OLN - Earnings call transcript Q3 2017

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Operator

Good morning, and welcome to the Olin Corporation Third Quarter 2017 Earnings Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Larry Kromidas. ahead. go Please

Larry P. Kromidas

Good Brian. Thank morning, you, everyone.

include begin remind from projected. to we the note session remarks, that I performance. forward-looking of associated results want that this question-and-answer could will prepared our and morning, these everyone following regarding presentation, Please those and estimates future Before slides this statements statements along actual are the with materially differ

Risk to without copy President, Jim and in the third International; Press today's Investors quarter and earnings earnings Executive press of press Executive and information Chlor release. financial factors the on The in morning Officer; Slater, section Some and Products Events. limitation and A available from described and John will Fischer, data and the projections Chief our release Financial of Varilek, are our President Chairman, and website available of Vice President be Vice cause most and results that slides Calendar under section our transcript our other differ Pat and actual John are and in recent are Factors President, of XX-K Todd could Officer. Executive With Vice this and Epoxy Executive Services; President and Olin's Dawson, me Vinyls Releases. Vice Chief Alkali McIntosh, under Synergies President President, Systems; Form

to John? over Fischer. John call the turn I'll Now,

John E. Fischer

Good Larry. you, morning Thank today. for and you us thank joining

our we discuss the review will third call, quarter. outlook morning's first fourth results this quarter for During our and

I'll third review quarter. the If you turn slide X, to

was $XXX.X million. quarter EBITDA Third XXXX adjusted

also through due plants availability. and operation million to by third XXXX raw production the was Products, third reduced at Olin's outages unabsorbed quarter segment manufacturing adjusted customer million Olin earnings the Harvey, from to were EBITDA Vinyls XXXX from reduce representing logistics result from result hurricane. by million, impacted by in that material its late to $XX.X costs, As constraints, reduced of quarter a facility flooding a of fixed customers incremental Texas Olin $XX.X forced $XX.X Hurricane profit the Freeport, third earnings supply result Other mid-October Epoxy hurricane. Texas as and Alkali continue August of $XX.X and segment Harvey, Hurricane Chlor a and reduced quarter were million million XXXX as of costs of sales. reduced $XX by lost was

Excluding would Olin turnaround quarter cost decline sequential the in have quarter, third approximately compared million in of outages the adjusted to $XX.X impact third hurricane, with discussion second million we Consistent and EBITDA maintenance XXXX. in XXXX. $XXX the earned a of our last the of of quarter experienced the quarter

business Vinyls Epoxy quarter, Products lower second turnaround In in the The and which lower compared soda ethylene and improved pricing over by costs. costs from benefited business outage dichloride sequentially Chlor addition, improved margins pricing. to was improved caustic Alkali offset partially hydrocarbon the experienced and

Epoxy Olin. consistent best acquired quarter. to Excluding the Epoxy for been XXXX, earnings was would adjusted forecasting. that business have level the with the been we've quarter of since hurricane, million third Winchester of earned commercial would softer the of $XX approximately it by the in This the demand of quarter third the impact in which have the EBITDA earnings is business experience continued

Third XXXX quarter approximately XXXX the declined levels. quarter ammunition third commercial to compared XX% sales

summarized with X. Chlor Alkali to on which and turning Now the first is slide Products Vinyls, business segments,

improve the and by in lower Electricity of partially $XX.X quarter adjusted Vinyls bleach costs, pricing improvement Vinyls partially hurricane. costs, and the to Company caustic XXXX natural decline Chemical third levels. year-over-year. on we $XX sales XX-year compared $XXX.X or acid $XXX.X offset manufacturing of million Depending sales caustic over is fourth by improve to dichloride soda million at offset lower third now in prices business cost Products by additional from $XX supply quarter economics. although of the forecast million, XXXX Alkali of ethane quarter third unabsorbed ethylene producer maintenance hydrochloric reflects pricing, expect recorded and third this million pricing to costs costs third and third with overall sales. Third improvement Harvey. and also XXXX prices The lower turnaround million. forecast to improved year-end. ethylene the dichloride is volumes quarter sequentially pricing Chlor costs. driven we payment Chlor increased and costs, of pricing EBITDA from begin reflects chlorine, higher EBITDA ethylene approximately quarter, dichloride the Alkali increase The resulting $XXX.X driven market-based XX% ethylene lost profit of adjusted XXXX is Late XXXX Hurricane soda, higher increased to ethylene Products to XXXX quarter secure associated a Dow reduced in Fourth the prices, million approximately increased from the million, quarter, from and agreement made $XX expected by an to supply ethylene million annual savings of generate fixed by in to gas of $XXX and XX% quarter,

the third reflect ton these domestic $XX export quarter pricing, X% Olin markets. higher quarter will of index in and quarter. fourth beginning Olin prices in increased to increases soda the in soda the second The both caustic approximately the soda XX% quarter system the third improved and XXXX compared domestic the quarter and strength increased the to benefits XXXX the $XX in export in turning caustic index levels. caustic third These than ton the from were of spot quarter. per Now third contract realize in prices increased per

the caustic approximately quarter, increases in $XXX we caustic We in fourth in on experienced price in XXXX. impact prices adjusted quarter. would be EBITDA the the expect additional at constant million the If soda indices the remain soda levels third positive

caustic exported. being currently in XX% soda pricing, improvements is With the caustic soda approximately Olin's export

in chlorine. were prices of quarter XXXX there pricing quarter second the levels, chlorine believe third we similar to momentum is positive Although for

ton, price the fourth contract by increased which have $XX benefit per Third monthly indices primarily quarter chlorine quarter. will XXXX

Additionally, and were quarter of $XX effective that there acid also fourth announcements the to third the were Hydrochloric XXXX They're prices increase of chlorine price XX% higher October X. $XX quarter to are in the forecast further per increase in quarter. increased level. ton than second

in Finally, quarter... experienced the volumes Difficulty] [Technical third bleach improved business (X:XX-XX:XX) the

Operator

speakers. is I they the And like would to have the This if begin? operator. reconnected

John E. Fischer

X. start This and on happened here. apologize the Chlor whatever I'm back to again. Okay. Vinyls Products John, I go is which is and slide with Alkali for going section,

$XX quarter, Chlor quarter, fourth XXXX third resulting of quarter or forecast business by improvement over third partially sequentially quarter $XXX.X prices, pricing soda, caustic third in Fourth million million and third bleach sales. million XXXX in offset in year-over-year. Products decline costs XXXX improve million approximately gas third the XX-year and compared pricing natural lost quarter on made although Alkali is The Hurricane also Hurricane of $XXX.X increased a and The improved and $XX Chlor Vinyls expect associated agreement producer ethylene Alkali to supply market-based costs, reflects the XX% Late XXXX acid, Dow million. an $XXX Company pricing lower chlorine, $XX.X million The $XXX.X year-end. to payment million forecast additional now of improvement to economics. costs is quarter improve reduced ethylene of annual and supply Harvey. EBITDA adjusted increase reflects the quarter, Third increased higher to manufacturing lower ethylene of and sales maintenance adjusted Vinyls profit driven XXXX to higher third prices, ethane ethylene Harvey. volumes from by approximately by the of in prices ethylene of dichloride unabsorbed XX% generate Products offset expected EBITDA begin from lower quarter dichloride the to at costs from by driven we savings and dichloride soda overall pricing, costs. XXXX caustic hydrochloric ethylene from Chemical costs, quarter pricing and $XX secure is fixed increased levels. million, Depending turnaround of to by this partially sales to Electricity with we to

quarter index soda in beginning quarter. and the the from realize caustic pricing in in the higher strength the the improved third the than the the quarter Olin increased of Olin in domestic fourth to export system per ton These The to increased reflect and caustic were XXXX approximately third X% the increased domestic in contract of in export soda quarter pricing, levels. both compared third turning these increases XXXX quarter. spot per markets. second XX% $XX Now caustic quarter prices soda and index benefit third $XX will ton

constant We soda caustic positive we remain would in $XXX adjusted expect If million fourth impact quarter. additional be the increases EBITDA in price quarter, at the indices soda XXXX. in approximately experienced the caustic on levels the in the third prices

recent the pricing, exported. caustic currently caustic export improvements the With XX% of being approximately soda in soda is Olin's

third in we pricing there similar quarter second were XXXX is for of the believe Although the chlorine chlorine. levels, momentum prices to positive quarter

ton, The third primarily fourth quarter XXXX benefit which have quarter. indices the by price will $XX increased contract per monthly chlorine

further quarter XX% $XX the in and Additionally, fourth the in of X. forecast of October chlorine quarter. level. that the acid increased to price quarter there per are third prices were $XX ton to increase also increase effective They're than announcements Hydrochloric were second XXXX higher

Australia Finally, full to slide caustic view XX% with that. of plant by exports On volumes to exports caustic the Freeport, tons. exports increasing to approximately the a facts forecast trend XX%. million volumes down, approximately level the while to soda the Europe approximately in up. last and the XX% record to level. quarter bleach Europe This year's grow caustic soda X.X Texas, recent a from year, couple experienced continue Olin to are soda prices. maintain States both third are continues the of increased increase third China on approximately quarter long-term at summarized is Through the exports year-over-year, to At driven compared time, bleach XXXX business a caustic into to In a X% trend August, forecast continue approximately XXXX, support improved positive same and basis, imports from caustic from have soda of to year X, facility. of of last new United

the summarized to is now ahead our slide Epoxy which move segment, on of performance X. us Let

third XXXX approximately Third quarter higher volumes product associated levels million result Harvey. XXXX to or offset lower by a partially $XX.X of by pricing, as increased compared Hurricane sales X% Epoxy the quarter with

offset Third $XX.X million the with the associated impact sales approximately and Hurricane million costs, than additional the year-over-year, costs, with $XX principally reduced primarily quarter, third manufacturing benzene of raw quarter the In propylene fixed Epoxy higher Harvey. and unabsorbed declined due lost product associated million of material EBITDA costs to XXXX $XX.X from adjusted of prices profits higher more the pricing.

depending we've costs, during increase XXXX, first significant hydrocarbon and experienced margins. of increases, region, the benzene propylene. Epoxy the which were compressed XX% half the approximately for XX% These As on for discussed business a in

been costs result, of and raw improving quarter as by costs. year-over-year and offset As year-over-year Vinyl for the improved XX% XXXX the negatively these effects the XXXX, increases and quarter Post price Despite in benefit to saw fourth We volumes higher These XXXX. operating and offset Chlor initiated successful North increases by cost outage Epoxy caustic of and approximately and increases had will raw offset price material these the of approximately approximately increases a half in first the America year-over-year costs. increased months Harvey, higher North in second levels. Hurricane Europe. Epoxy costs. our costs the for August from nine again announced been during have material Alkali Hurricane costs. both have rates to Chlor have initiated Alkali sale. input hydrocarbon The benzene impact have third than been price volume propylene reminder, making these a price additional American unplanned we Products input experienced during were improvements increases volumes increased X% higher first Further quarter raw costs. propylene increases and And benzene available soda X% segment material the increased more Harvey,

experienced will forecasted to in results The fourth and our As majority planned quarter we Epoxy maintenance turnaround segment the increases. business. of impact Stade, by facility in will at a look XXXX Germany, XX-day Hurricane be ahead, Epoxy fourth propylene benzene Harvey addition the quarter cost the production also reflect

costs hydrocarbon For expect and and business the improved are costs, the offset will both have year-over-year, but turnaround Harvey. outage to increased full be the Hurricane and higher Epoxy volumes year XXXX, by these pricing impact more we than forecasted benefits of

$XX we range. will be believe the year Epoxy million $XX As a EBITDA now adjusted in result, the full to that million XXXX

summarized our on which Winchester is X. business, discuss Let's slide

Third to XXXX compared Winchester XX% approximately quarter quarter sales third decreased XXXX.

adjusted $XX commercial from EBITDA by The sales. ammunition in quarter Winchester EBITDA. of lower declined million sales Third of military decrease EBITDA XXXX quarter adjusted XXXX and volumes, result higher million approximately adjusted offset partially $XX was third the

The XXXX. quarter and mix, was EBITDA ammunition Winchester selling material increased of adjusted quarter less commodity levels other third commodity by lower costs approximately third XXXX lower favorable higher impacted to experience million $X and product continues also costs compared and other demand. material a compared to have prices XXXX. Year-to-date, to commercial

cases, benefited quarter have broad-based been sales, year-over-year customers increases Winchester's experienced is is an quarter This sales reducing consistent XXXX, third and during ammunition sales which XXXX customers. military XX% the sales of have Winchester XXXX from commercial commercial Winchester continue XXXX. During higher the The in year-to-date from been to Winchester most military decline. in third has approximate ammunition the exceeded decline their their inventory, into with in has XXXX. across forecast benefit decline purchases. of year-over-year

EBITDA Now, the X%. with slide on outlook adjusted opportunities the of is we fourth which approximately to downside would X. fourth and quarter We're million, quarter, to risks $XXX discuss forecasting upside be for approximately like XXXX

stronger fourth to and segment fourth Ethylene costs includes due Germany. ethylene the investment. will million in year-over-year Alkali from forecast the EBITDA reflect estimate Our ethylene is production unfavorable to XXXX recent Stade, results across decline The the benefit is and Hurricane million Products lower sequentially volumes to planned quarter pricing our fourth quarter $XX quarter. forecast dichloride to from fourth of facility Harvey. turnaround in from and most XXXX to XX-day at third impact an $XX products Epoxy pricing maintenance Vinyls the our Chlor business of quarter adjusted quarter

outages overall As quarter million third costs maintenance $XX to displayed on slide by and turnaround chemicals forecast compared quarter XX planned approximately the fourth the the appendix, increase in are in to Winchester's fourth segment be material of sales the ammunition other commodity XXXX. due expected and below continuation to XXXX XXXX higher lower of quarter levels fourth quarter to commercial and earnings costs. are

during With further businesses, fourth third and the our call and to over Harvey Chlor that regarding volume I call second fundamentals years the confidence in challenged improve. turn the by over Epoxy, and the quarter, Todd, want Hurricane of stating the us Alkali turning conclude and Before to This continue chemical by significantly we pricing to both and I'll confidence while to were by beyond. maintenance gives quarter our that, fourth impacted turnarounds the and Todd. quarters, in outages quarter

Todd A. Slater

John. Thanks,

which turn slide on Let's to cash is X. our forecast, flow

third which payments During cash XXXX, the quarter. $XXX approximately $XXX expect in we free million to dividend the of before ethylene flow and million investment, generate made before late was

utilization cash taxes, not million from be tax two a reduce be the Starting proceeds EBITDA the year of effective our last XX% we leverage of loss ratio do midpoint believe XXXX. left $XX on far waterfall In is growth expect will tax created the will approximately but reduction in we in end range, times. debt EBITDA add XXXX, expectation back refund. of XX% with that debt tax operating the Our million full our net the over reflects income we X.X to forecast of by to that adjusted years. the rate EBITDA combination of to carryforwards the This the in chart, reflecting and the book $XXX XXXX, the of payer to net

XXXX. carryforwards cash approximately of to $XX loss operating shield in tax provide million net expect a We

between capital – to and $XXX of $XX provide of cash with expect in Additionally, carryforwards XXXX million. Column to $XXX expect annual This $XXX a future the to capital shield million unused maintenance million. operating $XX to currently loss million net approximately the spending tax we of million we three in million. exit $XXX years approximately million spending XXXX $XXX includes shows

are operation and the businesses. expenses and IT Dow the be planning, $XXX across our include global is be provide of approximately control the acquired spending million. completed to the and and processes During of effectiveness, incremental expenses associated cost multi-year IT an project to anticipated with $X.X during project investment. The our quarter capital business million, The the for a the The the chemicals implement engineering standardize efficiency maximizing been forecast as across project. XXXX. associated includes million of continue to across to required determine infrastructure. the to new we capital of included to products we forecast expect expect completion expected million million a objective information will these the chlorine objective third When to heritage is enterprise the add have EBITDA. return the expenses IT with approximately cost project project expenses to project project. this $XX XXXX, the is manufacturing total In of back Olin and $X this XXXX, multi-year operation. technology be of systems XXXX project through project back The and both $XXX annual on of add resource adjusted completed, a The is IT spending savings

to million during $XXX accelerate fourth the working XXXX Olin program to the receivables. receivables, expect that to an expanded additional $XX now capital had which the result reduction the reduction a cash of restructuring We expect include realize approximately entered be a a and XXXX. reduction is in column. Vinyls turning Now of Winchester forecast. column, with year, collection Last into in higher Epoxy million of Alkali prior our of program We receivables product permanent Chlor The inventory the This million. in represents create by costs an of estimate offset next increased consistent expense. items and column at In $XX prices. one-time as interest and next will integration and this Products

have approximately we of and interest those we're in forecasting will higher XX% XXXX. rates, experienced We our interest XXXX at be debt than rates variable

million approximately investment $XXX On the years ethylene far for approximately paying and XX forecasting free right totaling dividends economics. $XX of the $XXX at million of producer quarterly flow million additional column, are year the we cash normal after for our

stock. of Finally, Olin at declared last The on of payable to directors each shareholders share is record Wednesday XXXX dividend XX, Olin's of of board This common dividend $X.XX to on the by on quarterly is November paid October consecutive a business take December the XX, close of Operator, and of company. XXXX. on ready are Question XXXth the to XX questions. Answer Session dividend be now we

Operator

the begin now question-and-answer will We session.

Our with go from question Frank first Fargo. Mitsch Please comes Wells ahead.

Frank J. Mitsch

a half ex-Harvey, essentially is why Yeah. Good the about million $X.X think the year, John, of pricing EBITDA if there million there in billion record talk listen in I year, – back to normalized any reason And QX, run we and you EBITDA annualize the achievable in why $XXX of a $XXX were of any trends is QX, not quarter reason on congrats are XXXX? for on, gentlemen. full rate. that is Is EBITDA as to morning, if where $XXX so Chlor at I ex-Harvey in about plus in Alkali.

John E. Fischer

negative they that is will generally, yes, your on be only XXXX some The question in the there will I than lower as will say, answer because would a first that. half is to But of period outages there impact costs we've be I the the some in are were where year XXXX. meaningfully thing outage said, say, have would Frank,

Frank J. Mitsch

you able very the and when question interplay pricing metals did obviously, I Winchester, one a your then And catch of between prices since was Winchester, the your on you in raw this but Terrific. be right. talk about and might up mean, to well, on to materials costs? the increase can – Alkali Chlor All

John E. Fischer

is problem market that oversupplied. The you you now, that's overall, a have Frank, right vastly have

for competition market share on price. a lot So, there's on of going

do and recently XXXX. from that. I seen indicated in going of step-up would both to in America that starting to We competitors increases of announced the they're North because their Winchester in has benefit copper expect price see have prices, primary have

Frank J. Mitsch

much. you Thank Terrific. so

Operator

Next go question Please comes SunTrust. with from Jason Freuchtel ahead.

Jason A. Freuchtel

morning. good Hey,

John E. Fischer

Jason. Morning,

Todd A. Slater

Good morning.

Jason A. Freuchtel

has proportion those How should in the late we of tone contract think the XXXX? And about contracts your that discussions far? of so been what renew

James A. Varilek

the tone producer this has had a they're terms to supply-demand Varilek. say side right Jason, favorable now. and the we've the been dynamics, I change more Jim positive that would that in in of

discussions profitability have been the to make on of the improvements we positive contract contracts. So and continue the

John E. Fischer

average every in the renew is year. costed so said duration to to we've range, of something three the the what year in XX% contracts Jason, five neighborhood XX% our of And are

Jason A. Freuchtel

great. renewals And impact about think how Okay, to of we P&L? maybe contract the and then, should those timing the the

John E. Fischer

those four think you'll over improve. yield three see I contracts as a and improvement to contracts gradual renew year the period on the

Jason A. Freuchtel

Okay. the guess expect they first we the to I quarter in quarter, But if an the of P&L impact should fourth in renew XXXX?

John E. Fischer

see annually, renew quarter that so the you in a throughout They Yes. first year. apply step-up would the would XXXX in

Jason A. Freuchtel

soda, Okay, in upside I in are potentially expecting strength could you And what there and weakness? to then, guess expectations caustic be great. markets see terms demand forecast? any And to for end to growth X% your that of X%

James A. Varilek

on not in right really around anything. are The I the this is We're and basis. Jason, seeing generally would world. paper seeing markets strong markets now market, weakness global the markets the aluminum that a we're strongest Jim. pulp are say

be seeing. and that we're would Could what I demand there to seeing that's say, could we upside there So, are be globally. yes, upside? strong

Jason A. Freuchtel

you. Thank great. Okay,

Operator

Group. from question Please Next Don go ahead. Susquehanna Financial Carson with comes

Donald David Carson

Just a couple questions.

you realizations of Because some would we've there, of XX, seen Chlor to First as high you've How What show kind be to and higher slide do the increased go can preferable have your of there? on export you sales domestic that, realizations how you export you you flexibility up on that Alkali, commented proportion business. get that the between faster your XX%. sales? on

John E. Fischer

of probably reach Don, limit could that's And the we facilities capability. and probably XX%. our our

Donald David Carson

Winchester. a Okay, on and then follow-up

post-surge about outlook $XXX million. stable talk to used EBITDA You of

data think drawdown urgency it noticed down to the year because to what there is? place, is is or to permanent more administration be this quite change friendly business Clearly, and about around year-to-date? earnings NICS million. million I right seem down X% reduced in pipeline Any $XXX a You've doesn't And from the that for that million with you that $XXX $XXX to reduced a seeing, shipments your demand, the ammunition. we're commercial guidance outlook is cut buy final firearms in same for

John E. Fischer

Don, longer we say, $XXX do would of I average able I believe would term think to million be we EBITDA.

we that comment think I majority of our year the the this the commercial ammunition in large remarks than made customers have more sold bought. they've

would So actual pipeline drawdown. clearly the It's a there's know to what's very at us level. difficult that we say happening for consumer

I back a this So pipeline clearly would go year. to drawdown there's

Donald David Carson

question, passed, anniversary then two-year Trust now the plans that Winchester? And Okay. are the or retain with Reverse divest to future Morris you respect what whether final has

John E. Fischer

have regarding business Olin. We other cash business it very very capital continues comments made I plans good Winchester, flow would any good not to for a with say than our and on return a be

Donald David Carson

Okay. Thank you.

Operator

from Arun Capital with comes RBC go question next Please The ahead. Viswanathan Markets.

Arun Viswanathan

morning. Good Great. Thanks.

John E. Fischer

morning. Good

Arun Viswanathan

a Just wanted of to on some ask earlier. question your comments

So, the correctly, table that if you you there's an heard year. increases think for incremental add of then, $XXX on EBITDA said if price quarter third QX. I some holds, more would pricing And that I next million

last IHS think $XX index reflected night. the I in

or... run rate that $X.XX you're with already, you're $X.X Is starting year Is the if maintenance. rate assume to holds, So, about I take all right billion the billion? actual maybe for $XX that that and that at is million run you it off guess, next of fair

John E. Fischer

had leave in I math another to We that that forecasting think $X and is you. $XX quarter. IHS the fourth agree I'd

we keep half typically index about realize Just price mind in of increases.

Arun Viswanathan

market. Okay, can EDC the great. And discuss just you maybe then,

You in did recovery expect say some you QX. that

plays would what into how to as drive that Thanks. curious ethylene Just that? and

James A. Varilek

to Varilek. is in pull the drivers the of quarter reason year little on place of push, in show that uptick There's demand. a of time. This we restocking the expect takes but generally mostly There's point PVC during in And Asia. there's end the some fourth bit market an is factors. Arun. The two that Jim EDC the also obviously a the towards are Hi, cost

take pull. purchases capacity, expect should Alkali last dynamics in Alkali will associated help capacity And that so, little as better us Chlor the we but of experienced of will and months. also degree we've will mercury increase some also the there's bit with bring Europe on a few that, the situation result EDC Chlor And into increase a than – down

Arun Viswanathan

just then operating allow maybe greater caustic you lastly think on for growth offtake. year? to should noted next is expect your you rates year? and continue Epoxy, next to Epoxy year for improve $XX $XX you If you're Thanks. that soda do million, for million And What's this that'll expectation

John E. Fischer

any in have guidance. in tell you EBITDA We should in not given I on would growth based XXXX XXXX expect view, we our long-term versus Epoxy.

Arun Viswanathan

Thanks. Okay.

Operator

Please question Aleksey Nomura Instinet. go comes with ahead. from next The Yefremov

Aleksey Yefremov

think it impact in do that is? How Thank you. you you about might morning, prices Good sustainable How business your soda everyone. Caustic in jumped do coming Asia $XXX weeks. months? in recent think

James A. Varilek

with impacting years and that product And would remain is about would are to mercury you're policies that the almost – fundamentals fundamentals Aleksey, Europe, the that that. that talked environmental up show with don't whatever we in this change see world anything the so say in that any without pricing. this keeping in last the the changing now for starting and forth place demand, home, I actually for two Jim. capacity see around China additions fundamentals more the in shutdowns we've the

sustainable. So we it's think very

Aleksey Yefremov

Congress China. guess, short-term just such as Party the the some maybe were factors in and I it short-term around to clear, hurricane shutdowns So, some there make

may short-term. think don't the have the price trend you overshoot that line that So in

John E. Fischer

be that on more that to Yeah. And pricing, still going I points others the think the peaks there's go slowly, go going to line trend quickly be but same. of

Aleksey Yefremov

to raw getting is net fourth that getting And Do you then? worse material materials prices. fourth the by catch raw with Thank better? are raw in quarter and margin up in your you. your outlook also Does also, or for is mean Epoxy, quarter? this your that you're going And what you'll mentioned think quarter then the materials first raising up turning the that you

Pat D. Dawson

we're what unexpected And seeing is spikes Dawson. fourth going post compression the Harvey. these quarter, Pat into is we here this Hurricane Aleksey, Yeah, got since some

for quarter have what catch year have about And November. do a we price to increases So typically, announced been and up costs. takes you that increased saw both material raw those this October with

into we'll position we a as I in So be think go XXXX. good

Aleksey Yefremov

you. Thank

Operator

next go with ahead. Roberts UBS. The John comes question Please from

John Roberts

Thank project you. your with Shintech Was the in expectations? line permitting

John E. Fischer

anything don't that know we had regarding expectations I that. any like

I market. from think years permit. is three the that with through anything we're four just they And it's go impacting permit, if in a to what

John Roberts

Do cost Okay. hurricanes production your of Dow's costs any effect the ethylene from ethylene? Dow on of include

John E. Fischer

No.

John Roberts

Okay. Thank you.

Operator

with comes Next ahead. Research from Kevin Vertical question go Please McCarthy Partners.

Kevin W. McCarthy

Yes. slide referenced sunset Good demand a cell Europe, to John, X, China. mercury you regulations morning. lower reference as Vinyls the the in well as of on in

if wondering supply available directionally expectations Europe from what near-term be? and will Just could and over that the impact about talk your China for you

John E. Fischer

Europe Are from and you China? asking about exports

Kevin W. McCarthy

that's I soda not? of out in some you Well, do of coming regions of that of incremental the Alkali guess, China, in those supply And on restriction would available the or amount the incremental caustic of supply there restriction there then, going see sulfate been question see two world, there? mercury Chlor obviously, now. for Is analogous time you

John E. Fischer

of what look to thing that out from exports terms only to years And is And to a we inquiries year out China. between Europe seen get of answer to we a limit XXX,XXX of into trend between tons we've to tons exports that million occasionally, approaching The – ago X an and have today. soda – caustic in could is caustic seen at way Europe. ship we the zero go average from Europe five of of

been China. North those And we a America big Ecu something nominal of are in about tons. producer into China. exports China, exports that regions. to a see similar aluminum this contract million change. than still I from entering producer of a evidence both morning of two a less U.S. long-term that's an So there very pattern of I quantities coming was out of think in there's X.X say declining There that's And would the out supply

Kevin W. McCarthy

really Thank it's on question, that. a two XXXX then part second you flow. for And cash around

the plans what you well project, IT cash your that as impact any if XXXX, of XXXX. think could expenditure just on us to you wondering preliminary is I your expected thoughts capital as in tell in be mentioned

John E. Fischer

that Kevin, full be on all answer cash of when the give to quarter fourth prefer to we that would the we'll guidance in flow. prepared aspects

Kevin W. McCarthy

you. Thank enough. fair Okay,

Operator

next Please Eric Petrie The go comes Citi. ahead. from with question

Eric B. Petrie

morning. good Hi,

John E. Fischer

Good morning.

Eric B. Petrie

How What or China do into to regulations are in loosen chain? dynamic think ECU seeing that due the tighten you in environmental you is impacted will much and XXXX? capacity

John E. Fischer

obviously spills I been we into that's believe equivalent – tons that the seen X is an we've EDC million million thing shutdown, had there's produced. the China. of X isn't back we produced the think therefore, information And and carbide-based study that in of the on we through obtained isn't we which between based information clearest amount and chlorine done that's that caustic a concrete being most being most have

Eric B. Petrie

rising And Okay. export Question renewals on strategy with impacting your contracts? production? your this to can you up prices, of fast exporting is ramp how XX% domestic of

John E. Fischer

obviously supply It quarter. domestically to course over much ramp contracts the that We have a quickly, probably of up sell. we influences negotiate how we how by very can

Eric B. Petrie

Okay. Thanks.

Operator

question Next go Byrne of from Merrill Lynch. ahead. Bank Steve with Please America comes

Steve Byrne

current Chlor Chlor incremental you. return, say, either go? of such? on if in to how your investment would close greenfield in or attractive Alkali so, At level profitability in and chlorine brownfield Alkali, having are Thank Chlor Alkali, Yes. where interest levels on – And the you

John E. Fischer

small the we interest say, different and have think, to that our place zero. all could would driver that greenfield big it, is debottleneck you look did about the a the large we anybody, And we obviously close moment, plants opportunities that have. time, tell the chlorine. if shouldn't to five at we is I surprise we would very it in facility also and I at we

Steve Byrne

follow that. just to on And

the the shift outlook is chlorinated to to reduce of pricing volumes constructive, the EDC? near-term exception products Your fairly much with for How various for quantity to have latitude the do you in here. EDC around

John E. Fischer

that is I outlets single we for chlorine. multiple the of would tell acquisition that biggest the that benefit from Olin you is have deriving the Dow

a will. the XX acquisition the being liberate XXXX, announced soda, in we around. you and to were back of about you outlets I back made it earlier going – we in would tell from if able when said, caustic outlets. lot lever we talked March consume X I to Epoxy the that from have of chlorine flexibility to things move business And we've As just

So, we have a lot of flexibility.

last eight do of for chlorine, and The the outlet has strategy been is into what also make plays an with which grow grown is to which its this, over an don't a has you EDC, on-purpose bleach hydrochloric I Olin chlorine. acid chlorine. and is to business, other do outlet five business, for if would years remind you That the through able thing consistently you its

Steve Byrne

the comment lastly year looking might view you pricing. comment the a on similar And from pricing a the $XXX on caustic right you have be made on levels Do EBITDA EBITDA side this about one earlier on that. on impact a business? now just Do based chlorine? what million out have impact of You chlorine

John E. Fischer

say increases by the a change I changes have we've the and in a it's that what think price And chlorine slide that that of $XX consistently other annual million. would I says we I price just to the said talked of are do in ones been $XX expect realized. think about forecast EBITDA there announced, in that there's and be you a the index so our

Steve Byrne

Thank you.

Operator

Next ahead. Longbow with from Silversteyn question Please go Research. Dmitry comes

Dmitry Silversteyn

call. my But provide Thanks morning. just... the volume Vinyls I Good and you sure, in maybe wasn't Can taking Alkali you about I'm I or it. the Chlor growth division? did – year-over-year missed in talk actually volume declines for

John E. Fischer

QX... in said just We

Dmitry Silversteyn

Yeah.

John E. Fischer

Chlor because in ... Harvey. down Hurricane that volumes Alkali of were

Dmitry Silversteyn

much. you but didn't by how Okay, quantify

John E. Fischer

we not. No, did

Dmitry Silversteyn

that exported, new of businesses, and for this you strong But at has much probably how shut now to that to plants those if gone Okay. year, the opportunities X.X much being how XX% think Chinese that going EU-related mercury tons talked of happening you be that served into is of has looking versus so EU the of I you're with You very that's that are of there were mentioned declines In the the down markets because by are think or Australia converted that country. you new gone exports into getting obviously you into about markets? markets? or million exporting X.X do you your whatever typically being business or million

John E. Fischer

of It's Europe. very that's view, moment, the in being little America can you commented We maybe Jim, that is point were to exports amount North up at exported out Jim comment, want Australia. of my going to significantly on of that total to?

James A. Varilek

Yeah. That's correct.

out earlier, where I we're that in the is markets. pulp Gulf are strong I towards towards well, headed think the America Australia, of Latin markets the seeing aluminum and and that majority as the of demand are there which mentioned Coast are the headed increases paper

Dmitry Silversteyn

zero. tons guess you I of you about is mentioned million out for not was to have that exports what I wondering from market That's X specifically. that for the down obviously, EU – gone

of that to of going So, where I you was EU X.X million able the question. with up. how wondering of I exports were much lost was million That's that pick

James A. Varilek

that a I would up amount anything than not specifically trade by more say being impacting out flows It's Europe. it's material picked Europe the of else.

Dmitry Silversteyn

Okay.

you're Chinese by words other Chinese the basically declines production. are in would the that your so of filling behind, in reduced growth the much So, European that export all driven leaving exports, not spot of be the that really is saying

James A. Varilek

along well. correct, is Latin as with that America say would I

Dmitry Silversteyn

Okay.

for transition in So, a really, mercury is EU you guys. the the non-effect

James A. Varilek

yes. say I'd that's

Dmitry Silversteyn

to million up for million at year. for to kind good. for I quarter. EBITDA year very you the earlier for right end you very directionally, below $XXX now it's on mean, follow not that the wanted gave low Winchester. provided guidance I Okay, but the the it assuming the if $XXX just I'm And of Winchester guidance in

John E. Fischer

about If of the the would QX EBITDA we math, QX. million we do you to That said for to similar expected put year. you at $XXX be

Dmitry Silversteyn

make what math I thought. I just wasn't That's off. wanted to my sure

you. Thank Okay.

Operator

Please from comes Blair ahead. Next go Matthew Holt. question with Tudor, Pickering,

Matthew Blair

Good morning. Thanks. Hey.

Epoxy were are is growing the think X% you areas total do What of year-over-year. system volumes growing? the for market what mentioned your up Epoxy and at You

Pat D. Dawson

impressive Yeah. contracted grow was X%, last This side that Dawson. Europe that positive nothing being driven really overall seeing On And year, which year, this news growth infrastructure the being American I there in Europe. to albeit by Pat North is with of would oil of growth, about continues there's to of Epoxy. the by we're America, say of and Epoxy, last that most is spending X%. very lot In globally improvement X% the or due a on around North consistent good for it year gas. market, modest,

Matthew Blair

going demand? – expecting grown has overall market Any it seen you And you any for XXXX you. was you're chlorine? also, X% demand, Have Thanks. you forward there Great. then X% to a the think rise what Thank caustic comment, chlorine and expect to on do the annually. in do thoughts

John E. Fischer

at demand, grow to to caustic is about chlorine you forecast at. grow think if expected at what look I of it's half

a So, be by lot earlier on a X%, Shintech. things like happens expansions of with and there that'll X.X%, determined ultimately what that was PVC comment

Matthew Blair

you. Thank

Operator

SunTrust. Next question is a follow-up with go from Freuchtel Jason ahead. Please

Jason A. Freuchtel

my Hey. follow-ups. Thanks for taking

Canada less previously clarification you're imports with the from competition just that and Would out you of in from on First, a Europe, impact seeing your plant? plant EU. coming for competition facing less Europe, from now the was capacity of that say capacity

John E. Fischer

went United out the of that East of the came Coast exports west States. the Generally Europe the speaking, towards

marginally and we I have. also that Falls your Niagara would plant the Charleston, that plant have supposition also the And say has positive So that is we Tennessee a correct. on influence

Jason A. Freuchtel

Okay. Thank good recycled the the you you. growth? China demand that you on do so, in And ban X% will in quarter. X% soda? also, And included believe to then the is on if impact demand paper caustic impact Thank your luck for and

John E. Fischer

I that a detail would say able you. forecast. level Thank that's we to not of are

Operator

ahead. Richard comes question with Associates. Please O'Reilly go Next from ‎Revere

Richard O'Reilly

you year, at XX look terms turnaround of or Have a the maintenance maintenance costs? Okay. Good looking what that like XXXX in slide the you would $XXX what the about look I'm gentlemen. year full normal million. costs, costs. average for And like talked would you or about morning, think

John E. Fischer

the which was was We've and XXXX, said $XXX a somewhere XXXX, million, normal million. between which year is $XX about

Richard O'Reilly

Okay.

right. Somewhere okay. All in between,

a Okay. lot. Thanks it. That's

John E. Fischer

you. Thank Okay.

Operator

like concludes any now conference to This John remarks. back Fischer closing session. for would question-and-answer I the to our over turn

John E. Fischer

three all you look you results Thank and about to Thank joining fourth much for we to very forward quarter us in today months. you. talking our

Operator

concluded. attending for presentation. you has conference today's Thank now The

disconnect. now may You

Olin (OLN) 31 Oct 172017 Q3 Earnings call transcript