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Olin 3Q 2021 results: sales up 62% to $2.34 billion, reverses year ago operating loss

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Olin 3Q 2021 results: sales up 62% to $2.34 billion, reverses year ago operating loss

October 25, 2021 - 12:24
Posted in:

CLAYTON, MO, Oct. 21, 2021 (PRNewswire) -Olin Corporation (NYSE: OLN) announced financial results for the third quarter ended September 30, 2021.

Third quarter 2021 reported net income was $390.7 million, or $2.38 per diluted share, which compares to third quarter 2020 reported net loss of $736.8 million, or $4.67 per diluted share. Third quarter 2021 adjusted EBITDA of $707.0 million excludes depreciation and amortization expense of $145.2 million and restructuring charges of $3.6 million. Third quarter 2020 adjusted EBITDA was $195.5 million. Sales in the third quarter 2021 were $2,340.1 million compared to $1,437.6 million in the third quarter 2020.

Scott Sutton, Chairman, President and Chief Executive Officer, said, "Solid quarterly adjusted EBITDA was achieved despite production interruptions from hurricanes, raw material cost volatility, and supply-chain disruptions. Our third quarter performance continues to demonstrate the resilience of our unique winning model that adapts in real-time to prioritize 'value first' amid a backdrop of improving structural fundamentals. Olin drove sequential pricing improvement in the third quarter 2021 for chlorine, chlorine derivatives, including epoxy resins, and caustic soda.

"We expect Chlor Alkali Products and Vinyls fourth quarter segment results to increase sequentially, while the Epoxy and Winchester segment fourth quarter results are expected to seasonally decline from third quarter 2021 levels. Overall, we also expect fourth quarter 2021 adjusted EBITDA to be comparable to or slightly lower than third quarter 2021 levels."

SEGMENT REPORTING

Olin defines segment earnings as income (loss) before interest expense, interest income, goodwill impairment charges, other operating income (expense), non-operating pension income, other income, and income taxes.

CHLOR ALKALI PRODUCTS AND VINYLS

Chlor Alkali Products and Vinyls sales for the third quarter 2021 were $1,062.4 million compared to $755.1 million in the third quarter 2020. The increase in Chlor Alkali Products and Vinyls sales was primarily due to higher pricing, partially offset by lower volumes. Third quarter 2021 segment earnings were $263.0 million compared to $37.8 million in the third quarter 2020. The $225.2 million increase in segment earnings was primarily due to higher pricing across all products. The segment earnings also reflected lower volumes and higher raw material and operating costs. Chlor Alkali Products and Vinyls third quarter 2021 results included depreciation and amortization expense of $116.7 million compared to $112.1 million in the third quarter 2020.

EPOXY

Epoxy sales for the third quarter 2021 were $877.7 million compared to $476.1 million in the third quarter 2020. The increase in Epoxy sales was primarily due to higher pricing. Third quarter 2021 segment earnings were $215.2 million compared to $14.9 million in the third quarter 2020. The $200.3 million increase in Epoxy segment earnings was primarily due to higher product margins, as higher pricing was partially offset by higher benzene and propylene raw material costs. The segment earnings also reflected higher operating costs. Epoxy third quarter 2021 results included depreciation and amortization expense of $21.1 million compared to $23.9 million in the third quarter 2020.

WINCHESTER

On October 1, 2020, Winchester began operating the Lake City U.S. Army Ammunition Plant (Lake City). Winchester sales for the third quarter 2021 were $400.0 million compared to $206.4 million in the third quarter 2020. Third quarter 2021 segment earnings were $115.3 million compared to $21.0 million in the third quarter 2020. The increase in third quarter sales and segment earnings was primarily due to higher commercial and military sales, which included ammunition produced at Lake City, and higher commercial ammunition pricing. The segment earnings were also impacted by higher commodity and other materials costs. Winchester third quarter 2021 results included depreciation and amortization expense of $5.7 million compared to $5.0 million in the third quarter 2020.

CORPORATE AND OTHER COSTS

Other corporate and unallocated costs in the third quarter of 2021 decreased $6.9 million compared to the third quarter 2020 primarily due to lower costs associated with the absence of implementation of new enterprise resource planning, manufacturing, and engineering systems, and the related infrastructure costs. This project was completed in late 2020. This reduction was partially offset by higher incentive costs, which includes mark-to-market adjustments on stock-based compensation.

Third quarter 2021 charges to income for environmental investigatory and remedial activities were $3.6 million compared to $12.5 million in the third quarter 2020. The charges for the third quarter 2020 relate primarily to future remedial and investigatory activities associated with a former manufacturing site.

CASH, DEBT REDUCTION AND SHARE REPURCHASES

The cash balance on September 30, 2021, was $306.1 million. During 2021, Olin has reduced debt by $851.1 million, ending third quarter 2021 with net debt of $2,718.5 million and a net debt to adjusted EBITDA ratio of 1.3 times. Through a combination of improved adjusted EBITDA, disciplined capital spending and debt reduction, Olin expects its net debt to adjusted EBITDA ratio to improve to approximately one time by year end 2021. For the full year 2021, Olin is targeting debt reduction of approximately $1.1 billion using cash generated from operations.

During third quarter 2021, approximately 1.5 million shares of common stock were repurchased at a cost of $68.3 million. In 2021, Olin expects, at a minimum, for share repurchases to cover dilution. As of September 30, 2021, Olin had approximately $236 million available under its current share repurchase authorization.

CONFERENCE CALL INFORMATION

Olin senior management will host a conference call to discuss third quarter 2021 financial results at 9:00 a.m. Eastern time on Friday, October 22, 2021. Remarks will be followed by a question and answer session. Associated slides, which will be available the evening before the call, and the conference call will be accessible via webcast through Olin's website, www.olin.com, under the third quarter conference call icon. An archived replay of the webcast will also be available in the Investor Relations section of Olin's website beginning at 12:00 p.m. Eastern time. A final transcript of the call will be posted the day following the event.

COMPANY DESCRIPTION

Olin Corporation is a leading vertically-integrated global manufacturer and distributor of chemical products and a leading U.S. manufacturer of ammunition. The chemical products produced include chlorine and caustic soda, vinyls, epoxies, chlorinated organics, bleach, and hydrochloric acid. Winchester's principal manufacturing facilities produce and distribute sporting ammunition, law enforcement ammunition, reloading components, small caliber military ammunition and components, and industrial cartridges.

[For the full report and financial tables, click here.]