OLN - Earnings call transcript Q4 2018

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Operator

Good morning and welcome to the Olin Corporation Fourth Quarter and Full Year 2018 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Larry Kromidas, Olin's Director of Investor Relations. sir. ahead, go Please

Larry Kromidas

Good our and year fourth call. Cole. joining XXXX you us on quarter morning, you, thank everyone, for earnings Thank and full

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

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

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

John Fischer

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

segments finish dynamics. will more begin forecast fourth review market discussion our call, with highlighting quarter I XXXX, the will all-in our each from of detailed XXXX. this During in successful I a for business of key performance and morning's by the takeaways solid a and

let's three. slide Now to turn

represents was XX% for full EBITDA XX% company grown a Adjusted has a XXXX a which increase over of EBITDA Olin. mentioned, the record The $X.XXX XXXX over EBITDA. year billion, I adjusted EBITDA adjusted Chlor improvement revenue As year adjusted generated double successful in increase digit and EBITDA. Driving the Vinyls growth Products was an adjusted the from Epoxy Alkali XXXX XXXX. and growth two benefitted XX% business XX% during the in years. businesses past Both

EBITDA in cash During XXXX, closed performances shares we XXXX businesses. the fourth $XXX our Utilizing generated December the raising of shares million generated quarter, million. we Chemical acquired with total year by strong the during the of the of we during as million flow X.X stock repurchased to X.X businesses, the quarter adjusted

million, at million quarter, addition, ongoing shareholders. to our In debt We cash $XXX to repayments which of able net our businesses put to approach EBITDA deleveraging, investing our debt which ratio the $XXX capital allocation, year-end bringing pay we were to during balanced for remain and returning includes total to down the to a committed year debt times. in the X.X

discuss four our turn and to Now for XXXX. slide let's outlook

adjusted we For be EBITDA to to XXXX full XXXX, our year comparable record expect results.

forecast caustic and during disruptions destocking detail, result more January in our decline the soda quarter. levels fourth expecting first from quarter X% market. in quarter caustic quarter Looking have softer likely the fourth additional third XX% in at short the the are in by decline in a experienced as soda through We an export sequential prices of prices demand, approximate an customers demand the declined term consumer and and XXXX,

the We through year. progress to these first as prices the expect caustic we lower headwind a be soda of quarter

As EBITDA adjusted the XXXX will a first XXXX. quarter lowest quarter be we of expect during the result, that

quarter maintenance of strong America. will soda, planned resolution confident second pricing we for elevated North forward, late and of global turnarounds the driven issues and quarter short-term course. the caustic soda demand reverse by are industry the be will Looking demand that level caustic first This in related

year-end in experienced quarter Also EBITDA prices for derivatives. soda on adjusted year in pricing caustic chlorine, other XXXX. is chlorine and renegotiations those approximately forecast caustic adjusted being is XXXX improved the full caustic forecast dichloride chlorine ethylene we in Offsetting XXXX a the of soda and fourth EBITDA million similar annual the pricing soda add XXXX. lower contract $XX based Our the to to should

We to in XXXX sales Epoxy the to cost. and with as XXXX expect compared business higher continue will volumes hydrocarbon lower improve

Finally, XXXX we lower XXXX expect than to maintenance turnaround be cost in levels.

over continue the five. Products Alkali to is The the quarter slide Now Chlor Chlor fourth Vinyls turning both with Alkali revenue on during a and the quarter full $XXX million and top-line and increased $XXX our Vinyls approximately reflects the of The higher the the adjusted full majority year business year full business which year. and results XX% of segments, XXXX to and improved or products. grow for fourth Products nearly EBITDA beginning for pricing increased basis. EBITDA adjusted of quarter on on X% Fourth million earnings

$X.XX during averaged ethylene the the During fourth result of $X.XX first during as half which higher ethane gallon the fourth year Ethane, cost a experienced quarter, approximately averaged we per the quarter. of prices. gallon per higher

However, this third per from gallon was decrease prices. $X.XX an quarter

almost gallon As range year our of truck increasing the a freight fast. in of railroad with in Freight cost year basis. a for continue and a as a adjusted million $X.XX EBITDA full the impacts reminder twice rates on by to challenge rates ethane price a the increasing change be XX% full approximately $X

have which and that softer believe pricing, to slide Caustic attributable events inventory to The is was this over to declined of particularly caustic short-term demand year-end year. two January six. soda in destocking. prices We customer demand. soda to due past is turning one-off the softness this Now quarters and on

to industry will through in a demand the as of XXXX significant and resolution planned that the confident of half maintenance are we the year some first and events. announced with outages tighten caustic move soda one-off supply We

of soda result, we the As pricing over course will year. a expect the that caustic improve

As we opportunities to that provide presents. into forward are earlier there challenge pricing look caustic can offsets the that XXXX, soda

dichloride acid, We demand and expect chlorinated are supply not Limited hydrochloric organics demand additions portfolio pricing keeping pace fundamentals. capacity growth. in based chlor including alkali and XXXX ethylene during bleach, our to with global merchant chlorine improve on current derivative chlorine,

XXXX we we more be ethylene costs higher pricing a compensate to While compared ethane ethylene anticipate than for to XXXX due dichloride higher to higher in XXXX in costs. ethylene our pricing, expect to higher

the Epoxy $XX The to offset more on seven. move of our Let's the represents pricing is the activities destocking million. year the declined of seasonally The business demand level performance lower and part seasonally on declined slide lower strong higher with during period. which sequential its result reflects earnings third quarter by adjusted from Epoxy of best than and Epoxy finished than the quarter sales raw which normal volume quarter. resins, improved fourth prices higher volumes consistent resin year-over-year Olen a over of XX% business, decline fourth Epoxy as $XX million This was nearly end XXXX. user primarily costs. with modestly material lower The quarter for XXXX of improvement Fourth EBITDA Epoxy driven customer costs. a Quarter during and of as propylene sales adjusted EBITDA lower increase benzene

Looking first ahead similar we XXXX, to to be sequentially XXXX the first of to quarter the volumes levels. higher expect quarter of and sales

the a price continue significantly to meaningful year-over-year further some costs first erosion with These material results. raw coupled improvement in factors decline. expect result costs as quarter in should lower also maintenance turnaround We Europe displays adjusted This in EBITDA Asia. provides States, liquid on improved point pricing another eight in resin XXXX. solid starting slide The epoxy United a for of epoxy and chart year

significant fourth liquid quarter modestly the of and resins costs raw pricing for a as input epoxy material declined propylene. During in result benzene declines primarily

supply lows ahead. above have resin epoxy will in recently prices liquid We the to demand and prevail XXXX. early persist during well moving the that lead declined global supportive in experienced XXXX that remain conditions and fundamentals market all geographies While in favorable XXXX believe

fill supply the occurring. evidence and on likely Olin slide alkali alkali demand in near-term. the that epoxy growth markets about additions prospects economics and to is sold is operating chlor in and products caustic markets rate and sees Our key alkaline businesses epoxy as demand supply the global We by nine, the both change resins and capacity will precursors. not soda, out remains that alkali as result epoxy for XXXX XX% to increasing is chlor view tighten global of to derivatives, effectively supply resin minimal creating positive do additional its demand continue A There justify expected chemical additional required this and are in long-term structural outpace current areas chlor chlorine chlor greenfield would such investment to be the believe Demand gap. XX% upward balances a industry momentum. pricing of

additions We also remain the sector, with by minimal epoxy the alkali supply business market in support developed chlor and dynamics favorable in and the coupled steady capacity the growth to overall a outlook. similar demand dynamics demand encouraged

customers, lower to by $X a decrease $X material of XX. shipments Winchester slide of commodity partially costs of operating and the Moving other fourth fourth attributed from million business These offset adjusted quarter the million is million costs. a lower lower XXXX on mix on favorable of less primarily pricing. product and EBITDA year-over-year The commercial $X.X quarter to to and were Winchester concluded higher with decrease XXXX.

into full that XXXX, to For a commercial expected year continue is year XXXX trend compared early XX% sales approximately to declined XXXX. full

material compared the as commodity approximately the full XXXX. For costs year full other increased year and XXXX million to $XX

consumer participated further while military commercial in first XXXX other decline expect and as levels, government negatively elevated sales the be commercial the continued inventories to impact market. we ahead, to quarter Looking consistent is with demand to

While other steady, has Winchesters contract. note, is we there still sales the and believe in majority levels. government the ultimate personal is remained Of excess large that expected consumer already military of under ammunition usage level XXXX inventory at of

As fourth quarter quarter we as fourth of there in normal weakest result to the will results improvement and compared that as quarter first sequential ammunition a quarter XXXX. the be you is demand know XXXX a expect the typically

XXXX, results levels. to XXXX year Winchester be we full full For to similar year expect

points. who call some Todd would the over turn a here I to take moment financial summarize to like few I Before items to review a will

considerable a XXXX We and First, was growth. the EBITDA record good company. achieved earnings year very for

also able and investments down a dividend. X.X adjusted share and We debt ratio the in and net run EBITDA we to our during to plans in to million of returned debt shareholders repurchases due paying our approximately reliably Additionally, times through year. the to to hard were $XXX were successful

reduce debt continue expect to to XXXX momentum our cash and generating to return businesses, our in we this further in enables flow, which cash us significant shareholders. invest ahead, Looking

XXXX, changes and chlor are supply value and epoxy drive Beyond in place demand Olin. will for confident growth that creation businesses and taking are we the our alkali structural

XX:XX of detailed I our week will XX industry the a next provide we at Lastly hosting we're to New where everyone Investors Day at Exchange P.M. outlook. analysis York and want Stock remind an that views on February

the to Officer. Todd Olin's over call like turn would to Slater, Financial I Now Chief

Todd Slater

Thanks, John.

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

with XXXX, months. reduction in combination flow cash free over growth of of EBITDA million last $XXX debt a XX approximately generate to expect We and

As our debt-to-adjusted of has X.X EBITDA ratio times. year-end, net to leverage reduced been

our be multiyear by that We of XXXX. forecast, The the $XXX includes prepayments approximately far full the investment of spending $XXX capital with our are estimated approximately million. current Starting the that spending we in during for adjusted technology will carryfowards reflects million, deduct left associated with between Olin year. debt integration information is similar cash on were chart, million payments. of for cash and tax $XX in to $XX project taxes million waterfall to which of targeting XX% than XXXX the higher million. annual the of midpoint $XX exhausted forecasting Column maintenance million XXXX XXXX $XXX levels of million three are forecast tax year We're range credit to the rate our tax expected Cash capital XXXX. $XXX acquisition our in EBITDA million as $XXX in the created with additional which XXXX be

heritage discussed previously systems project resource implement the Products information engineering businesses. in Dow The and planning, enterprise began Chlorine technology we've a the the manufacturing, we acquired required includes Olin to As infrastructure. new project and multi-year XXXX, across

have and of Now, turning XXXX. million one-time use next approximately cash I the information includes working costs restructuring In interest capital This higher IT technology just include are that column million. And the we're in source column, $XX we forecasting costs to to interest XX% We column four, that interest The our transition. approximately nor currently XXXX. cash those the an of a approximately of slightly expense. incurred cost variable estimate cash to items neither next experienced at and integration be debt approximately $XX of spoke about. IT during million project rates be XXXX we're for rates, of expecting duplicate represents $XX in being integration than

$XXX forecasting are we flow. cash column, free right million far the of On

approach balanced businesses our our shareholders. deleveraging, cash a capital We returning which in are committed to to investing allocation, includes to ongoing and

amortization and forecast last which some discuss in slide, levels. annual million $XXX will provide forecasts. to million I in is our XXXX and comparable XX, slide We're XXXX assumptions we XXXX my XXXX modeling the to in be $XXX forecasting expense assumptions. On Turning corporate depreciation to range, to

full due XXXX forecasting benefit losses. million, income to pension increased deferred $X.X defined be pension approximately made are year of we defined XXXX, primarily than $XX million is actuarial lower which international benefit In $XX to We pension will contributions to pension slightly million in XXXX, plans. amortization

less contributions to than XXXX expect be $X We million. plans these to

of insurance are In full $XX legal environmental to expenses remedial and for costs Information environmental were are due million, XXXX other $XXX We to million million Full were million. historical year the XXXX, with expenses activities associated level the project. Technology and In costs forecast of investigatory increase year and forecasting Integration costs the the recovery. corporate return environmental, $X.X actions costs $XXX to related excluding million other and stock-based corporate XXXX to to excluding recovery environmental compensation. to higher approximately $XX XXXX

the tax and be effective tax rate XX%. book the For rate believe that we will XXXX, cash approximately both

by Olin's be January XXXX. ready dividend February share take dividend to are of we The close of on of XX, declared a Finally, Olin stock. on XXXth quarterly XX, to each now shareholders to of common questions. consecutive XXXX dividend business Operator, the payable the on company. is XX, on March Directors Board Friday, at This record paid is the $X.XX of

Operator

will We And Please Neel ahead question-and-answer comes Kumar begin with the question from Morgan question. your go session. now Instructions] [Operator first Stanley. the with

Neel Kumar

Hi. Good morning.

John Fischer

Good morning.

Neel Kumar

guided, in in you the of your inclusive prices recent As a of point index that January? clarification, domestic fourth mentioned caustic using decline in is $XX quarter the

John Fischer

it's not. No,

Neel Kumar

that of roughly would do impact for in XXXX? terms EBITDA Okay. you And the know what have

Todd Slater

that's quarter first when quarter our and down look - will year-over-year million the of at headwinds Neel, for million We've from $XXX this What said the between is fourth that the soda all quarter. also you and system XXXX, soda X% Todd. annualize pricing, about fourth that caustic in caustic you Olin. be pricing to $XXX

Neel Kumar

it but of further. epoxy, seems been And down, very in That's then to pricing terms costs material down helpful. even have coming the that raw has seem come

assuming cost? expect pricing the So you for margin be would and it accurate expansion that in XXXX resins to say would ethyl current

John Fischer

the last freeze true think and couple that's say margin would I would stays if we raw material some as years, where And we we've if cost the to able seen the very over of relationship it is same. moved expansion. dramatically today everything I quickly. were get But

Neel Kumar

you. Okay, great. Thank

Operator

question go from And question. with Don Susquehanna. Please next with our your Carson ahead comes

Don Carson

outlook. you've caustic for John, you. expect be costs? to bit increased on your Can you assumptions given talk pricing what you are your and EDC Thank specific about your also what a ethane

John Fischer

assumed we're $X.XX assumptions, EDC And $X.XX forward be the was we've we to are terms ethane going in it that assuming will than our XXXX. that XXXX in of as throughout be range. move to better pricing In it prices

Don Carson

the obviously when softness in noted some that on be exports. year, out Gulf this projected Coast online but the Do anticipating expect factors in caustic pretty low volumes Alunorte back positive, guess are that exports Australia comes in I to of you QX. you've will offshore have then U.S. here export offsetting continue? some demand you as And two were Okay. weakness market, as

James Varilek

Jim this is Don Hi, Varilek.

that was quite go as export As out been a fourth far Australia, of expect exports outage alumina that have the as get you're the the exports. the impacted improve. - do continues if business it export Alunorte an and we'll solved settle to somewhat was impacted by all of in as direct U.S. that quarter volumes Out as right honestly we increase And have and that obviously gets

sourced. see end think I just it's it's we'll - pretty demand where the user and of think and out demand, matter a of just steady a matter Australia I it's

would we'll we expect the stronger a last that's improve to issue. than to year year. this continue year export think I But see exports and

Don Carson

the a And to everything, next just of detail on Is in lot of you're more you one that something earnings epoxy provide with but final question, the week? gave us terms exception leverage going clarity of margins.

James Varilek

Not specifically, no.

Don Carson

Okay, thank you.

Operator

next comes with from question your go Petrie Citi. question. ahead Eric And Please our with

Eric Petrie

morning. Good Hi.

John Fischer

Good morning.

Eric Petrie

improved is noted, you has times. target for as your flow priorities there, X.X cash leveraged going to forward? Todd What and

Todd Slater

In XXXX, we $XXX expect million million to repay debt. prepay of or another to $XXX

$X.XX you of net $XXX million. you for of answer, As that EBITDA payment our have end put know the the ethylene with forecast associated at X.X we is of big a the XXXX. debt at the end ultimately of at the XXXX to XXXX billion-ish adjusted If final

Eric Petrie

Thanks. that the was billion achievable My second target $X.X in you near-term. noted question is, the

you're roughly compared puts bridge and reaching flat are do XXXX? the billion Now takes? year-over-year you the and to guiding how what $X.X see to that So for

John Fischer

would of say would some with also billion. I the it puts things. which quarter, we different that And on $XXX $X.X represents on it pricing assets represents really have that It be had environment, which generate EBITDA it in a path - quarter I in just done of hand. that represents we to us XXXX would But would point say volume the see one can out is put third two generated combination we obviously a million achievable we pricing a and growth. I in of on almost growth

Eric Petrie

thanks. Great,

Operator

go And your Vertical with our with Research comes ahead question. next McCarthy Partners. question from Please Kevin

Kevin McCarthy

good A on thank you. epoxy. Yes, morning few questions

North comment in slide there for amount Any that show then about and America you on global epoxies very some the grew on do Europe. And related how half regional in you of second, price demand in eight much can high XXXX? number too? of think First, you numbers color Asia, changes,

regional comment you driving is those what And differences in on so, could price?

Pat Dawson

Pat. is this Kevin, Yes.

don't would been I a that lackluster. flat most and China from and China Asia really I that's has demand Asia. all, of at First say of true it's pretty for very grew hardly know standpoint, year-over-year all

lot out reports down XX%. of coming specifically You a of China, saw automotive being on

that of world pretty part So, the was depressed.

XXXX. grow as Europe in think in XXXX it much did did I not as

one was globally, But I think would demand Europe oil was XXXX being I America the was that of flat probably of and fueled was by say pretty lot regions overall, the relatively North gas better. flat. better a in year-over-year. Kevin, and

levels From we We big were they early back seeing QX, but here what a where last was quarter pretty question, of European on market destock the gains. demand year. we're by the pricing to first very a evolved are in QX that in the encouraged XXXX had much in globe seeing tighter are with come of around it good standpoint XXXX. than way Europe The second in half the in much

simply than progressed. Europe higher off prices So cooled started and XXXX out with as XXXX

So and Europe. was America into way their very that's percent of of improvements that the North consistent reason the Pacific coming a with saw part we America find difference. North obviously that Asian exports the of pricing Asia lot out that on and

So pricing all very regions world. frankly of whole the we had throughout year in momentum good though the quite

Kevin McCarthy

And I may. last question if

remarks, rates you're You prepared I supply week, your could alkali I that the that chlor it could if basing Perhaps more out next of we'll made wondering demand but that correctly and on if on? by growth in hear heard comment was a comment you XXXX. sold be

Pat Dawson

I talk about leave have we're next party prefer third to that would week to going that. a for because

Kevin McCarthy

much. very thank you Okay,

Operator

with comes ahead question And from go Please JPMorgan. our question. Zekauskas next your Jeff with

Jeffrey Zekauskas

Thanks very much.

of increase? $XXX you I Is that bridge was the EBITDA to up chlor million XXXX. and of the segment chlor Can million caustic how different Your XX% soda? some in increased kind the you as segment alkali EBITDA part $XXX do of got think alkali

Todd Slater

product soda chlorine, is The prices pricing. driver had. but across pricing just virtually were year-over-year. it's a HCL, chlorinated of And $XXX Obviously every we organics, caustic under EDC, all was driver, the up bleach, really Jeff, big big those million,

$XXX so, earnings headlines, significantly is that lot was all year-over-year million the And caustic contributed more Volume of just gets fairness growth. one that to in flattish. under a but

Jeffrey Zekauskas

the came So percent you it percent rough what caustic percents, increase? of chlorine divide what into had from terms to derivatives came up from in soda,

Todd Slater

XX% be high. too The would

broken We have specifically out not those publically. numbers

Jeffrey Zekauskas

all right. plan, don't you guess I Okay.

In tax on different cash much terms it than XXXX, is XXXX rate of rate for in basis? a tax

Todd Slater

This do utilized XX% has number. The lot is a again. by XXXX. the Todd still being with That to the of is end NOLs a good

So XX% still a is number. good

Jeffrey Zekauskas

I income lastly then on information your the Okay. $XX through of costs. million And the some that saw million includes CapEx $XXX passes technology statement. But of

number would the on CapEx flow what statement be shouldn't $XXX So than net the to lower for be as funds million?

Todd Slater

There project capital. with associated other $XX $XX through those one-time runs million that through through items. is expense million goes another the

Jeffrey Zekauskas

that the other through and okay, then that $XX the cash an words, income there is - through So is there $XX goes flow million million statement? statement in goes additional

Todd Slater

the tried we've to with mean, investors. and I help out that folks Yes.

If project we've those deck expense XX, costs you look the on end through of capital on all and to today XXXX. the the through slide slide tried identify

Jeffrey Zekauskas

great. you so Thank much. Okay,

Operator

ahead question. next our your And Sheehan SunTrust. with with Jim from go comes question Please

James Sheehan

Gentlemen, morning. the ramp you will guess they if from operating soda rates Good to when Gulf? Alunorte could your start start the give ordering caustic as more best will U.S. up us to and

James Varilek

is I that embargo lifted for there a is made. operate that we're The to but for be plant have Jim, I is waiting equivalent just embargo been of answer is lifted saying ETA safe before that's - progress say and the national has that restart. basically what Yes, to to real can the a this the don't Jim. being the are you, good

it So with the happens it we dealing it so but be than could be in government that We're are weeks, first that. still hopeful longer quarter. could

James Sheehan

Thank Can working you. that? outlook capital provide you for changes working capital XXXX. just assumptions then your on And your flat in underlying

Todd Slater

XXXX the quarter we is caustic are obviously - pricing saying over fourth the this soda obviously to will get we in Todd, improve year order average. Yes, to

little said headwind Having are assumed receivables. in there that, a also we've costs be hydrocarbon could So bit lower.

on of expecting flat. the other capital we're side, little to a bit see working you'll So net-net benefit be

James Sheehan

thank much. very Terrific, you

Operator

ahead with question Please comes next your our And Holt. question. Matthew Blair go from Pickering, with Tudor,

Matthew Blair

Hey, good morning everyone.

John Fischer

morning. Good

Matthew Blair

maintenance? highlight? upcoming how $XXX another like you'd growth CapEx And like any plant projects versus Of much such there to organic that of is are that million bleach XXXX, as the for in

John Fischer

you like I - think to also would project when in related talked that of is growth all And there are that are integration that add in plants bleach The maintenance. another I time. will IT ongoing that add what tell I plants, that and about majority and guidance expansions, Todd the smaller the our would the project add you bleach are spending or next to say acid around growth plant that projects maintenance. provide just more around objectives hydrochloric to and week. we

Matthew Blair

Okay, thanks. And then, come with the rig like count coming January. prices HCL down in it have looks off

I HCL XX the EBITDA this slide there you think quarter. way highlighted ballpark is up Is volumes strong you contribution in area? any fourth on either that could from pretty or

John Fischer

prices from acid also we have I that our but first dramatically. similar that not in to are XXXX saw to What tell say would forecast very you XXXX. volume would is And quarter, in I hydrochloric fourth for quarter come what

Matthew Blair

Okay, you. thank

Operator

with ahead Mike next question. go Please our KeyBanc. with Sison question comes from your And

Michael Sison

guys, nice quarter. Hey

John Fischer

you. Thank

Michael Sison

caustic need of eight improvement? see tighten there pricing are as supply kind markets get unfolds of up to the aside you terms improvement In end that to that to Alunorte, other year

James Varilek

Jim. is this Mike,

need I We the saw think what of quarter it chemicals, uncertainty the of of we the fourth but all take economic across that wasn't in generally some see industry. just in climate. to out is uncertainty, the

world. January are around we up we we here also that things I are pick that's need seeing the we go diminish into the U.S. and and seeing see quite are, honestly so, just in something things as to think both we And

that that will maintenance Another us number in of pricing impact the scheduled significant first forth thing of are a terms there are so is turnarounds and quarter. the that in

go as and environment a improving pricing So provide supply the of combination limited the through quarter. better we demand

Michael Sison

but you capacity doesn't don't three want alkali years with think segment would next demand for what thunder some to state about from profitability the is to And capacity? it is think sense your Got for it. couple generally adding to think Olin would years and term you now? longer week, do two point of where And next then make I good. from chlor - at the be minimal about the

John Fischer

of volumes, go think asked clear billion that rates improved and mean to which I'll we would that. $X.X for some I assets and operating see $X.X improved can of pricing. the have to one questions Well, making back earlier the the with say combination Olin billion We on about higher

Michael Sison

Got you. it, thank

Operator

Please next Vincent Stifel. comes question your Our question. from ahead with go Anderson with

Vincent Anderson

months. spot right we market, Thank about you the of comfortable you. you're alkali spot and where with the volatility now over are chlor a bit. given; How I I or the volume given in cycle towards contracts up allocating to you more market your want that the we larger that more shift one, expect of mean, the take spot to few duration depth to observed also volume last talk in would commitments contracts spreads shorter firm lumps negotiating maybe are right to your your now by now. bid the

Just managing this environment. book of how you're your a sense trying get to in

James Varilek

is Jim. Vince, this

of contracts be this percentage as the to than year far As any is contracts different go not last going year.

been into or market. seven thin last not the spot The or we're has more last actually six putting over the quantities trading less So in market the pretty months. - spot

supply very think the actually last part from was where of stems early that year I tight.

very market. for for a thin. domestic January seeing volumes and of year which customers this high the And so there that in throughout an is and basis, on parcels year the again it And export part export many and last example the was barge spot two made spot of contracted latter thin we one that market saw we're

of that indicate and supply still there's to out lot would fundamentals a demand are there it So me contracts intact.

Vincent Anderson

hanging might chloride now chain. Great, price instance chlorine. acquisition environment pipeline along procurement for for thanks. the And offer any then how improving value Are think do about where this in right synergies areas your there some you commodity low

John Fischer

thinking would acquisition it that are about relates our we infrastructure. I existing say chlor as alkali not to

in don't we our from perspective. believe there's I antitrust North out anything could alkali at look an there perspective that you If position from America buy a chlor

Vincent Anderson

publicly kind you. that you a for see about to they as higher your to percent on But ask Alunorte, more impact one benefits exact intelligence around I raw a take is utilization could to caustic date the clarification enough to up think you wait caustic some the that capital. really impacted pointing without guessing the actually you they've inventories Or would were the thank caustic. on when months. of down sooner before Okay, then material when shut of market rebuilding said would if full its return And would have to as just still working restart ramp it expect they sitting had

James Varilek

Yes, I think Jim. that is - this

you'll and their that of that's up. obviously with their lead an know advanced restart importing advance of see you'll in material shipments start think then I times

they it'll actually So building before plant. positive and then be startup to inventory able restart to the some be

Vincent Anderson

right, All thanks much. so

Operator

question Please And Leithead ahead from Barclays. our comes with your next question. go with Mike

Michael Leithead

Good morning guys.

Just sounds one $XXX pay guiding million down of deployment or cash, of million only roughly going which to that for leaves so that $XXX to $XXX going million and dividend, free maybe capital million buybacks. roughly you're on be at at so $XX

talk repurchase with top below aggressive growing So just now I versus why maybe times share here? program the X.X can further debt you net reduction priority your about more target EBITDA guess leverage is a

John Fischer

delever end balanced approach a X.X was the we the continue talked for Yes, the to balance times and had will we XXXX. will to about continue sheet target capital we of allocation

mid-cycle. have be ultimately to by under want we We the talked time we times or X get that to at

get a repayment little repurchase So there. debt need we of bit still to

Michael Leithead

housekeeping quick then EBITDA what from in and the stock-based the just quarter? item a was tailwind enough comp Fair

John Fischer

we on have answer will. back get question. that you, the to you to to will We Thank

Michael Leithead

you. Thank

Operator

question. And Frank comes next Please Premium our with Research. go your Mitsch ahead from question from

Frank Mitsch

or minus about billion How would X% range. to that that of billion is you I get third that appreciate When think Good you put I the for you be. the that morning terms betting really party start to number around I guidance? for to take XXXX next bracketed guidance speaker XXXX week as Day range billion $X.XXX going in who folks. to might your am if were that is poll outcomes teaser the broad of thought a too should the Investor And plus to your a out the $X.X $X.XX of that guys John we

Todd Slater

that with we was of we to upside downside the actually the I and have the And said where moment it. think really caustic we because which are the at reason has most we soda bracket of trying given the do to feel product to obviously balanced is this didn't the it majority leverage. is comfortable and

Frank Mitsch

comments that looking puts is Fair fair at I was you're way but probably your taking up And at sequentially and at something of down a just the first is takes? enough. little year-over-year, the will the looking be a least guess bit read here, quarter math would I out work that the

John Fischer

would it Yes, be.

Frank Mitsch

Thank you week. you much. See so next

John Fischer

Okay.

Operator

UBS. And question John Please comes our from question. ahead go with next Roberts with your

John Roberts

might opportunities Thank bottom could you. It's When here. the earnings used as not first in as have in are along Winchester to be, it restructuring business? bigger year-over-year more you you quarter your elevate there expect for but business to it that up

John Fischer

we're better I your continuing is, always will first we there can XXXX. things make yes, answer that up second in an would do to of business the and think to in things. is I the The half it see quarter expect question to those we do

John Roberts

had can to premium why and recontract over like got the kind next and then come XXXX. that advantage to the customers gap just sounded back then take spot in expect here? it aren't this volume of year spot into the of really I'm And roughly your surprised XXXX large Why be more just we've spot in wouldn't they paying going expire customers letting you they're given same contract mix sales you contracts let And versus be prices. market

Todd Slater

made pretty go thin, get with large forth And product also we've out some talking volumes is earlier about the I pretty time. there believe the the so been so they customers that that quantities actually comment the fundamentals well I to in for difficult. is John and see fairly is market to large was quite that our and understand Yes, market

of one So number pricing. is the their job get best it number get at to security supply; two, to

in feet they their and So how to go forth. I boating of so want contract about terms they're with think

John Roberts

you. Thank

Operator

America. And Please Byrne with Bank from question. with our next question go comes your ahead of Steve

Stephen Byrne

you. to What your tolling [ph] Shintech their Dow chlorine is VCM the thank with of Yes, production contract? portion for agreement allocated

John Fischer

much capacity next on will week. more our next chlorine - guidance where guidance provide goes We on week

Stephen Byrne

finding molecules Can you term interest that that comment on other chlorine to versus in up longer your locking move into?

John Fischer

locked renewal I that contract. think the had that about we year up ago of we already a announced

Olin Dow tolling customer. That under from party So arrangement contract BCM to chlorine beginning in with tolling the again XXXX. directly Olin selling moves current a supplying the arrangement to third to Dow's

Stephen Byrne

changes different that have for such may Your in price? for before global say the demand caustic demand? over versus have levels bauxite as in how And sourced XXXX year, Okay. alumina customers demand reduced the the feedstock that up may characterize for you would caustic run any last

James Varilek

is lines. going ups a Yes, What I time. demand What consumables look the demand. is drumbeat period this And quarter-to-quarter long-term would is a longer in over say moving steady and so trend we to and at caustic with of is variation Jim. more there downs that and is forth be always

Standards or You consumables to disruptions and go. caustic production moves the that is clicks about to way on, so talked between continue along do the already Industry Alunorte or market the we've Bureau as grow have of going GDP But that's forth. industrial

so, over would next And continue. to we that's expect what several the years

Stephen Byrne

Okay, thank you.

Operator

question Arun Please next from your question. with with ahead go Viswanathan our Markets. comes Capital RBC And

Arun Viswanathan

I couple on guys. have Good thanks. expectations. Great, morning, the and pricing of clarifications a XXXX

be you're XXXX. caustic you pricing prices X% XXXX And down like on in to similar sequentially. looks it So the QX made be statement expecting average would then to also

[ph]? QX? export discovery highlight can in versus maybe you the QX on similar end through in that that is XXXX just assumption And with a price saying the be if decline pricing you are And your QX caustic you've the XXXX? got so, Thanks. that cadence So to in of back X% contract

John Fischer

our equivalent said fourth that pricing contract, me whole of Let And domestic the We spot, be the quarter and clarify. assumption to - to will export, the shebang. that was XXXX relates that X - XXXX the pricing.

on throughout that expect as also it decline XXXX Our And recover portfolio. was relates we our versus is QX X% our it statement in entire to QX to our portfolio. entire

Arun Viswanathan

And then would the the and other challenged maybe tie-in potential would bridge anything could there? XXXX. similar little you And and assuming hydrocarbon caustic bit so And expect on similarly conditions given EBITDA, be on Okay, else then worse that's that what flat the to I guess just relevant higher guess would that's XXXX? potentially I on kind you two, of release. be relatively epoxy bridge that the pricing did for I on or that volume to be be better turnaround you the worse that you guess mention - Winchester, helpful. are comments in a can still and in QX, would to

John Fischer

essentially four big points are full our year There to guidance.

We be expect caustic soda year-over-year to lower.

to improved be to by that chlorine derivatives. pricing offset impact and the the chlorine partially expect across We

and will volumes, we improve cost We cost better costs. benefit and the that's with show lower have lower to expect hydrocarbon where epoxy higher of turnaround will because better turnaround up slightly corporate - the cost

We Winchester have essentially is assumed flat.

Arun Viswanathan

you being at And million and Thanks. on Perfect, billion? about billion, at business that that lastly the bucket and and $X.X given epoxy the even chlor included that the getting the $X.X that thank you're caustic million, looking can how think bridge, then still rest if to Winchester I at Winchester you. you think epoxy about the has in $XXX billion Is may just $X.X you mid-cycle past how differences or in that maybe I noted $XXX changed the alkali. that

John Fischer

Winchester. that As side not $XXX and chemical would profitability from we billion include million will said from a side. today, I profitability There from the be lesser Winchester increased would tell the that $X.X you

Arun Viswanathan

Understood. Thanks, John.

Operator

our Instinet. go with Aleksey your Nomura Yefremov question from next Please ahead question. And with comes

Aleksey Yefremov

X% Good morning. quarter-over-quarter caustic your negotiations Thank in include should the contract around contract you Does details renegotiations, realization X% QX? lot benefit a of of of in we think the decline for or providing guidance. offsetting that

John Fischer

of negotiations. the includes benefit It contract

Aleksey Yefremov

doesn't the timing contract X. as follow-up. just of a kick-in renegotiations January pretty of And much benefit The

So of the from that's or we quarter-over-quarter pick-up get of course over $XX more assume the can ratably that sort you'll million year?

John Fischer

No.

modeling I you quarters assume across it's of think year. as the purposes pretty can the for evenly much

Aleksey Yefremov

may. pick-up On quick one on I'll if average. both in and assuming some And in XXXX pricing in QX I you're chlorine

Are are similar caustic? what to think that assuming chlorine far I you or has you will you so been go discount contract experiencing January better have in the flat. itself up contract

John Fischer

chlorine Well, we did point. one and caustic that the so say the renegotiation soda, benefit that's in remarks contract covered

Second, we've talked pricing the derivative about better chlorine portfolio. across

Aleksey. that So we've EDC we're for on comments year-over-year on right factors were into example and better seen all - now bleach pricing better on experiencing our pricing what

Aleksey Yefremov

Understood. Thank John. you,

Operator

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

John Fischer

Yes.

And So New to you next thank today. hope week for all joining I'd us like to York. I you all see in

much. very So you thank

Operator

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

your disconnect lines. now may You

Olin (OLN) 5 Feb 192018 Q4 Earnings call transcript