OLIN CORPORATION 
By CLAYTON, Mo., Jan. 27, 2014 /PRNewswire/ -- Olin Corporation (NYSE: OLN) announced today that its fourth quarter 2013 net income was $24.7 million, or $0.31 per diluted share, which compares to $34.6 million, or $0.43 per diluted share in the fourth quarter of 2012. Sales in the fourth quarter of 2013 were $562.1 million compared to $587.6 million in the fourth quarter of 2012. Full year 2013 net income was $178.6 million, or $2.21 per diluted share, which compares to $149.6 million, or $1.85 per diluted share, in 2012. Sales in 2013 were $2.5 billion compared to $2.2 billion in 2012.
Joseph D. Rupp, Chairman, President, and Chief Executive Officer said, "During 2013, Olin achieved $424.6 million of adjusted EBITDA, which is the highest in the history of the company. The record adjusted EBITDA was driven by record results in the Winchester business, which more than offset weaker year-over-year results in the Chlor Alkali business. In addition, during 2013 we increased our cash position by $143 million and repurchased approximately 1.5 million shares of our stock.
"Fourth quarter 2013 results in both Chlor Alkali and Winchester exceeded our expectations as better than expected demand resulted in higher product shipments. The fourth quarter 2013 Chlor Alkali operating rate was 81%, which compares favorably to the fourth quarter 2012 operating rate of 76%. The favorable Chlor Alkali and Winchester results were partially offset by higher than expected stock-based compensation costs reflecting a $4.6 million unfavorable mark-to-market adjustment, and higher legal and legal-related settlement costs.
"The fourth quarter 2013 results included a $6.5 million pretax gain associated with the sale of a joint venture interest, $4 million of favorable tax adjustments and $1.4 million of pretax restructuring charges.
"As Olin enters 2014, we believe we can generate adjusted EBITDA in the $375 million to $425 million range. This range reflects the view consistent with prior surges that the record level of demand currently being experienced in the Winchester business will begin to moderate during the second half of the year.
"In the first quarter of 2014, earnings per share are forecast to be in the $0.30 to $0.35 range. Winchester first quarter 2014 segment earnings are forecast to improve compared to the first quarter of 2013 due to improved pricing and lower costs. First quarter 2014 Chlor Alkali segment earnings are forecast to decline compared to the first quarter of 2013 due to lower ECU netbacks, partially offset by improved volumes and lower costs."
SEGMENT REPORTING
We define segment earnings as income (loss) before interest expense, interest income, other operating (expense) income, other income (expense) and income taxes and include the earnings of non-consolidated affiliates in segment results consistent with management's monitoring of the operating segments.
CHLOR ALKALI PRODUCTS
Chlor Alkali Products sales for the fourth quarter of 2013 were $322.2 million compared to $336.4 million in the fourth quarter of 2012. Lower selling prices more than offset higher sales volumes. Chlorine and caustic soda volumes increased 2.5% compared to the fourth quarter 2012 levels, fourth quarter 2013 hydrochloric acid volumes increased 15% compared to the fourth quarter of 2012, fourth quarter 2013 potassium hydroxide volumes increased 7% compared to the fourth quarter of 2012, and bleach volumes increased 6% in the fourth quarter of 2013 compared to the fourth quarter of 2012. The fourth quarter 2013 ECU netback declined approximately 9% compared to the fourth quarter of 2012 netback. Fourth quarter 2013 Chlor Alkali segment earnings declined from $54.3 million in the fourth quarter of 2012 to $30.7 million in the fourth quarter of 2013. The year-over-year decline in segment earnings reflects lower ECU netbacks which more than offset increased shipments of chlorine, hydrochloric acid, bleach and potassium hydroxide.
CHEMICAL DISTRIBUTION
Chemical Distribution sales in the fourth quarter of 2013 were $80.7 million compared to $108.7 million in the fourth quarter of 2012. Fourth quarter 2013 and 2012 sales primarily reflect caustic soda sales. Chemical Distribution bleach sales are seasonally weak in the fourth quarter. Chemical Distribution had breakeven operating earnings during the fourth quarter of 2013 compared to operating earnings of $2.6 million in the fourth quarter of 2012. Both caustic soda volumes and margins declined in the fourth quarter of 2013 compared to the fourth quarter of 2012.
WINCHESTER
Winchester fourth quarter 2013 sales were $178.4 million compared to $155.8 million in the fourth quarter of 2012. The increase in fourth quarter 2013 sales compared to the fourth quarter of 2012 reflects increased shipments to commercial customers, partially offset by lower sales to military and law enforcement customers. Winchester's fourth quarter 2013 segment earnings were $34.1 million compared to $16.5 million in the fourth quarter of 2012. The increase in segment earnings reflects the impact of higher volumes, improved pricing, lower commodity and other material costs, and lower manufacturing costs. Winchester's fourth quarter 2012 segment earnings included a $3.0 million favorable settlement of a property tax dispute.
CORPORATE AND OTHER COSTS
Pension income included in the fourth quarter 2013 Corporate and Other segment was $6.6 million compared to $6.7 million in the fourth quarter of 2012.
Fourth quarter charges to income for environmental investigatory and remedial activities were $5.3 million in 2013 compared to $1.6 million in the fourth quarter of 2012. These charges relate primarily to remedial and investigatory activities associated with former waste sites and past operations.
Other corporate and unallocated costs in the fourth quarter of 2013 increased $13.8 million compared to the fourth quarter of 2012, primarily due to mark-to-market adjustments on stock-based compensation of $4.6 million and higher legal and legal-related settlement costs of $7.7 million. The legal and legal-related settlement costs are primarily associated with legacy environmental issues and cost recovery actions.
CASH / DEBT
The cash balance at December 31, 2013 was $307.8 million compared to $165.2 million at December 31, 2012. In December 2013, we repaid $12.2 million of SunBelt notes, which reduced the par value of Olin's debt at December 31, 2013 to $679.6 million. During 2014, Olin has maturing debt of $12.2 million. Capital spending and depreciation and amortization expense in 2013 were $90.8 million and $135.3 million, respectively, compared to $255.7 million and $110.9 million, respectively, in 2012.
DIVIDEND
On January 24, 2014, Olin's Board of Directors declared a dividend of $0.20 on each share of Olin common stock. The dividend is payable on March 10, 2014 to shareholders of record at the close of business on February 10, 2014. This is the 349th consecutive quarterly dividend to be paid by the Company.
CONFERENCE CALL INFORMATION
The Company's fourth quarter earnings conference call with securities analysts is scheduled for 10:00 A.M. Eastern Time, Tuesday, January 28th. The call will feature remarks by Joseph D. Rupp, Olin's Chairman, President and Chief Executive Officer; John E. Fischer, Olin's Senior Vice President and Chief Financial Officer; John L. McIntosh, Olin's Senior Vice President, Operations; and Larry P. Kromidas, Olin's Assistant Treasurer and Director, Investor Relations. Anyone wishing to listen to the call may do so via the Internet by following the instructions posted under the Conference Call icon on Olin's website, www.olin.com. Listeners should log on to the website 15 minutes prior to the call. The call will also be audio archived on the Olin website for future replay beginning at 12:00 P.M. Eastern Time. A final transcript of the conference call will be available on the website in the Investor section the following day.
COMPANY DESCRIPTION
Olin Corporation is a manufacturer concentrated in three business segments: Chlor Alkali Products, Chemical Distribution and Winchester. Chlor Alkali Products, with nine U. S. manufacturing facilities and one Canadian manufacturing facility, produces chlorine and caustic soda, hydrochloric acid, hydrogen, bleach products and potassium hydroxide. Chemical Distribution manufactures bleach products and distributes caustic soda, bleach products, potassium hydroxide and hydrochloric acid. Winchester, with its principal manufacturing facilities in East Alton, IL and Oxford, MS, produces and distributes sporting ammunition, law enforcement ammunition, reloading components, small caliber military ammunition and components, and industrial cartridges.
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FORWARD-LOOKING STATEMENTS
This communication includes forward-looking statements. These statements relate to analyses and other information that are based on management's beliefs, certain assumptions made by management, forecasts of future results, and current expectations, estimates and projections about the markets and economy in which we and our various segments operate. The statements contained in this communication that are not statements of historical fact may include forward-looking statements that involve a number of risks and uncertainties.
We have used the words "anticipate," "intend," "may," "expect," "believe," "should," "plan," "project," "estimate," "forecast," "optimistic," and variations of such words and similar expressions in this communication to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict and many of which are beyond our control. Therefore, actual outcomes and results may differ materially from those matters expressed or implied in such forward-looking statements. We undertake no obligation to update publicly any forward-looking statements, whether as a result of future events, new information or otherwise. Relative to the dividend, the payment of cash dividends is subject to the discretion of our board of directors and will be determined in light of then-current conditions, including our earnings, our operations, our financial conditions, our capital requirements and other factors deemed relevant by our board of directors. In the future, our board of directors may change our dividend policy, including the frequency or amount of any dividend, in light of then-existing conditions.
The risks, uncertainties and assumptions involved in our forward-looking statements, many of which are discussed in more detail in our filings with the SEC, including without limitation the "Risk Factors" section of our Annual Report on Form 10-K for the year ended December 31, 2012, include, but are not limited to, the following:
-- sensitivity to economic, business and market conditions in the United
States and overseas, including economic instability or a downturn in the
sectors served by us, such as ammunition, vinyls, urethanes, and pulp
and paper, and the migration by United States customers to low-cost
foreign locations;
-- the cyclical nature of our operating results, particularly declines in
average selling prices in the chlor alkali industry and the
supply/demand balance for our products, including the impact of excess
industry capacity or an imbalance in demand for our chlor alkali
products;
-- economic and industry downturns that result in diminished product demand
and excess manufacturing capacity in any of our segments and that, in
many cases, result in lower selling prices and profits;
-- new regulations or public policy changes regarding the transportation of
hazardous chemicals and the security of chemical manufacturing
facilities;
-- changes in legislation or government regulations or policies;
-- higher-than-expected raw material and energy, transportation, and/or
logistics costs;
-- costs and other expenditures in excess of those projected for
environmental investigation and remediation or other legal proceedings;
-- unexpected litigation outcomes;
-- the failure or an interruption of our information technology systems;
-- the occurrence of unexpected manufacturing interruptions and outages,
including those occurring as a result of labor disruptions and
production hazards;
-- adverse conditions in the credit and capital markets, limiting or
preventing our ability to borrow or raise capital;
-- weak industry conditions could affect our ability to comply with the
financial maintenance covenants in our senior revolving credit facility
and certain tax-exempt bonds;
-- the effects of any declines in global equity markets on asset values and
any declines in interest rates used to value the liabilities in our
pension plan; and
-- an increase in our indebtedness or higher-than-expected interest rates,
affecting our ability to generate sufficient cash flow for debt service.
All of our forward-looking statements should be considered in light of these factors. In addition, other risks and uncertainties not presently known to us or that we consider immaterial could affect the accuracy of our forward-looking statements.
2014-04
Olin Corporation
Consolidated Statements of Income (a)
------------------------------------
Three Months Years Ended
Ended December
31, December 31,
(In millions, except per share
amounts) 2013 2012 2013 2012
------------------------------ ---- ---- ---- ----
Sales $562.1 $587.6 $2,515.0 $2,184.7
Operating Expenses:
Cost of Goods Sold 469.7 487.9 2,033.7 1,748.0
Selling and Administration 55.7 37.4 190.0 168.6
Restructuring Charges (b) 1.4 2.5 5.5 8.5
Acquisition Costs (c) - - - 8.3
Other Operating (Expense) Income (d) (0.6) 6.1 0.7 7.6
----------------------------------- ---- --- --- ---
Operating Income 34.7 65.9 286.5 258.9
Earnings of Non-consolidated
Affiliates 0.4 1.0 2.8 3.0
Interest Expense (e) 9.9 8.1 38.6 26.4
Interest Income 0.3 0.3 0.6 1.0
Other Income (Expense) (f) 5.0 (4.4) (1.3) (11.3)
------------------------- --- ---- ---- -----
Income before Taxes 30.5 54.7 250.0 225.2
Income Tax Provision 5.8 20.1 71.4 75.6
-------------------- --- ---- ---- ----
Net Income $24.7 $34.6 $178.6 $149.6
---------- ----- ----- ------ ------
Net Income Per Common Share:
Basic $0.31 $0.43 $2.24 $1.87
Diluted $0.31 $0.43 $2.21 $1.85
------- ----- ----- ----- -----
Dividends Per Common Share $0.20 $0.20 $0.80 $0.80
-------------------------- ----- ----- ----- -----
Average Common Shares Outstanding -
Basic 79.5 80.2 79.9 80.1
-----------------------------------
Average Common Shares Outstanding -
Diluted 80.5 81.0 80.9 81.0
----------------------------------- ---- ---- ---- ----
(a) Unaudited.
(b) Restructuring charges for the three months and years
ended December 31, 2013 and 2012 were associated
with exiting the use of mercury cell technology in
the chlor alkali manufacturing process and the
ongoing relocation of our Winchester centerfire
ammunition manufacturing operations from East Alton,
IL to Oxford, MS.
(c) Acquisition costs for the year ended December 31,
2012 were related to the acquisition of KA Steel.
(d) Other operating (expense) income for the year ended
December 31, 2013 included a gain of $1.5 million on
the sale of two former manufacturing sites. Other
operating (expense) income for the three months and
year ended December 31, 2012 included $4.9 million
of insurance recoveries for business interruption
related to an outage at one of our customers in the
first half of 2012.
(e) Interest expense was reduced by capitalized interest
of $0.1 million and $2.1 million for the three
months ended December 31, 2013 and 2012,
respectively, and $1.1 million and $7.4 million for
the years ended December 31, 2013 and 2012,
respectively.
(f) Other income (expense) included $1.5 million and $4.4
million of expense for our earn out liability from
the SunBelt acquisition for the three months ended
December 31, 2013 and 2012, respectively, and $7.9
million and $11.5 million for the years ended
December 31, 2013 and 2012, respectively. Other
income (expense) for the three months and year ended
December 31, 2013 also included a gain of $6.5
million on the sale of our equity interest in a
bleach joint venture.
Olin Corporation
Segment Information (a)
Three Months Years Ended
Ended December 31, December 31,
(In millions) 2013 2012 2013 2012
------------ ---- ---- ---- ----
Sales:
Chlor Alkali Products $322.2 $336.4 $1,412.3 $1,428.9
Chemical Distribution 80.7 108.7 406.4 156.3
Winchester 178.4 155.8 777.6 617.6
Intersegment Sales Elimination (b) (19.2) (13.3) (81.3) (18.1)
--------------------------------- ----- ----- ----- -----
Total Sales $562.1 $587.6 $2,515.0 $2,184.7
----------- ------ ------ -------- --------
Income before Taxes:
Chlor Alkali Products (c) $30.7 $54.3 $203.8 $263.2
Chemical Distribution - 2.6 9.7 4.5
Winchester 34.1 16.5 143.2 55.2
Corporate/Other:
Pension Income (d) 6.6 6.7 26.6 27.2
Environmental Expense (e) (5.3) (1.6) (10.2) (8.3)
Other Corporate and Unallocated Costs (29.0) (15.2) (79.0) (70.7)
Restructuring Charges (f) (1.4) (2.5) (5.5) (8.5)
Acquisition Costs (g) - - - (8.3)
Other Operating (Expense) Income (h) (0.6) 6.1 0.7 7.6
Interest Expense (i) (9.9) (8.1) (38.6) (26.4)
Interest Income 0.3 0.3 0.6 1.0
Other Income (Expense) (j) 5.0 (4.4) (1.3) (11.3)
Income before Taxes $30.5 $54.7 $250.0 $225.2
------------------- ----- ----- ------ ------
(a) Unaudited.
(b) Intersegment sales elimination represents the sale of caustic
soda, bleach, potassium hydroxide, and hydrochloric acid
between Chemical Distribution and Chlor Alkali Products, at
prices that approximate market.
(c) Earnings of non-consolidated affiliates are included in the
Chlor Alkali Products segment results consistent with
management's monitoring of the operating segments. The
earnings from non-consolidated affiliates were $0.4 million
and $1.0 million for the three months ended December 31, 2013
and 2012, respectively, and $2.8 million and $3.0 million for
the years ended December 31, 2013 and 2012, respectively.
During October 2013, we sold our equity interest in a bleach
joint venture.
(d) The service cost and the amortization of prior service cost
components of pension expense related to the employees of the
operating segments are allocated to the operating segments
based on their respective estimated census data. All other
components of pension costs are included in Corporate/Other
and include items such as the expected return on plan assets,
interest cost and recognized actuarial gains and losses.
(e) Environmental expense for the years ended December 31, 2013
and 2012 included $1.3 million and $0.1 million,
respectively, of recoveries from third parties for costs
incurred and expensed in prior periods.
(f) Restructuring charges for the three months and years ended
December 31, 2013 and 2012 were associated with exiting the
use of mercury cell technology in the chlor alkali
manufacturing process and the ongoing relocation of our
Winchester centerfire ammunition manufacturing operations
from East Alton, IL to Oxford, MS.
(g) Acquisition costs for the year ended December 31, 2012 were
related to the acquisition of KA Steel.
(h) Other operating (expense) income for the year ended December
31, 2013 included a gain of $1.5 million on the sale of two
former manufacturing sites. Other operating (expense) income
for the three months and year ended December 31, 2012
included $4.9 million of insurance recoveries for business
interruption related to an outage at one of our customers in
the first half of 2012.
(i) Interest expense was reduced by capitalized interest of $0.1
million and $2.1 million for the three months ended December
31, 2013 and 2012, respectively, and $1.1 million and $7.4
million for the years ended December 31, 2013 and 2012,
respectively.
(j) Other income (expense) included $1.5 million and $4.4 million
of expense for our earn out liability from the SunBelt
acquisition for the three months ended December 31, 2013 and
2012, respectively, and $7.9 million and $11.5 million for
the years ended December 31, 2013 and 2012, respectively.
Other income (expense) for the three months and year ended
December 31, 2013 also included a gain of $6.5 million on the
sale of our equity interest in a bleach joint venture.
Olin
Corporation
Consolidated
Balance Sheets
(a)
December 31, December 31,
(In millions,
except per
share data) 2013 2012
------------- ---- ----
Assets:
Cash & Cash
Equivalents $307.8 $165.2
Accounts
Receivable,
Net 280.1 299.0
Income Taxes
Receivable 1.9 8.2
Inventories 186.5 195.1
Current
Deferred
Income Taxes 50.4 61.3
Other Current
Assets 13.2 20.3
------------- ---- ----
Total Current
Assets 839.9 749.1
Property, Plant
and Equipment
(Less
Accumulated
Depreciation
of $1,259.1
and $1,164.0) 987.8 1,034.3
Prepaid Pension
Costs 1.7 2.1
Restricted Cash 4.2 11.9
Deferred Income
Taxes 9.1 9.1
Other Assets 213.1 224.1
Goodwill 747.1 747.1
-------- ----- -----
Total Assets $2,802.9 $2,777.7
------------ -------- --------
Liabilities and
Shareholders'
Equity:
Current
Installments
of Long-Term
Debt $12.6 $23.6
Accounts
Payable 148.7 174.3
Income Taxes
Payable 1.7 7.6
Accrued
Liabilities 244.5 228.5
------------ ----- -----
Total Current
Liabilities 407.5 434.0
Long-Term Debt 678.4 690.1
Accrued Pension
Liability 120.4 164.3
Deferred Income
Taxes 115.7 110.4
Other
Liabilities 382.8 380.5
------------ ----- -----
Total
Liabilities 1,704.8 1,779.3
------------ ------- -------
Commitments and
Contingencies
Shareholders'
Equity:
Common Stock,
Par Value $1
Per Share,
Authorized
120.0 Shares:
Issued and
Outstanding
79.4 Shares
(80.2 in 2012) 79.4 80.2
Additional
Paid-In
Capital 838.8 856.1
Accumulated
Other
Comprehensive
Loss (368.1) (371.3)
Retained
Earnings 548.0 433.4
Total
Shareholders'
Equity 1,098.1 998.4
-------------- ------- -----
Total
Liabilities
and
Shareholders'
Equity $2,802.9 $2,777.7
-------------- -------- --------
(a)
Unaudited.
Olin Corporation
Consolidated Statements of Cash Flows (a)
Years Ended
December 31,
(In millions) 2013 2012
------------ ---- ----
Operating Activities:
Net Income $178.6 $149.6
Earnings of Non-consolidated Affiliates (2.8) (3.0)
Gain on Disposition of Non-consolidated
Affiliate (6.5) -
Gains on Disposition of Property, Plant and
Equipment (0.4) (2.1)
Stock-Based Compensation 8.8 6.2
Depreciation and Amortization 135.3 110.9
Deferred Income Taxes 12.4 42.5
Qualified Pension Plan Contributions (1.0) (0.9)
Qualified Pension Plan Income (24.1) (24.8)
Changes in:
Receivables 18.9 1.2
Income Taxes Receivable/Payable 0.4 0.1
Inventories 8.6 17.9
Other Current Assets 0.7 (0.1)
Accounts Payable and Accrued Liabilities 1.0 (0.7)
Other Assets 1.3 0.3
Other Noncurrent Liabilities (14.5) (17.9)
Other Operating Activities 0.3 -
-------------------------- --- ---
Net Operating Activities 317.0 279.2
------------------------ ----- -----
Investing Activities:
Capital Expenditures (90.8) (255.7)
Business Acquired in Purchase Transaction,
Net of Cash Acquired - (310.4)
Proceeds from Sale/Leaseback of Equipment 35.8 4.4
Proceeds from Disposition of Property, Plant
and Equipment 4.6 8.6
Distributions from Affiliated Companies, Net 1.5 1.3
Restricted Cash Activity 7.7 39.8
Other Investing Activities (2.6) (0.4)
-------------------------- ---- ----
Net Investing Activities (43.8) (512.4)
------------------------ ----- ------
Financing Activities:
Long-Term Debt:
Borrowings - 200.0
Repayments (23.7) (19.9)
Earn Out Payment - SunBelt (17.1) (15.3)
Common Stock Repurchased and Retired (36.2) (3.1)
Stock Options Exercised 8.8 1.3
Excess Tax Benefits from Stock-Based
Compensation 1.6 0.7
Dividends Paid (64.0) (64.1)
Deferred Debt Issuance Costs - (6.0)
Net Financing Activities (130.6) 93.6
------------------------ ------ ----
Net Increase (Decrease) in Cash and Cash
Equivalents 142.6 (139.6)
Cash and Cash Equivalents, Beginning of Year 165.2 304.8
-------------------------------------------- ----- -----
Cash and Cash Equivalents, End of Period $307.8 $165.2
---------------------------------------- ------ ------
(a) Unaudited.
Olin Corporation
Non-GAAP Financial Measures (a)
Olin's definition of Adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization) is net income plus an
add-back for depreciation and amortization, interest expense (income), and income tax expense less a deduction for other
income (expense). Adjusted EBITDA is a non-GAAP financial measure. Management believes that this measure is meaningful
to investors as a supplemental financial measure to assess the financial performance of our assets without regard to
financing methods, capital structures, taxes, or historical cost basis. The use of non-GAAP financial measures is not
intended to replace any measures of performance determined in accordance with GAAP and Adjusted EBITDA presented may not be
comparable to similarly titled measures of other companies.
Three Months Years Ended
Ended December
31, December 31,
(In millions) 2013 2012 2013 2012
------------ ---- ---- ---- ----
Reconciliation of Net Income to Adjusted EBITDA:
Net Income $24.7 $34.6 $178.6 $149.6
Add Back:
Interest Expense 9.9 8.1 38.6 26.4
Interest Income (0.3) (0.3) (0.6) (1.0)
Income Tax Expense 5.8 20.1 71.4 75.6
Depreciation and Amortization 34.1 32.2 135.3 110.9
----------------------------- ---- ---- ----- -----
EBITDA 74.2 94.7 423.3 361.5
Deduct:
Other Income (Expense) (b) 5.0 (4.4) (1.3) (11.3)
------------------------- --- ---- ---- -----
Adjusted EBITDA $69.2 $99.1 $424.6 $372.8
--------------- ----- ----- ------ ------
(a) Unaudited.
(b) Other income (expense) included $1.5 million and
$4.4 million of expense for our earn out
liability from the SunBelt acquisition for the
three months ended December 31, 2013 and 2012,
respectively, and $7.9 million and $11.5 million
for the years ended December 31, 2013 and 2012,
respectively. Other income (expense) for the
three months and year ended December 31, 2013
also included a gain of $6.5 million on the sale
of our equity interest in a bleach joint venture.
SOURCE Olin Corporation
