OLN - Earnings call transcript Q2 2019

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Operator

Good day, and welcome to the Olin Corporation Second Quarter 2019 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]. is event this note, being recorded. Please

now Ms. Logan would Bonacorsi, floor like Investor to to over the ma’am. yours conference the is Bonacorsi, Ms. turn Relations. I Olin's of Director

Logan Bonacorsi

for everyone, morning, today. and you Good joining thank us

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

be Some of Form differ Investors Factors release described in the are in available on of yesterday's copy and factors cause recent results financial Releases. earnings Risk A our and XX-K that without from section earnings press to Past will the Events. and The could quarter section other the most under Press release. information data today's second transcript are our our in available of slides under projections press limitations website and

With Epoxy Vice Chief President, and Executive John Chief Executive me Dawson, Officer; Chairman, & President Synergies President Varilek, and Pat President John and are Operating Executive Vice Todd Officer. International; Vice this Slater, President Officer; Jim McIntosh, Executive Chief and Olin's Systems; Vice and President, & Fischer, morning Financial

will with and We take our thereafter, remarks, we prepared to begin questions. will be your happy

over call John? Fischer. turn John now to will the I

John Fischer

market each chlor discussing business remarks half followed epoxy. review Logan, for and Today, key of the and by my second for will by view from with the outlook our segments, A of and the you, the Thank good Olin's detailed on conclude everyone. just the dynamics morning, points of alkali begin XXXX, quarter ended, I

to With Slide X. that let's turn

early quarter second with During million. adjusted reported the consistent EBITDA of $XXX.X July update, our Olin and

by challenged our were business results across factors segments. several quarter Second

resulting were challenged experienced negatively impacted Houston, Intercontinental results impacted certain in one-time by Terminals refrigeration by Company’ and approximately a $XX derivatives, We we Texas issues outage fire Europe agricultural reduced by resulting segment, the the from customers unplanned million. storage epoxy area customers and demand supplier. and for and utility chlorine which production included events from the chlorine in than merchant customer titanium an flooding. lower from at anticipated These Specifically, predominantly dioxide several in

as legacy incurred we planned and recorded of $XX expected turnaround in activities approximately environmental remedial Olin We our million site. expense million $XX maintenance manufacturing businesses, to sequentially a for a related costs chemical higher

XXXX to our which is outlook on Now third moving quarter Slide X.

in to expect second be We quarter the EBITDA achieved of that higher XXXX. third quarter our than adjusted

rates First, volume three we and in our each expect improved operating sales seasonally segments. strong of

approximately turnaround we expect $XX of the costs second compared quarter. million lower maintenance Second, to

Olin Third, EBITDA. challenged the one-time the quarter second of absence the in third benefit adjusted that should quarter events

soda the in anticipated positive caustic improvement second provide quarter Finally, continue in moving third forward. systems during the to price caustic in momentum declines soda should affect while the Olin's will indices quarter, the pricing

half Now of outlook, the is X. second on Page looking at which XXXX

chemicals The segment; and volume alkali and Winchester operating $X.XXX early cost in the year higher EBITDA billion XXXX turnaround are: chlor midpoint, and million. second from half behind business; $XXX contribution epoxy; in At in this range stronger we billion. assumptions levels rates EBITDA key adjusted in increased costs; the improved full forecast performance. lower to to guided of implies be we As approximately the the guidance July, this $X.XXX of expect adjusted

to second are half million that compared improvement improve, pricing is the in the the will $XX Although, of expected come from adjusted prices. half first to EBITDA higher assuming we approximately

the vinyls chlor segments business X. a alkali at Now detailed we'd like and with products to look take Slide of more on starting each

impact XX% year-over-year of chlor was lower $XXX.X the Second soda significant million, caustic the vinyl and and products for XXXX a alkali pricing. quarter adjusted representing segment reflecting EBITDA decline

soda lower million second Olin when of fact, compared to In XXXX. approximately caustic the $XXX quarter system was approximately or in XX% pricing

which volumes X% pressure and was impacted dichloride some prices overall approximately larger Ethylene lower approximately caustic overall lower contribution pricing soda from addition, XXXX second Olin's Offsetting volume were the year-over-year quarter quarter down levels. In ethylene of negatively year-over-year improved segment the results. XX% over levels dichloride second from business.

let's the in price system, with This Olin’s levels. our quarter recognized Now, rate XXXX quarter Domestic quarter pricing discuss X% still the sequential Slide first down to from with system. a on decline pricing, third-party is second decline first soda at reduction slower $XX in additional which indices caustic XXXX, the soda X. is coupled in led being a caustic moving declined an

turn seeing positive in but now price occurred than are later upward caustic anticipated developments. has we soda had An we

During the resolved. demand were market than soda that for year the caustic locations plagued a second quarter more the largely

and lead In should addition, on for The side, need soda demand price the place taking in the soda particularly year. improvement back progress additional from in emerged restraints resulting America of supply through to global half as United States. the today supply dynamics Latin have exports the we caustic tightening caustic the

seeing pricing already momentum. are indications of we upward fact, In

trend price the For $XXX most of with quarter. its law the recently, of quarter domestic increased has the pricing ton. approximately end per indices $X by And ton indices the example, spot pricing of U.S. caustic streak first increasing export domestic $XX per declines Resilient in increasing broke per quarter. over approximately first reversed in July its downward the ton second since

move of which the is X. our on epoxy us segment let Slide to performance Now

the XXXX performance from XXXX business. operating first quarter of $XX.X results generated since with this During second EBITDA represents the million. adjusted adjusted segment owning of and half this epoxy business first level our This coupled strongest Olin's quarter EBITDA

when of we to to segment XXXX. XXXX, expect epoxy results to third compared ahead second Looking of increase the quarter the quarter

uplift $XX seasonal in expected turnaround Stade, at resumption unplanned the volumes. outage facility Specifically utility resolution customer the million and of Germany plan operations supplement terminal at of costs, of ITC lower will storage normal the plant the the

in improved we from epoxy believe However, to will segment we see continue the XXXX. year-over-year performance

resin which the at shown prices Slide are chart epoxy on X. Looking global now on

the year moved in resin quarter. prior pricing pricing epoxy in experienced During lower liquid and resin stabilized. pricing than due appears during Europe liquid quarter second the weaker expected to from regions have to declined Sequentially, the U.S. levels epoxy all while demand, pricing Asia

disruptions supply have epichlorohydrin ongoing tightened China in However, supply.

in prices approximately China XXXX. liquid second resin epichlorohydrin months. development in tighten resulting the half China. for fact, XX% increasing markets liquid in pricing an We resins global over upward In global momentum epoxy in the increased in could pricing past resulted believe of this two epoxy This

Now operating XX. quarter EBITDA decline last a in Favourable commercial and adjusted volumes compared X% the the turning segment experienced lower decline Slide second XXXX of offset quarter and lower This is on of a summarized partially result to to commodity the Winchester second pricing. volumes costs was year. impact our Winchester the pricing. and of which lower product for

business quarter third We are as seasonally during EBITDA the the in enters forecasting its strongest the quarter sequential year. of improvement adjusted

an volumes. expect to stronger the in should performance in and We This enforcement lead year’s military product law sales to commercial and see a improvement sales half. volumes and all across categories, overall second during

We year to to full of XXXX. XXXX continue achieved full levels year results respect to for in the be comparable the Winchester’s

a assuming assumed the pathway risk the merger $X Dow become increasing to a we completed Olin to -- and our I discuss of facility. to low But transaction new overall, billion will in our market. cost establish turning late $XXX the bank refinance minute. mid-July long-term able In during bond this million detail high callable credit XXXX a view Now XXXX, the in offering bonds overall financial were in flexibility. also bonds more when

products, our Despite of the outlook ECU. global alkali recent the lackluster in weakness on capacity of To-date there both following: certain this chlor long-term is of growing positive unchanged. and view of additions soda sides alkaline epoxy demand. sector to In additions pricing is and the This minimal has growth and the positive chlor meet caustic announcements demand markets occurring the our reflects demand been for

economics do support industry scale capital Current world investments. chlor alkali not

a and see chlorine demand chlorine steady minimal Olin’s tighten, in supply for additions. upward caustic capacity and momentum global Similarly, the to As epoxy growth will over result, continue pricing demand creating we soda, business, balances products. derivative and announced time

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

Todd Slater

Thanks, John.

market discuss completed outstanding of capital million $XXX opportunistic detail the borrowings flow extended proceeds In we an A and issued notes our Loan at the to facility. receivable rates like current XX. Before under of to turning more year mid-July, recent securitization on liquidity facility We debt senior our which Term Slide interest I'd offering an to accounts our the immediately We outlook, XXXX bond XX cash offering prepay the position. unsecured in from used transactions X.XXX%. enhanced maturity the and profile the

debt As a have no result, pre-payable outstanding. we effectively

facility consisting $X.X and $X new term billion put $XXX we Concurrently, delayed-draw place million credit bank of facility an in revolving billion loan. credit a a

pay of Dow delayed-draw that use from Products acquisition to to proceeds the XXXX. in were bonds expect the cost existing the We late loan bonds the assumed high the in term become when callable businesses Chlorine

within now, estimate and refinancings sheet significantly addressing to expense future cash positioned attractive flow By markets million. our reduce balance XX will favorable, we $XX interest are next $XX by to We annual the credit XXXX Olin this million months. the when have enhance at that need terms the

forecast Now, let's on XXXX turn which to flow is cash our XX. Slide

our of XXXX. left cash chart, to of XX% adjusted midpoint of our waterfall Starting our $XX be forecast, midpoint the rate $XXX the estimated the the year. tax in expect is in approximately we guidance, we flow far year the deduct generate will EBITDA adjusted million cash Assuming in we of in payments, for tax the which forecasting full EBITDA cash are million range with

our investment of capital technology and spending the $XXX $XX capital includes million, for of maintenance midpoint current reflects with the of and X approximately which project information million million. between associated million $XXX Column annual $XXX our integration forecast of multi-year spending

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

incurred Now discontinue next were million column, integration our capital our during that increase column sale being during $XX factory duplicate includes turning expect million. of non-consolidated fourth under the costs, million spoke use project that This and and to technology working from $XX integration IT one-time pre-tax are costs first information for XXXX, by items include the the restructuring These of just to investment sale from of we million approximately proceeds In will an cash $XXX million $XX a approximately partially the of receivables approximately a as of we costs in quarter. in costs the arrangement. about, offset transition. IT affiliate I the in the cash $XX refinancing

of at XX% of rates. approximately an had XXth, next estimate debt interest The represents cash our we interest On June column expense. variable

debt our of refinancing was variable However, that at percentages that the dropped XX% completed, following rates. just to

interest experienced We are those in XXXX higher XXXX. we than be forecasting the slightly rates will

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

Given to no capital to-date, million build cash which than for free the priority in will is our the progress late shareholders and through repurchases, market be our transactions of dividends that payment, our is debt recent and and XXXX. advance position the and share due cash flow top ethylene returning $XXX repayment more in

on on Board Finally, XX, consecutive Olin paid Olin's August Directors a to close is $X.XX quarterly dividend This on The XXXX. the of each XXXst share stock. the the on at of by company. common of July declared record XXXX business to of be is payable September XX, shareholders Thursday, X, dividend dividend of

questions. Operator, ready we are now take to

Operator

Yes, sir.

instructions]. [Operator question. question-and-answer to begin now will We

of Our first will Please go question Carson Don from ahead. come Susquehanna.

Don Carson

maybe John in about of continued TiOX, like price are to for demand your weak. refrigerants about obviously second talked half? and and But outlook any as seeing EDC weakness is well, other you ag just in what some volumes these some and markets in chlorine the talk uptick you pre-release

John Fischer

Okay.

say, terms our would those. look just historically And of let fairly and in both strongest refrigerants both which of, it seen in demand, Jim been some In the TiOX seasonal has QX. relates chlorine on always uptick as weak have saw to in the comment you first EDC. half, we if I'll at it I we

Jim Varilek

actually EDC an we also a it Asia. We’ve be demand And two increase increase months, year ago, But it that in few Latin half. well. a has to I is pretty second the From demand What there's think then, recently North first actually a the in seeing and John, as in demand solid seen Southern Middle half. we're used East, A throughout standpoint, broadened time long continue into And Yes, for last Jim. this marketplace is ago, predominantly Africa been the half, America. the EDC. the to we've Europe. expect of most course, in seen in years

demand solid, EDC. on is we constructive So remain

Don Carson

show gas half how on you if in And both you leverage the And then ethane of position? the growth any, as a been lower What given have and follow down. in to that price see that, earnings see benefit XX the costs coming could and nat do significant contributing you from up, hedging half? Slide to second first

John Fischer

generally, was be profitability our say -- are ethane just have tempered the it hedger predominantly that from to see prices. you terms lower benefit and we would any I we gas in of as that benefiting the delayed been some EDC system. of it'll relates And but the a of our in

Although has recently. a fairly that of occurred lot very just

Operator

Research. Kevin of McCarthy Next have Vertical we

Kevin McCarthy

your baked if to noticed weakness could follow morning, of comment was what and Good level on kind assuming months in you're guidance you for pattern or Yes. into We've last XXXX. I is EDC. EDC just there? would over to so understand wondering the just of the like some of two the terms up that financial sequential prices on

John Fischer

place. EDC an think that of that’s ethylene that’s from there because And taking pricing low has Yes, Asia. been seen standpoint, I in some we've movement

is already participate doesn't for seeing in that that Olin contractual are amount probably quarter we're participation have specifically and third to Asia, the to quarter that, are at pre-placed of say a pricing. our some marketplace, we at reduced have fourth numbers. and earlier the spot that, mentioned significant on hearing a and So in broad-based I volumes volume are been the has that you What I in seeing Asia, as of moving would

will we're we going somewhat spread. muted see So to that be somewhat effect -- to relative

Kevin McCarthy

realized soda declined as for in I then And think a press pricing in you second average versus your that XQ. question, X% indicated caustic your XQ release

including average Just chlorine similar molecule, your provide price wondering What the was to side there? the number if it's for of a possible derivatives. experience

John Fischer

is on chlorine that side you tell itself, the up would I chlorine year-over-year. actually

into So into just moves the that takes play. play at think through the gets and the can and gets -- derivatives I with are because and organics mix through. look bleach which derivatives get very you messy -- chlorine But chlorine big it moves chlorinated the

have is market at the from to HCL, that look you So still, more perspective, would derivative at I is had trend. a those a if value to merchant say lower And this year-over-year other which chlorine. HCL, it's has our positive driven. selling But be would compared tended much point. still add

Kevin McCarthy

prices stable on And sequential a just were versus to XQ? clarify, basis John,

Todd Slater

except go all this is Kevin, Slide Todd, to similar if you were versus HCL. prices back XX, virtually QX, you'll caustic and QX for see

Operator

Eric Next, we have of Citi. Petrie

Eric Petrie

soda in You since any or how contribute you pricing epoxy? noted that does XX roughly caustic think will over your you half Of would guidance in that uptick that first second represent derivatives pricing much million. realize that chlorine half

John Fischer

have half I We most out. roughly say just with not that is broken caustic as our of would portfolio, volume. of

So represents price. of it probably half the

Eric Petrie

at least basis. caustic talk remained year-over-year on And soda a historical inventories, elevated region, in on customer seems that about stocks you a Europe, by your could then, it

at seemingly out So if in about you and wonder prices [trussing] levels, second these with talk half? I restocking potential could bottoming

John Fischer

of we from I Europe, I Europe China tell could XXXX that of standpoint guess you that I you down. down. much say tell are attention exports don't also pay out other America than to would from would the I for that North to the exports also year inventories, are

to see So benefit continue we see from market. think see to benefit over to -- we're to and tightening going a continue that we're time going

Operator

Next Michael Leithead we Barclays. have of

Michael Leithead

million. over sort preannouncement question, of And turnarounds another in XX last so us a XX your if million epoxy going give in bridge, out give I going million, us on you is half EBITDA items. to XX to called half the are think pricing build I Following

my math that need hitting assuming us So to if I'm that is XXX is guidance. around of that's million gap mostly that terms we right, get volumes leaves the us there? going in

Todd Slater

That's correct.

Michael Leithead

has what half the four business second half? between the and and volume you years bought seasonal first the Okay, the Dow been since ago, split historically

Todd Slater

'XX Look, in as but we've three 'XX EBITDA our about at as of the the between XX% the first second half, and 'XX, XX% year half averaged if and for average low been you second look XX% XX%. to half, EBITDA first just half in of it's

So, line out not seen is forecasting I would what way historically. of what we've say we're with

Michael Leithead

one, massive But I a guess caustic past just four one seen up-cycle or three you've last over the years.

So benefited the from years the just first this half versus has second higher over that year. half price past three

benefit. skews EBITDA pricing assuming I'm So the some of

guessing on side that's So why I’m volume that I slipped the guess in?

John Fischer

first the of half. me Let I'll benefit second in statistics versus that give for biggest give things is you, terms half biggest, three the you us three

And first in it's July, the as And in seasonal. businesses. is positive the historically as been biggest it's up in is But The that's comparison. of of that that's in And -- bleach, XX% terms half to second fact, XX% to it cyclical. range, has the not half. not the which first actually somewhere high was

And averaged second that our prior some who pipeline but versus the been has and vinyls over our three timing the do second have path. to customers we first that years half related lot has the has a And customers about then has X% first time. And do. turnaround when business, in XX% half. we and that to second improvement polyurethane large primary X% are turnarounds of take half typically with versus a historically about just The to the predominantly the been our

pieces. three that’s big So

Operator

SunTrust. Jim have we Sheehan Next, of

Jim Sheehan

demand declines below GDP of to down production the industrial and Is an Can in this You quarter? well said or you or rates. trade impact address alkaline, something seems chlor be your the It else? tariffs X%.

Jim Varilek

anything. the obviously And market it's side chlorine that of on chlorine of not tariffs it the things, weakness some a result organics, refrigerants impacts us. sides you the We No, that demand or Jim. agricultural when the chlorinated basically. mentioned is that have and side, both is the Jim, this on trade of

about volume terms the declines. what primarily So that's of we're in talking

Jim Sheehan

in epoxy. Okay,

tight enough in talked to markets? automotive offset You liquid epoxy about you upward epoxy is and from seeing some epichlorohydrin supply tightness think pricing. Do demand end and maybe resin conditions resulting demand of we're in electronics pricing momentum to for the weakness that

Pat Dawson

is this Pat. Jim, Yes,

in the -- will two the pressure puts China. real epi prices on with see producers XX% epoxy going because, non-integrated last We in there months that resin is the pressure up margin issue

of LER 'XX levels so, price what of in 'XX. does up the seen price And that the in price we out early you LER And and China that we've LER were late in where to of than of China. go China is higher get

that So see a they Europe into we because the and Europe market arbitrage off in coming better Hence, activity producers can competitive send and in Asia, and they'll LER of get tightening takes North that America, from make that lot China kind dynamic. a North can you of product where the into America. returns

that's So second here we the really in half year. what happen could the see of

Operator

Matthew The next question we Pickering, Holt. have comes of Blair Tudor, from

Matthew Blair

the I cash use proceeds. just on to of want clarify

were is to or that payment? Is previously about general the of still you the intact think $XXX $XXX third build debt. tranche down ethylene I million talking advance cash in paying million idea to of

Todd Slater

payment of debt be was Matthew, XXXX. this going to effect is end the of ethylene repayment Todd. in in that That advance the at due debt was lowering

a And a be build position that. going half pay so cash next we are in the to year over to to and

Matthew Blair

in July. then a looks contracts it good. settled And epoxy in U.S. little sounds bit like the Okay, down

compression that expecting will you think epoxy third make raws? are Or do quarter? you with in cheaper margin the in wondering, up Just it

Todd Slater

lackluster And chart that in the there had -- increases you index from again, improvement on got on IHS is that May, seeing major on in we the May. here traction this margins, seeing out Yes, June Asia in with pricing pressure but not increases in also we costs. in Europe. we're modest and demand price any saw the -- material no timeframe, the the question We're raw

second margins America. in So of think pretty North the here we go as half the stable be year should we into

Operator

Ahmed Hassan Alembic is Next of Global.

Hassan Ahmed

back in caustic the You year. of guys about a talked pricing recovery in half the

U.S., in a facility some not of the there consultants out back restart, same. a huge all caustic the there's but the about half restart the capacity Now, of industry a in talking the

you about you for looking that So back forecast, as capacity factoring guys on are coming think in sort in the caustic stream? your of half, higher prices

John Fischer

things that's say is I plus, restart, scheme a small. a in capacity guess a very it of facility, XX in is terms there what would it’s I that, that's in a -- North this small whole million America, of

caustic obviously, overall I is So expect would constructive plant demand seeing, And constructive what domestic impact on restart, on we're export to it. we're outlook. strong market that wouldn't the And we're very seeing. and that the in we pickup we're on say in the The supply market. that have any on demand

Hassan Ahmed

demand side. to offline, are year. since to on hear the the brought seeing the of up sort export specifically you would facility Alunorte the it, you And up be side It ramping we guys the seems production, but of through of continues Braskem what love is end least Brazilian very

are the seeing you guys export on what sort So demand side? Brazilian of

John Fischer

some We in a prepared see I'll caustic have of there. talked We that the demand about price quarter. the we other make pricing. about over caustic up And our in aided Brazil, go $XXX outages comment down continue by last domestic price one strong to the Brazil, in soda ton remarks relatively the seen supply

of first to of a end the from ton soda America of second outside the North pricing Our quarter. approximately caustic the went $XX the up quarter end

improving. So is the export market

Operator

Next of we Bank Steve have Byrne America. of

Steve Byrne

you derivative into running Are shift could markets way at your in chlorine EDC? more products chlorine higher spot end capacity? from Or a those margin molecules

Jim Varilek

have This up around. the is do to ability some move Jim, products we

in bleach think Our to we And fact Investor in the the that. doing forth. capacity so derivative HCL talked Day running hard. and and are additional our I at we road assets And down adding support demands about are

seasonal And well, we different have the to some across So optimize running say would do we running operational I -- do and have demand. on portfolios assets are capability product still downstream hard. based

Steve Byrne

source term? associated be contamination could and this have, remediation with? of And you What's the the how environmental site longer what charge is significant this that

John McIntosh

We're the going part normal This orphan for trend of not with of a the were specifically few This sites to ongoing McIntosh. ago. things the just This respond us not come. about site. events the site. course of is remediation activity that is at cooperatively This is is the agencies to remediate targets John we harbinger years as or or to work sites just

Steve Byrne

comment just the you on Can what is? contamination

Todd Slater

Steve, this is Todd.

If a over year $X last million. has XX you item, from average look our year expense just in been the $XX ranges a long-term to environmental $XX under million million that years anywhere

So this $XX million item happens is not unusual. It happens periodically over a XX-year period.

I XX The this a have within that think Olin its Dow environmental is -- other And day, portfolio. we environmental didn't any over the [indiscernible] sites we dealing liabilities. is as that environmental take remember legacy site,

Operator

Mitsch The will Frank next of Research. from we question Fermium have come

Frank Mitsch

Congrats quarter on indices caustic wanted versus per was had bond also $X. $XX in the I indicated offering. that industry down I on first I quarter. to it pricing. July up you you And believe second down mentioned ton follow the that thought

your in this index if the we we -- industry think where the be of end about getting index down $X will ended quarter? third thinking higher how where it expectations what at should than of be look are the more June? than it that should Is that about end we terms As quarter, the we by it on that being

Jim Varilek

is Hi Frank, Jim. this

indexes. There's to indexes from at anywhere to a actually Just moved for X IHS. number range and on up clarity the they different index the up XX of up July X

movement, that through That as and be time. go expect on here upward point continuing reached with summer the we've we movement inflection strong we demand would the prices. the to do expect we So continued

an second from be quarter being a standpoint, you about or pricing caustic think quarter third would good think I better assumption. at expectation than if slightly

Frank Mitsch

question which I sense, because a why lot That misheard makes that. obviously asked the is more I I

apologies there. my So

On as incident, progress negatively delayed that that Is the ITC the be year? gone making by is $XX. through that we demand just epoxies and impacting up, you'll forever? merely Or

Pat Dawson

gone has It Frank, was is No, Pat. this that forever. not situation. a temporary demand

the so actually the that started of to of we come And it are come the month here, into second in we we half back June. see seeing and back go as year, strong

Operator

from we JPMorgan. The next question come of will have Zekauskas Jeffrey

Jeffrey Zekauskas

expenses elevated was $XXX to about then nicely wondering think you $XXX I million maintenance sort you're are pay still Your from a about level several maintenance? this normal level more elevated? the come of year? next case from Is XXXX, now to an as spending years? the these what in over going down maybe a million trajectory is base $XXX that is this of of Or 'XX. have of Or million this maintenance, maintenance

Todd Slater

Jeff, there's outage three drive That XXXX, again VCM maintenance the most things level we a in there's last drive a every of the is complicated obviously of which And the will up the that so years in plant, we biggest, occurred year occurs that couple spending. in that it large will One, plant have. that that occurs. see that XXXX. in

that of year Part of six XXXX. maintenance Part the in of also plants. in that once both occurred epoxy every XXXX. late had occurred We at

as below that to we above that because I the expect we little normal I up again XXXX, elevated 'XX a I line, 'XX would both So of tell would call the what would say drove the bit is would But normal you, into VCM. go be probably line.

Jeffrey Zekauskas

probably you slower first they in the the market just levers half come in are why was is do the think is caustic toughness caustic soda at primary mind XXXX if behind rate? summarize a the of coming and and to And lower stabilization altered? why the briefly growth prices your in about and then the What caustic for could which than why probably you -- why And that you were expected.

John Fischer

half was ago. of which a was year has caustic discussed much restart a the of -- a month I was here one -- anticipated think Alunorte tons delayed whole XX,XXX than longer about discrete much have been of there consumes of event, might which was issue for year. And we that the plant, was which

industry The some demand in first look was other data, of little just I year bit thing we you caustic America would weaker data think and than half at some have the the consumption I think if a expected. soda in North

where believe, in as specify currently of we came the remarks top disruption to America supply why, about turned said from. impossible Latin around from our there's that Now But On the to probably disruption in we’ve we've seen corner the started we've that Alunorte. demand Braskem. that's

So summer -- into the months from we've improving seen move our strongest are started which and a manufacturing we've typically perspective as months, of demand to the system in

Operator

have we KeyBanc. Sison of Mike Next

Mike Sison

Hey guys.

$X a on the Just the question realization, July caustic. for

think and Was of you low? pricing several about realization the suppliers -- maybe you it more the so guys realization? XX. others I Can more why terms announced what demand and was talk in

Jim Varilek

Yes, price to realization, up, range a And terms Jim. turn place. down is been things of you this the a individual to this when you're think in has the also market a of pricing. lot as from it's Mike, take moving should that negotiations going hard always about

Some like to different there's around indexes, range XX that. said I from X of the

of took place the And into so a quarter. of of type kind spread to in continue that that of will realization and epoxy the indicate be would price industry latter as what third parts some of pushed the

Mike Sison

in to terms well? improve you demand you that is to U.S. need some demand on improve of it more a geographic overseas does do sort as And need see of that then basis. just where or improvement mean demand in do I to demand, needs

John Fischer

market. I would John, is for that to us caustic global a is you say This

need really way different, we So in it improves. the demand where

Operator

Neel Kumar have Stanley. we Next of Morgan

Neel Kumar

higher the And are pricing? is the what price anticipated export if about is you're market was metric July. versus going mentioned domestic second that's $XX of trade sources than of wondering lower have come then U.S. your just recent half One offers? different per lower coming the seeing to the drivers year, ton offers export the it of in the improvements I in or from in what and

John Fischer

Well, caustic sold is, minutes to approximately $XX question answer I'll of system, which end between quarter went ago, go ton of gave I the a first America and in a back to the the the the our few up out quarter. of second North a end to

we we forward. that not and go down So -- as expect move to do

with $XX see different what export our ton. our you be shipment American that getting half this a be From pricing half. what up the might versus price expectation perspective, what contracts. comment is for our non-North I that's a is system, consistent which the us first under it's one So in or in second can't I that index, And improved might will we're pricing mean. the slightly at on in think our

spot we nothing the As market. in sell past we’ve the virtually said in

So we're constructive least direction. the on at

Neel Kumar

Thanks. to for some elevated get commentary That's And we've currently? demand, being levels characterize the would with you or caustic helpful. those inventories drawn over begun in about seen last couple a higher Have inventories the export months. the how bit industry down

John Fischer

are I slightly to at say right the talk industry, can inventories you tell can't below about would now. normal our that levels I normal I

Operator

next Roberts we question come UBS. of have John will from The

John Roberts

epoxy. I were you. Thank the that the a just industry? disruption based ago chemical through talked But while you system? think glycerin may Chinese the these explosions or at beginning. the have of was that in went misheard supply that based at Is disruptions older some about I Or happened some Chinese the

Pat Dawson

And primarily really it not has to out chlorohydrin press glycerine gone capacity is down. Hi, having some epi the and John, environmental epichlorohydrin. highly -- this base. based issues this Pat. was really This It around in the was is was

John Roberts

continues glycerine a the so market here production excess of back fair fill still the of in if amount up? to based that And can pricing to kind come

Pat Dawson

John honest little right to of out the in sizes hard of -- There's as scale. it's of say that I'd in know. small there's epichlorohydrin of that different ever China, terms tell. Most comes a lot answer lot There's costs a out different to epi those assets. involved you glycerine now, here of very

of most this of that based. base. is most in And chlorohydrin capacity of is epichlorohydrin think I China is, the So around course,

John Roberts

follow we is kind now. current the of along, Winchester? end are and disruption And supply the next have until kind consumers results on patterns the all comes both destock of at normal completed up the in Winchester, of this seasonal a a level and chain of off normal then And new will

Todd Slater

John, this is Todd.

stock. we've I consumer what seen in their safety the I the think at It’s and distributors line. inventories retailers are what has still think in unknowable

they're clear today. buying technically not consuming what it's they're So that

commercial first costs similar. So has sales year, sort even results improved of volumes, what the are though year-over-year we've seen and pricing down down of, have Winchester been with been the military in and half is very commodity

Operator

Arun Markets. RBC Next we Capital of have Viswanathan

Arun Viswanathan

to question bridge. the on a going Just back

that weakness gives HX volumes. or first well? is jump given saw comparable out big you price what you a Winchester that break so especially quite like then you seems confidence, earnings, half? you that Could that weakness highlighted, lower only Was just turnaround that in the XX. back? XXX to kind you see that in So XX, of for all you me. pronounced the and that’s so was minimal HX And more I that of demand that as And coming least at improvement, mean said

John Fischer

was that The seasonal vinyls of business X% to historically always run, the predominantly how a in has half. customers is I first ago first in to a and States, first lot September. uptick. X% second We’ve in has related. a is the That July, it second lot hotter think few construction half. a of half second pattern a how August, we've bleach, and than talked continued early the wetter. weather April, to lot provided Europe, business summer that in part to terms And Historically, in we uptick businesses half half first a a August. had -- and lot talked seasonally has epoxy that year, it uptick June, run, is seasonal products knows especially which been to May business. about we minutes which the really seen versus represents And look United It activity I July the to goes if big the has of a some strongest XX% the a lot at the cooler the a you everybody component in a half. was of information normal, specific about where our

I our And to we improvement have large we So seen the talked of first that. them. the XX% also confident business. half one in in half about in who in somewhere typically were And are primarily second accounts urethanes pipeline

costs the looking the first demand first first So half. going half versus fact you second and pattern half. this what over the the normal first half demand some to turnaround turnarounds the that turnarounds the second of for gives is second that plays into really to here half by lower half half. be occur in the -- are because in And is we're And lower, of that a that reflect lot driven

So unusual. I’d could about we're not be as we say as the This confident pattern that that seeing. we're is

Arun Viswanathan

And in X% context. vinyls, can then XX%. we pipeline that as XX%, just Yes, I have XX% those up so to bleach numbers as X% up in far to put

movements could past, larger in in second changes half? first a resulted you that that improvement the has I typical those because system is Given that realize of improvement? of guess typically that half versus million $XXX Or your levels in

John Fischer

would obviously half. half. and assumptions I And skew from the is of XX% We've looking that we've XX% significant We're price second about all price, over giving there's years a time. we're number based that -- first creates last second on of this. pricing a that Dow are that our our you owned generated skewing earlier seen based this And lot place. can be change the said that on to half, the not at three on We first say over the the typically businesses. our half in in EBITDA the

Arun Viswanathan

the And guidance then just lower the of end then. understand

$XXX end so mainly the get So lower go Or come end, of that volume other or the assuming midpoint, into factors million that that the it through? you doesn't volume, is the the lower just in are guidance? so what

Todd Slater

big price? say in It’s is are, volume. realize the the the $XX do the guidance the Todd, I And around million two rest variables would you

Operator

Next we of Nomura. Yefremov Aleksey have

Aleksey Yefremov

the midpoint is as question second to average million divided by another $XXX half Should take below XQ I and I on than the the that? seasonality first that's half. versus $XXX going and that Apologies higher X, XQ quarter. half second million per back to it the about be in If about think

Todd Slater

No, mix QX today, similar changes the and I have of look say would customer, that in product I should with other. the QX some think the we to and each

Aleksey Yefremov

$XXX because then Alright, quarter million absence million should charge, quarter compared thanks. that's $XX that quarter per in roughly. the of of the benefit the third the corporate And second is to line So environmental it?

Todd Slater

equal, being else yes. All

Aleksey Yefremov

fire in negative last if I may. ITC first quantify it half, much the second? And of impact benefit quick and the the Could how one, you would

Todd Slater

said was in is that second million we've the it All quarter. $XX

Operator

this Well further are would over to back for as like there any closing call to Fischer conference turn questions, concludes session. John I the question-and-answer our now Sir? no remarks.

John Fischer

our third for forward all thank us joining we to with quarter. about speaking like today and I'd look you to you

Operator

may care. sir, the the Thank also. time has And for thank rest Right, conference a and At disconnect the this Again, you now Take your great call lines. have everyone. your concluded. time you, you. we team to of management day,

Olin (OLN) 1 Aug 192019 Q2 Earnings call transcript