OLN - Earnings call transcript Q1 2018

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Operator

Good day and welcome to the Olin Corporation First Quarter 2018 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, Director of Investor Relations. ahead. go Please

Larry P. Kromidas

Good Nicole. Thank morning, you, everyone.

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

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

John John? Fischer. would I to the to like over Now, call turn

John E. Fischer

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

each outlook highlighting XXXX, of of I by I Olin's will four call, more describe quarter, During begin a segments. business detailed followed will for takeaways morning's improving key then this our first by our discussion from

to slide turn X. Let's

most Olin our April, significant of turnarounds. planned During the XXXX first quarter into successfully maintenance completed and the

and results schedule million Chlor were Louisiana maintenance on included quarter completed Plaquemine, XXXX costs. Texas that in turnarounds maintenance of quarter April. The planned at in began first $XX Freeport, first the Our Alkali planned turnaround approximately

by details also years actual by a also February costs weeks the April. the planned couple of majority quarter maintenance Also turnaround This six In in Alabama April. McIntosh, in presentation of that by of appendix ago. this will that a Texas in began we was turnaround $XX positive forecast slides Epoxy was addition, forecasted the XXXX, in continued Epoxy segment. our ago million the and of Included costs. year was The Overall, planned Freeport, chemical lower year pricing completed maintenance to are full completed our turnaround of maintenance end began portfolio. the two-month performed the continue turnaround last than turnaround be at that to during business and full approximately experience for XXXX first the we quarter environment of costs

approximately first improved quarter XXXX and year-over-year Our pricing XX% caustic sequentially. XX% approximately soda

per export increased index ton soda discussed early a pricing quarter, During pricing $XX $XX the caustic be per increased indices XX-day in decreased price but spot These price January the the while February. the lag. at XX first $XX high per the recovered of changes while domestic export fully our $XX contract April caustic soda additional ton, prices an at price that to on indices from range. end low-end, we in contract increased will reflected The the indices domestic ton, decline

volumes soda export quarter, first the approximately During accounted caustic of for sales. XX%

and we caustic most first increases addition chlorine-derivative realized quarter In price price products. increases, soda chlorine to in

lag. to one resin price Europe also North April pound difficult Pricing the in have improved the year also product time than experienced per liquid North strong dichloride April primarily in While and realized the metric quarter, less indices €XXX commodity increased in XX% in improved was epoxy first epoxy of commercial last additional more and exceeded ton expectations per $X.XX quarter. increase improved the $X.XX on lower than year-over-year strong Hydrochloric liquid XX% be mix price sequentially material publications from €X,XXX Ethylene we chlorine sequentially. during which prices liquid products. increased a per ton for quarter. lower indices costs. pricing America pricing quarter than first from ton, for sequentially a quarter both business, our Trade the In $X.XX epoxy in our Winchester per reported XXXX, and first an have on Europe. the in Epoxy higher XX% Published anticipated, during doubled prices quarter favorable approximately and resin and and first metric increased acid had not demand. chlorine Demand remains this America indices but for did to the that pricing, $XX resin and demand per a environment we pound will

Given factors, quarter, Winchester results. the over the that believe earnings continued XXXX improve these no longer which early full-year XXXX into have second we will segment

of approved million Olin $XXX stock. XXXX. of share rules for Dow of program the directors Reverse transaction, a Products a and Finally, Trust up during Morris effectively repurchasing prohibited of from the October April, repurchase through Olin's common acquisition Chlorine governing was Because board to stock

As Olin XXXX. had XXXX may active from an recall, you share to program of some repurchase

the we with to repurchase While opportunistically remains of top debt free shares dilution. our generation, begin cash priority for reduction goal offsetting expect flow to

like XXXX, to into for detail outlook on more on on is update business I which our slide you going would Before segments, the X.

encouraged Alkali the remain Vinyls the Epoxy dynamics Chlor both to Products by business the continue We and and supply-and-demand business. for

Alkali and to Products to We significantly Chlor compared continue improve earnings expect Epoxy in XXXX to and both Vinyls XXXX.

improve believe longer earlier, As Winchester I will mentioned XXXX. we results during no

of full of EBITDA risks X%. our billion, downside reiterating approximately and for opportunities adjusted with forecast upside are $X.XX year We XXXX

risk. believe there than upside that is more opportunity favorable forecasts, the With downside pricing we

the Now, business X. Vinyls and turning Alkali Products to with beginning segments, slide Chlor on

ethylene offset pricing. volumes adjusted of lower These for to XXXX lower compared lower to quarter primarily and costs. ethylene and First of were first EBITDA chlorine, other dichloride quarter chlorine-derivatives, Vinyls partially caustic Alkali due million higher Chlor and and $XXX.X the Products XXXX, items improved pricing soda, by

first Vinyls to forecast our of XXXX quarter, quarter caustic Alkali the significantly turnarounds. the ethylene lower the Alkali to by improve subject XXXX, Chlor costs. in the is of approximately maintenance and was planned pricing, higher chlorine business soda, from capacity XX% second Products of and second quarter The Chlor chlorine-derivatives During driven and

to planned soda increase reach continue into of with material caustic down, alumina XXXX up. A levels. maintenance caustic The to Exports slide volumes. to XXXX, the in reinforces And exports soda from are paper additions Alkali Europe three and expected to once continue increased approximately in costs North quarter In plants XX% of positive and soda at over XX% Second lower same to our continues capacity recent next the on have while imports trend Europe continued exports Brazil States caustic the the and least approximately pricing. of in Europe closure demand. long-term of and no expected exports also caustic significantly summarized combination Alkali mercury-based Chlor its XXXX caustic in again XXXX soda turnaround Chlor maintain time, trend increased soda expect both X. Olin record couple to we levels. view. improved years American United XXXX, At from China to pulp exports XXXX This be view is record the facts: to Australia in year-over-year. from

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

EBITDA million maintenance impacted Epoxy of our in million approximately First turnaround quarter Freeport, at XXXX was production $X.X costs Epoxy by adjusted largest $XX of facility Texas. planned

first than quarter I the planned the XXXX turnaround during has earlier, first this As of were said once-in-every-six-year due XXXX been quarter turnaround. lower to this Volumes completed. of maintenance

quarter second higher XXXX, second ahead the look we both and to we the product into quarter project pricing higher Epoxy of XXXX. As of sequentially than be

is be in as that quarter. the compared quarter compared first and second in a the propylene, significant sequential primarily combined the to in improvement expected adjusted with result will of lower raw XXXX. the We higher to second XXXX quarter also costs, turnaround in project maintenance This, quarter to EBITDA second benzene material of costs,

Overall, included months to Epoxy show XX be illustrate and Europe two over meaningfully and resin On and to product for pricing slide pricing past trends. to United We pricing new in Epoxy over liquid X, epoxy the pricing slides Asia. improve material the expect business to States, input XXXX We've continue raw the strong. continue XXXX. product demand we

in fundamentals have three demand As supply regions you market resulted improved see, has pricing can since XXXX. in and Current all tight conditions. the of beginning

for products on Forecasted demand depending X% geographic growth application. our is X% the annually between and and location the

in raw material these began mentioned in costs, seen XX months. recover to in which of and portion have of been the higher additional benzene located primarily today's price States have summarizes and significant XXXX. necessary Epoxy past for the The benzene pricing, earlier, As A slide is I and in slide propylene. appendix Europe we pricing already slide improvement the United increases The propylene deck.

Winchester's a other demand let's material spite and commercial first the year-over-year move and on In revenue. which Winchester business, resulted account on other to commodity material commodity pressure current The lower and selling ammunition X. quarter Winchester's Now has commercial of the one-third. XXXX, on enforcement basis, industrial in business higher ammunition of increased two-thirds million. Military, level in slide summarized commercial $X sales of costs of approximately prices, mix, the costs. costs ammunition for for account law remaining In is sales on

efforts million. and commodity first increased Through last prices $XX of other quarter successful. our higher been selling XX months, to not recover have increases have the the price Over costs metal commodity material through XXXX, the approximately

the in quarter headwinds, the our with first of of than Winchester, was we pleased progress to addition are this in quarter the first favorable company. XXXX. higher In cost commodity the the – In spite less mix of last the the weakness of product year

businesses During four trends our improved. the of across chemical overall price the XXXX, months first have

believe products. We volume evidenced continue positive cycle the price witnessed caustic up other as by trends pricing are momentum. in chlorine and We've a to multi-year soda in that and both chlorine-derivative also in positive we

business. of as the have trends in adjusted as In and pricing we Epoxy forecast to to in positive experienced movement achievable in addition, volume described years. increase million in These of the two compared years XXXX. of continuation the all $X.X will a The next these adjusted support XXXX $XXX billion EBITDA the ago XXXX beyond of one a couple makes we EBITDA

the like Now, Todd over Slater. turn call to Todd? to I'd

Todd A. Slater

John. Thanks,

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

cash dividend flow of $XXX generate before to free payments. expect million We

Our and the leverage of that to by the reduction X.X the net end EBITDA XXXX, the of times combination reduce growth range. expectation will is ratio debt-to-EBITDA debt

million During estimated income first tax tax $XX million approximately the debt. payments, payments we chart, full of on year billion $XX adjusted of waterfall deduct far forecast we XXXX. $X.XX quarter, made midpoint the reflect Starting in jurisdictions the to left primarily with of the prepaid of our which EBITDA of foreign

XX% to U.S. the XX% are are for loss primarily in Since payer tax We the not utilization of of Because XXXX. range cost tax carryforwards, cash XXXX. be forecasting because out been rate to federal to expected associated net has not be operating with federal a acquisition taxpayer a arising Olin the our tax carryforwards, U.S. credit the year. in XXXX, of in we of

tax XXXX maintenance we XX% investment and range. an the the to of tax the We annual The in approximately XXXX provide in law $XXX currently includes in beyond Job Column of due current expect analyze Cuts million, translates estimated While the taxes to spending reflects to information to $XXX tax of cash credit of Tax benefit our our reduce tax the cash million. tax the capital cash $XXX to of to and for the law tax Olin of million midpoint $XX associated new the and benefit capital cash law to the is are do Acts minimal impact beginning reduction new between which continuing estimated in X Olin full XX% carryforwards. for technology XXXX. is rate forecast This million project XXXX, approximately and and $XXX with a to million. tax into of our spending of changes

chemical expenses for this IT to Products the annual of the during The and associated million and and this is $XX Total savings to implement across we project the project the business cost with global $XX million. is expenses infrastructure. of of a enterprise the manufacturing, began Dow to we project expect are systems efficiency of project project be project. and $XXX The Chlorine associated planning, forecast objective XXXX, The $XXX the million with engineering includes project When first In businesses. million completed, and quarter, the million. $X.X operations. to spending multiyear effectiveness, heritage During the standardize IT be resource technology our to anticipated be acquired completed we processes approximately control Olin new provide capital objective maximizing is information XXXX. a cost multiyear required of spent capital forecast to over

that project. add-back The the have XXXX, the year of been I mentioned, forecasting of are million approximately and through the an of expenses spend previously for million as adjusted with this $XX these capital, We will to approximately full continue IT The we as add-back completion will expenses included of EBITDA. project expenses incremental project. associated our IT $XXX

interruption hydrocarbons integration, the Now turning to business insurance cash million the inventory due IT capital increase selling expecting column, million. of project are fourth The include $XX the expense. costs to column, million in working spoke with prices a one-time higher expense approximately estimated the be of portion about. million XXXX. $XX cash in in approximately to that associated just Included XXXX an we next the of is restructuring items capital In The next working use approximately column costs $X primarily of estimate represents is the I interest recovery. of and here of $XX and

we debt flow paying of column, the year. totaling higher million debt have variable $XXX for experienced in rates the quarterly are forecasting are XXXX January right refinancing normal and our after interest rates In we XXXX. interest in at the be we $XXX we cash completed our We XX% will approximately those forecasting of million free dividends, approximately far than after

we for will While of an opportunistic remains generation, free flow dilution. priority top reduction the repurchase our goal share begin cash with program offsetting debt

is XX, XXXX business on XX, to dividend of of payable at of the April share declared May take of dividend by board paid Thursday, on $X.XX the common are June ready company. be to quarterly on consecutive stock. shareholders on of This XXXth Finally, Olin's dividend directors a close each record XXXX. we questions. Olin is Operator, XX, now to the The

Operator

you. Thank

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

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

Jacob Hughes

to offline Good and Hughes guidance? to months. that wanted for your on like for outage, EBITDA for There's past Hey. which caustic This get is couple morning. over from and any months year it's your just of disruptions your six you up Rusal Could several thoughts. full outlook has the coming looks Jacob I Alunorte the talk about Frank. been impact to

John E. Fischer

– think happened; trade more – of those. has yet both had Rusal than anything both of hasn't just The address I'll of effect Alunorte, have happened flows I speaking the those, generally Alunorte adjusted, causing to else. be

will case, quickly. had small less occurs, an it we're characterize have I impact it And market. would I the have Alunorte in of the expect in of going Rusal very if think XX flows think million talking there that think than from Rusal is about caustic – But to the I just would more of again, Europe, ton end quantity and some day we at more, it the event, otherwise delay million all and the I because the occurred to because big adjust a XX And it wash out. it'll will total trade upset import volume an be enough will Europe supply ton then – there isn't market. will

don't I caustic of pricing really going really – going So, believe don't we forward. to affect materially those either are

Jacob Hughes

the given you – buyback opportunistic to then can your on Okay. through thinking program? walk your the on timeframe debt your current to And executing current and pay-down envision leverage – profile, your more you versus

John E. Fischer

our priority, is having our repurchase keeping thinking. opportunistically the that important that our And we still shares vehicle believe for a to believe mind offset debt in We remains we have shareholders. was dilution on based outlook, that that reduction – top to

Jacob Hughes

you. Thank Okay.

Operator

comes ahead. Viswanathan question Please next of go Capital from RBC Markets. Our Arun

Arun Viswanathan

to experiencing and of EBITDA amounts, First your use Are we offset the Thank the significant typical you or in should $XX Great. so million the XXXX? should just caustic inc for XXXX off, profitability more to Thanks. doing? we (XX:XX:XX) statement I adjusted on you that on potential guess, upside would $XX equals about just inflation How you. your uplift? guys wanted the think How or inc (XX:XX:XX) $XX annual chlorine $XX understand dynamics and about opportunities. kind those

John E. Fischer

you should on from the that XX days. $XX in think $XX is keeping typical the XX to million mind use caustic anywhere side I uplift, it's of

In chlorine it's terms of XX side, implementation on typically the days.

Arun Viswanathan

last are I any go the guess index – over significantly million into follow-up, we've Okay. a and couple as are couple different index, years. of a hundred there And contracts your dollars that behind the or the said way, seen

if of take margin increase there holding that is maybe ECU something So, we ton your that back? or in Have XX% margins. seen you your of there's a per else on kind implied (XX:XX:XX) improvement that is that, XXX

James A. Varilek

This is standpoint, a improvements continue From contractual on we Jim make that. Varilek. to

that now to should now we improved You XX% index assume movement. in It's percentage realization the in of the range. have XX% the

we we're of continue impact the so on prices a year seeing so, And versus to improve ago. contract, an acceleration

John E. Fischer

quarter, Arun, just talked planned QX, I Alkali was look our when one we about point you capacity caution at XX% would due of during also the you, maintenance. at Chlor to offline

So, year. QX the the is – this weakest will be of will earlier, quarter going as entire will perspective, volume This as Chlor be the – from we've said for Alkali. be weakest the a quarter the weakest will

Arun Viswanathan

we of up the you what lastly Do the not, continued kind some guys expect that And that be then, go rates just would (XX:XX) outages support in higher point through chlorine pricing? given you there alkaline ramping if anyway. and typically, to on go in prices moderate are up as will of here And QX Great. were year? back for and QX drivers

James A. Varilek

fundamentals the exports record anticipate see see very GDPs as looking the that still industrial production; again. changed. are see of we John said, the is that I good Coast. out We still and of say good; U.S. Gulf still this Arun, Jim we haven't would market

the momentum fundamentals. you're from quarter what seeing the see those month So, the first the through stemming you and quarter second first in is of

So, we with see to expect years continue trends for for next to being that those continue that, next, the we the and several actually would positive.

Arun Viswanathan

Thanks. Okay.

Operator

Carson Please Our of go Susquehanna. next question from comes Don ahead.

Emily Wagner

Good morning, than bias in quarter? on chlorine aspect. price better much guidance EDC trends for an to Epoxy Why and have is this when guess guidance on only Emily up following given and I guidance show so caustic, initial upside Wagner been the Don. fourth the

John E. Fischer

pricing have been the with very if material we're the in agree and XX months, what pricing which essentially costs, we last trends. year, with XX half raw cautious as about always you year Winchester, benzene is EDC the as said pricing. volatile as propylene, in about last would over happened know we remember you mentioned Epoxy Emily, And what especially you second downside and well There the collapsed. in the to EDC of as business

more So, just upside at saying there believe would downside, say raising this moment, feel than comfortable is our we rather more guidance. I we than

Emily Wagner

$X.XX realize how Epoxy about know Epoxy, space? the should already the then the Understood we and that lags okay. And pricing U.S. in on you chart Did on price think in I increase you showed the

Pat D. Dawson

Pat Emily. This Dawson. Yeah, is

well. the short as to momentum that increase as answer increase, on into are continue get that and May think here good I we Thank is you. we go to seeing yes, we that

Operator

go from Aleksey Our of next Nomura. comes ahead. question Yefremov Please

Aleksey Yefremov

everyone. you. Thank Good morning,

describe maybe Just these it benchmark XX% should you Epoxy, way similar changes the to the up your we benchmark, follow caustic? Is XX%? on prices, about in of sensitivity think how to to

John E. Fischer

last with in guidance we remember, you that given is specific we what have to year, propylene benzene changes that. is continued over Aleksey, have the The But provide key started to though, not and to the those. now increase. associated have

of costs. for in first million the of to up matter year over a first benzene As the quarter quarter were propylene last compared and our $XX costs fact,

said has of So, offset our really increased a as pricing lot we material improvement been to raw earlier costs.

Aleksey Yefremov

margins materials, increase on QX those And your that are increases up maybe cash are as quarter your second in in in to increasing the follow to compared QX? again, look larger prices, at raw than you in

John E. Fischer

and for the benzene in the propylene, margins would second Based current we prices expand on quarter.

Aleksey Yefremov

prices recently you – in on maybe a up do the EDC for in recently spike there it hope Does is not that And there you. give see a EDC, Thank you forecast conservative this prices were or your was in second sustainable? China. as follow lower quarter EDC

James A. Varilek

and global in the Jim. with Latin push spike EDC kind of lot it's – Obviously, market, that see do in so actually This had up. terms those helped to movement the a it's to and prices. a we're of of prices is – some And other pleased forth the Brazil EDC issues – a America,

of We a are first and forth, quarter. into terms second strong so in moving replenishment quarter, season

momentum in second the anticipating we're So, quarter.

quarter, you as EDC third The said, is go That's why for season a John cautious the we're year. remainder off as time and challenging monsoon. in EDC, fourth always to the in of about

IHS XXXX projection annual EDC an think XXXX. lower slightly the be basis prices than I has on to

Aleksey Yefremov

you. Thank

Operator

Our Morgan next Neel comes from of Stanley. go Please question Kumar ahead.

Neel Kumar

Hi. Good morning.

$X.X rather your in a near-term mid-cycle years $X.X EBITDA prepared next remarks adjusted billion estimate the now mentioned You of mid-cycle new Is of than one, in billion? two of target your more higher target. than that EBITDA is a

John E. Fischer

adjusted not two believe achievable achieving on target. the we next We're to the have just billion commenting one $X.X We – in years. is mid-cycle

Todd A. Slater

Neel, this is Todd.

has above interpret about of the versus about maybe talk some sort peak, I we're plenty still it's of how we been a investors for of not where And talking speaking that. to some remotely folks. room that. think there's we're there other nomenclature When think we item are talking people the about at times or mid-cycle, confusion how by middle cycle, I run may other

we're an $X.X I an think by that billion item improve will of to continue just we from. yeah, is So, – It's number end. no means the

Neel Kumar

about landscape? portfolio. headwinds current in in has recent consider? some of thinking has question you're industry in helpful. Great. sale. Is change thinking the of also, any that put changes epoxy that how And been And would assets for yours something up competitive and you're your you a That's there very in Competitor how then on Winchester about light

John E. Fischer

the for as would We're say, And we be interested. a would Epoxy aware general assets sale in I business. are always comment, of that

that we from it us separate is answer Olin the I portfolio issues. for to always and same sale value. which value anti-trust a are Olin assets a question, it, matter, Winchester a there the to the going have answered represents be the really question of is practical and think not to Winchester for methodology are business the because available way as create I would

are XXXX. We faced we've business extremely tax its with always an the basis, owned fact the equal since has working It that capital. essentially low to

would for So, cash have also pretty impacts your it looked to I have look ability get if kind today would It any worse tax-free at you that would And to straight again, you're you any if going today. a in the sale of That Olin would generous that. it's say, trade off. comparables at marketplace, in multiple on than not do today, trading And it. you to spin. properties to similar spin

generator Olin, cash it So, becomes significant really would We've I can for question. we're is value hard It I've years, understand. with that work aware a a of a it. been improving. looking the at it's results, That continue to and business for it and we just a XX said, its at we weaker is business say, issue. it been on focused even

Neel Kumar

are do with dilution, opportunistic then being to see long-term yourself at the And that follow-up levels When you one you going speaking be XXXX are shares Great. about shares these last the issued buybacks undervalued And from plan, at? incentive buyback. also I aggressive Okay. then, you just more offset that? to guess, say on you're

John E. Fischer

say Those at the We think employees look haven't issued that addressing for be from and were management, opportunistically. shares were directors; the just just compensation addressing whether the we not yet. specifically they been occurs opportunities We dilution plan. or would existing normal I XXXX actually would we plans,

Neel Kumar

Okay. All you. right. Thank

Operator

Our Jeff from comes JPMorgan. ahead. of Zekauskas next question go Please

Jeffrey J. Zekauskas

or pricing. you a do very positive the view? are supply/demand time, epoxies have In caustic the two balance you don't years of will much. view a agnostic, whether three you for chart. and favorable view next over you period longer Thanks In have epoxies, in a and a is balance a soda you or talk or supply/demand have over Do a you tighten as you balances of present simply what price or to your slides, supply/demand about loosen

Pat D. Dawson

we this market positive for to first started into growth XXXX. X% you Jeff, fairly Yeah. resin again that in that range see got XXXX epoxy was all, X% remember of XXXX, contracted this We've and just that to Pat. versus I is you talked Listen, think No that's question a the and in Also, this it, think remarks, improving. the our positive. as of about built China industry fundamentals are very that supply/demand in I most in while to the built was from was standpoint, overcapacity about in sluggish know.

so, that that also There's itself been of has think capacity that off. regulations been some And working I capacity. has constrained environmental some

supply/demand fundamentals to and much here. And we Although we those gone more has continuing forward. have meaningful of don't are that favorable don't anyone going and out capacity be vision announced a clear that, definitely see here see that new it been who's fundamentals we impacting supply/demand any favorable

right now. view our it that's So, of

Jeffrey J. Zekauskas

of in unusually follow-up, your my for high were years Just XXXX and opinion? turnaround XXXX activity,

John E. Fischer

plants, a in States. the six U.S. this European of operations the one or the first year For Epoxy one assets in and United year, XXXX, integrated two then, third Europe, underwent There Olin, was into have second we their fourth the turnaround. In of quarter large underwent quarter yes. the once the – And every quarters in that.

production for dollar forward of would year, volumes, Epoxy lower spent turnaround So, year much one in you and be look lost expect that Jeff, the business. a we terms will XXXX if

Jeffrey J. Zekauskas

very much. Thank Okay. you

Operator

Our America. of next question Byrne Steve from Please of Bank comes go ahead.

Stephen Byrne

ethylene start-up your you Yes. Shintech the contract tolling change have post Thank via of you. And agreement What is with outlook for that this cracker? could the Dow? their the new

James A. Varilek

Jim. We expect would is to not We wouldn't – expect anything this change.

expect long-term well into a and next with have relationship have that Shintech, the We to decade. we

Stephen Byrne

say would Is dichloride? a at there weakness, is you leads do driving you that merchant shrinking Thank structurally And it look ethylene market ethylene-related? in weakness that? Okay. that what you. is the How to or

James A. Varilek

a now, Has things, has a that only very caustic be the that of ability liberate look say obviously driven have EDC incremental you players have drives to you by or slide, Right that where order number that's moves on it. to you if the to that's chlorine has It going the of that, the in would achieved factor. at been certain EDC see amount – a come said incremental of there's side I online. is been down. and caustic into that volatile. weakness the it's Supply/demand Well, to factors. up move been EDC, able EDC Having the success

of we next that period over do EDC. improving two fundamentals we the anticipate And expect on years so, the do that

Stephen Byrne

And or with latest just lastly, efficiency capacity turnarounds? improvements any this of round expansion

John E. Fischer

always expects this many of improvements that had in every to to production get we Europe when that's years. in do on of best money we once I years. coming turnaround Epoxy, turnaround a the out had six kind mean, One we've you done operating the spend had

We expect see the in same thing to Freeport.

Stephen Byrne

you. Thank

Operator

Please ahead. Our next question of go SunTrust. comes Jim from Sheehan

James Sheehan

for discuss quarter and the the my see taking bridge? second Thanks question. that Could for you various you takes EBITDA puts

John E. Fischer

Chlor and that have single in the think biggest point bridge I significantly both less going significantly loss and lower Epoxy. to volumes Alkali cost production we're is Well, turnaround from

moving – the going bridge The other positive big pricing forward. is trend

expect about we discussions pricing Epoxy, better As quarter. we've said be both Chlor quarter in first second versus and to Alkali

James Sheehan

current views your business are what And Epoxy for the on XXXX?

Pat D. Dawson

Yeah.

Pat. I is this think –

in what think, the of don't consume few years, gas the with and I standpoint I resin fundamentals more America. over we that of X%, see the with and well changing the from a demand with North especially past again, fundamentals, X% that lot really seeing, think to improving part a infrastructure Europe world. in back building we're to epoxy continued oil bode the

whether is unknowns I in on the the of in will these not the think fundamentals It's to demand the from tell epoxy basically, and environmental standpoint. some some crackdowns to or of China, point put But of limitations really continue one at market improve. hard time. should this that

John E. Fischer

Yeah.

prior be were in other should outage question answered significantly The lower we was in maintenance costs thing XXXX in XXXX. they in Epoxy than a

James Sheehan

XXXX? And related you in be will total that? lower give to costs some that, how planned more on your maintenance Can color much

John E. Fischer

be we qualitatively, to I lower. expect them would tell you,

out given other billion the two juncture, or one achievable specific $X.X this We we broad the is years. any in than comment anything element that to that have on not, other next think of at XXXX

James Sheehan

Thank you.

Operator

comes Roberts UBS. John ahead. Please question next of go from Our

John Roberts

Larry, slide from benchmark the the and Epoxy Dow vary and to ethylene the for add seeing forward disclose slide Would you be able the to appendix IHS benzene XX. for Todd on to And, costs. with that? much from guys. you does Hi, new you looking in price Thanks your propylene May well, too or as an

John E. Fischer

say unnecessary sensitive. would and price the makes somewhat a Dow I slide competitively that very from

Todd A. Slater

John, this is Todd.

have virtually now think of should producer at – ethylene You economics. we

when you're or are September in basically really of – ethylene about XXXX the those in So, longer changes Because changes went the ethylene. type after ethane. of to we end thinking spot meaningful no of things cost-based

John Roberts

competitor other and Okay. at separation competitor Do you've one back ammo behavior got comes – until competitor gun normalized And operations. a the post-bankruptcy in second marketplace? competitive from Winchester, then we announced to bankruptcy to you've separating its the or wait of secondly on the have for got just kind that happen and its business the

John E. Fischer

right that sure not John. we're to question, I'm people the answer

quickly. bankruptcy to very Remington proceeding appears the that be think I

So, hope that very I gets would resolved shortly.

think I is Vista said if hope at would made around you they comments the their of mean, look I normal sort gets quick. they I that. ammo, and to behavior do what trying

John Roberts

right. All very much. Thanks

Operator

Research go next of McCarthy Vertical Please ahead. question Our Kevin Partners. comes from

Kevin W. McCarthy

Yes. Good morning.

to those feel whether trying the get across plan. next about and capacity we a the look call will think new capital where couple priorities deployment you compete, of do on cash you businesses sort repurchase the expand your the for any you over be to meaningful anticipate organic markets as Just of in any reinvestment need As of years?

John E. Fischer

would operating we to the greater the a have one for can use I will ensure the which investing on – that we to years, two term, think, in Kevin, optimize call I of rates investing chlorine the focus our and or generate. output of near reliability to highest

Kevin W. McCarthy

additional questions, comment trend? rate geographic in liquid expect slides. within operating different business? your also would then, if Epoxy Is if there. over related resin? do but what months? back prices outlook several inflected So, few mix apologies, have rates? Why typical like your judgment to to a of the it How past you that question, a can Okay. better And it's the is And to the epoxies, appreciate on assessment second global understand the operating so, you base for to And come just may, to or your increased I I just

John E. Fischer

Yeah.

are you'll geography, relates will to is today, I geography. the information XX-Q, the in see I'll actually which at of second Pat either it talk third, As inflection be points. others segment larger there Europe, or South about by being think you in Asia which Epoxy North if look that the be our is And later business, the will let actually what filed and sales portion the then America America.

Pat D. Dawson

Pat. This Kevin. is Yeah,

the included epoxy you'll in liquid through see And all resin. where inflection Asia, here, XXXX the was think really built that in overcapacity timeframe. graph big type that that's I XXXX we the

on liquid was I've happened think mentioned transparency definitely we inflection full I and And that capacity factor have in before already around resin epichlorohydrin constricted one that the that point epoxy what China. don't there caused So, restrain capacity. have environmental regulations

And so, a was big inflection I think China point.

when the you into major until for economics you there. was arbitrage up build liquid beginning price, fundamentals this are course, And moved outside think epoxy ongoing September see the supply/demand of from reinvestment weren't hasn't fundamentals on event. which way meaningful an liquid I China, is it And create did year, where a there been capacity the resin because any if resin. good there shot the it very pretty look XXXX China, epoxy Of of people

propelled environmental off, I think has a epoxy resin really its So, cycle working supply combined seeing and in China, fairly issues way that commodity with the some you're prices. of typical liquid

Kevin W. McCarthy

that the back $X.X forth the might that lastly medium expect And of say, profitability to I let's to sort billion you've what may, Epoxy EBITDA near if term, put level coming in over or of red six level? off what provide of sort here, you or quarters? some a in of coming of as Can notion five, you embedded normal level be profitability of mid-cycle sort view just level of we to

John E. Fischer

back February the what a on upswing we goal the If to we of long-term a period that which you was, talked Investor Meeting, over had XX, $X.X showed Epoxy XXXX chart about was billion, where went years. our

try the of the suggested it chart, be something out I EBITDA range. map actually year in you think to that a Epoxy if $XXX would million

Kevin W. McCarthy

And that's still valid.

John E. Fischer

yes. so, believe We

Kevin W. McCarthy

much. you Thank so

Operator

comes Eric question Citi. from next Petrie Please Our ahead. go of

Eric B. Petrie

morning. good Hi,

John E. Fischer

Good morning.

Eric B. Petrie

you ton an curtailments? slipped the us prices Could little the following $XXX alumina below softer caustic specifically kind production think been X+XX demand soda update of as And give on I Asia demand or mark. per China a recovery it's winter for

James A. Varilek

Jim. is place. saw to in This so prior China and winter What forth the Sure. is, you the curtailments, took curtailments that

$XXX into a at actually You peaked saw time. point in range prices, up went the run in and prices and the well that

And a really so, calibration just of is the since seen a or to what norm. then you've return kind back a

to and four don't the China been So in pricing But trend. been as to don't movement that continuing soda you a they've the of exports curtailment. caustic seeing following the still see It's downward. a long-term there decline. with then up changing. out prices. some Nonetheless, settling has And the a we in peak to China year some curtailment, on of we five decline, We're of see saw dynamics prior out

just is around I some much into actually read what very than other it normal movement too a So, number. high wouldn't

Eric B. Petrie

a in U.S. what's Coast, Gulf the healthy then, million April? gap mark $XXX typically of China and level And Okay. prices between

James A. Varilek

movements healthy occurred, those just that that. the dynamics the that drive that of are gaps guess don't I gap. There's know I – that market will normal and there's a

what I moves product – market know that a It's So, gap. a healthy the to don't highest wherever you and prices consider, are. global a there's

So, answer for I good a on don't have you gap number. a

Eric B. Petrie

Okay.

of changed soda in mix or on Lastly, has EDC proposed trade tariffs? flows the either based caustic your the China

James A. Varilek

at No, all. not

Eric B. Petrie

Thank you.

Operator

go Holt. and from Blair Matthew comes question next Our ahead. of Tudor, Please Pickering

Matthew Blair

Want come can China significant of geographies, And demand. you're a strong particular mentioned out in end on good. comments any a that few areas specific Epoxy to looked call seeing back markets, morning. terms pretty you Good Hey. here, improvement? the where about What think I to you

Pat D. Dawson

In coating course, markets, of this Pat Epoxy, Matthew, again. are biggest market. is your the performance

little about follow there's you been a bit the a no weather, Sherwin-Williams, with the both demand. you PPGs, their if the of the cold biggest market. coatings idea the performance the Epoxy get wet good America, There's part Europe by start Akzos, but slow a with the those So, season in of far to are North pretty and question

You – in over we which participate electronic in electrical get into China. laminates,

for that's very major So, than and be GDP. a good to grows market. It us continues more

adhesives blades windmill automotive. a the also course, You of wind market, and major and get into is energy and market the then,

XXXX much the XXXX. markets it most as those across versus And in than demand of where and between is said first in earlier, of So, X% the X%. I was XXXX better half

Matthew Blair

rates U.S. couple of with you And overcapacity just a comments both After there's good. are your Europe Sounds the in you running then of turnarounds, industry. the get and what done assets on at? kind utilization

Pat D. Dawson

for we're operating We rate information do so not any prepared have not that. provided of to assets, our

Matthew Blair

you. Okay. Thank

Operator

Research. ahead. Dmitry go of question next comes from Our Please Longbow Silversteyn

Casey Mcdonald

Hey. When of Winchester a $X.X mentioned you Dmitry. potential, to Actually, the for look in improvement. you Casey billion EBITDA

could come maybe pricing? that think whether you where wondering Just from demand, or some pickup in raws

John E. Fischer

actually we major a improvement mentioned Winchester as think don't I thing.

think that earlier And list the single operations. and going of improve ultimately Fundamentally, balance environment. about seven our it get last six is it's or you're and costs the things. going question is the happen, and run the to the think competition, thing pricing on an between short to I the to we what biggest ability be in our to commodity will that was continue

Casey Mcdonald

alkali on Okay. And one more just the chlor side.

likely You concerns with on Is just I that business have mentioned over that capacity you production be you to there's that the fulfillment three production additions, any years. all think the any there rationalizations? not said next or

John E. Fischer

up cycle about conversation the had think Well, we to multiyear a on I soda. that caustic goes

global that would suggests to you a to suggests demand. annually add remain That X% market's caustic tighter and that no And are prices going capacity, that increasing to time. you I get soda the grows and that actually potentially remind growth you being positively. at economy new X%, have If over added to chlorine move get continue to have going or tight capacity

Casey Mcdonald

guys. Thanks, Excellent.

Operator

Our next go of Sachs. Karl ahead. from question Please comes Blunden Goldman

Karl Blunden

Hi, guys.

the for input a Prices costs year-over-year, price there? lot is enough forward a going not up, of different coatings that up the still up to pricing but too. Just driver demand a it's is players oil Epoxy. quick the up. Epoxy are quite really dynamic question Does in looking nicely, move TiOX that or on affect are low

John E. Fischer

other don't a driver. think I those the factors are think overall really momentum. adds it I to do

into really basket that raw those no materials a now. major from there's coating the goes going of other materials raw any right on impact of here houses up Epoxy. But have You adjacent

Karl Blunden

quick just one a on then, here. the sheet it. Got balance And

You've made progress.

for coming from And you should term the and feel time, factors are debt (XX:XX:XX)? think just have edging You're do in amount agencies debt overall loan the with will then, moving should you terms debt about What ratings to like we towards up ratings target, on out front. IG up gating the the about think the deleveraging growth. that? of EBITDA of progressing but or reduction, further primarily How somewhat now the be over is we appropriate? from And

John E. Fischer

continue EBITDA metrics based both you the continue of will in to think debt-to-EBITDA I target we where We've the is our ratio, to past do it in are we on they and improvement will when it in cycle. the should repayment improve that we about that reflect commented and think debt.

need obviously and the And will be a to of get hopefully down if, cyclicality, in need part a and believe that based X to cycle continue turns we good to stay X.X good to to cycle. give place. we cushion, in that the historic to get in are something – the us We in we when on range. We the ratio well and the volatility

we We objective se. a company another get the has element. That strategy or credit grade is to is have with always said run Whether and been not investment that grade per not metrics. investment not is ratings our

Karl Blunden

Thanks, helpful. guys. That's

Operator

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

John E. Fischer

today we joining about Thank look to to us speaking results. you and our quarter you for second forward

Operator

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

line. now your You disconnect may

Olin (OLN) 2 May 182018 Q1 Earnings call transcript