the U.S. cost advantage. In the near term, Olin faces stranded costs of approximately $70 million, resulting from Dow's recent closure of their Freeport propylene oxide plant. This cost burden will be offset by our Beyond 250 structural cost reductions, which I'll discuss shortly. Now let's turn to slide five for a look at our epoxy results. Our fourth quarter epoxy results sequentially increased due to improved product mix, allelics and aromatics margins, partially offset by higher turnaround and seasonally lower demand. As we look ahead to the first quarter, we do expect our epoxy business to return to profitability, although at a low level. This will be realized through actions we have taken by growing our participation in the European market, realizing lower costs at our Stade Germany site, and lower turnaround costs. As we look out further, structural changes in our cost position, Recent European epoxy chain plant closures and continued growth in our formulated solutions portfolio will support a return to profitability for 2026 as well. Over the past three years, Olin's epoxy business has remained focused on cost reductions. In that time, we've reduced our global epoxy cash costs by about 19%. Our most recent action was this month's closure of our Guarujá Brazil epoxy plants. This shutdown is expected to deliver $10 million of annual structural savings. Also, in 2025, we continue to deliver on our formulated solution sales growth. These solutions enable AI chips to better manage heat and conductivity that allow lightweight wind blades to exceed 500 feet in length and that serve as adhesives in some of the most challenging environments and applications. We will continue to benefit from that growth in 2026. Now please turn to slide six for an update on our Winchester business. During the fourth quarter, Winchester took aggressive action to adjust its operating model to reflect lower commercial ammunition demand and significantly reduce inventory. As expected, we realized higher military and military project sales, which was offset by these lower commercial sales and higher metals and operating costs. Winchester's first quarter priority will be the implementation of our commercial ammunition price increase. Our new pricing is expected to offset the majority of 2025 cost escalation. As we begin 2026, commercial shipments will continue to be made to order and subject to our increased pricing. As we look back at 2025, we've seen a significant decline in demand for commercial ammunition, back to pre-COVID levels. In response, our Winchester team has taken the necessary actions to align our production capacity with today's reduced demand. We've eliminated shifts, reduced headcount, and restricted overtime across all Winchester plants. At the same time, ammunition imports have slowed dramatically in the face of U.S. tariffs as high as 50%. Last year, imported ammunition satisfied approximately 12% of U.S. demand. In the most recent September import data, imports from Brazil, which typically is the largest importer, have disappeared completely. Domestic and international military sales continue to grow as NATO countries expand their defense budgets and the U.S. increases its own defense spending. Our next generation squad weapon project remains on schedule and will be the most modern and sophisticated small caliber ammunition plants in the world. Winchester's 2026 outlook still faces significant cost headwinds from higher copper, brass, and propellant costs. Winchester 2026 tailwinds include expected sales growth across domestic military, international military, and military projects. Commercial volumes and pricing are also expected to improve during 2026. Retail sales have begun to show year over year improvement, albeit over a low baseline, and retailer inventories have come down significantly. Let's turn to slide seven for a high-level view of our Beyond 250 Structural Cost Savings Program. Olin's Beyond 250 Structural Cost Reduction Program focuses on the identification and removal of inefficiencies. During our 2024 Investor Day, each Olin business made a cost savings commitment, and we are focused on delivering these savings as quickly and efficiently as possible while maintaining safe and reliable performance of our assets. In 2025, we delivered $44 million in structural cost savings, and we expect to add an incremental 100 to 120 million of annual beyond 250 savings during 2026 spread across our three businesses. As I discussed last year, we've enlisted outside expertise to help review our organization and processes against industry best practices. We've begun to improve efficiency at our largest site in Freeport, Texas. By streamlining our work processes, we've already been able to achieve a meaningful reduction in staffing. Through this exercise, we've identified many key performance metrics and gaps to close. For example, our contractor time on tools was well below industry best practice, and our overall reliance on contractors was excessive. With our new organization, work processes, and performance tracking, we have clear line of sight to deliver these additional cost savings in 2026. Our Freeport plant is the pilot for this improvement program, which we're now rolling out across our other global sites. At the same time, Winchester has been right-sizing their staffing and operations to reflect lower levels of commercial ammunition demand. Both of these efforts combined have resulted in a reduction of more than 300 employee and contractor positions during the second half of 2025. We expect to realize a similar level in 2026 as we implement the same efficiency measures at our other sites. In the first quarter of 2026, we'll begin to see the benefits of our new supply agreement at our Stade Germany site. We expect to realize $40 to $50 million of savings related to that in our epoxy business through the year. As mentioned earlier, Dow's closure of its Freeport propylene oxide plant has created a $70 million stranded cost headwind for Olin. By optimizing our power supply, we've already managed to offset approximately $20 million of that stranded cost. Earlier this month, we announced the closure of our epoxy production plant in Brazil. We'll be able to more cost-effectively serve our customers there with supply from either Freeport or Stata, both of which are vertically integrated with better cost structures. As a result of this action, we expect to realize a $10 million annual benefit. With the progress we made in 2025 and visibility of savings in 2026, we're confident we can exceed the $250 million savings commitment we made during our 2024 investor day. Now I'll turn the call over to Todd for a look at our financial highlights.