OLN - Earnings call transcript Q1 2020

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Operator

Good morning and welcome to the Olin Corporation First Quarter 2020 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Steve Keenan, Olin’s Director of Investor Relations. Please go ahead, Steve.

Steve Keenan

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

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

Factors that from limitations Form the first factors quarter could of Risk our in release. are of results first differ earnings cause quarter recent Some to XX-Q most without projections described the the yesterday’s Form section our actual press and XX-K, in XXXX of

of information website release Press earnings available copy press A Investors are slides Releases. other Events. transcript on in data financial available The will and our under and be section today’s and the under Past

Fischer, me Officer; and Strategy President, Chairman, Officer. Olin’s President is and International; Vice Chief President and Chief morning Jim Vice With Executive Executive Vice Corporate President Pat Todd Executive Slater, and this Dawson, John Financial Officer; Chief and Varilek, Operating

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

to I’ll now John? over turn Fischer. John the call

John Fischer

resumed manufacturing quarter XXXX had first first operating resin segment earnings by Epoxy of to you, first Epoxy significant and plants morning, Thank good approximately The reduced by million. in coronavirus have mandatory quarter in Asia, everyone. XXXX. did a business and not epoxy did quarter reductions $X These the closures have impact of response which results Steve, Olin’s the XXXX. on operations the the of plant manufacturing end

maintenance exception worldwide with turnarounds. facilities operating manufacturing the Olin of those All currently undergoing planned are

authorities. have that government essential by operations and public among health Our considered are been businesses

on business first with then by close detailed a I Olin’s dynamics, Olin’s the each of with segment. near-term begin followed will review quarter, key highlights from presentation market today’s discussion of a view

outages tied from an also acid significant demand and is Chlorine our During March resin for began chemical has to experienced weakness in Olin export the which reduced Olin demand especially gas quarter and have urethane year, in in customers in Hydrochloric been space. And And oil in has isocyanates of first April declined. and product of experience the across there Ethylene demands second sector. to we expect dichloride, later levels. extended half the isocyanates portfolio. May into has decline June the decline declined. to and epoxy from a demand discussions

chlor vinyls levels planned first in have epichlorohydrin lower caused from and rates in XXXX second our to system and major outages maintenance alkali the chlorinated for and The operating organics, demand quarters levels. decline

expected portfolio chlorine bleach near-term While have remain been is demand into and the are sales of outlook disinfectants and unclear. to strong for chlorine so, our

demand. order are the the regions which of The recent system the lower supply reduced And announcements We in our control supported believe caustic operating conditions. below XX% soda market in the XX% we by price we to level have at implemented increase have rates these level across operate.

contract with EBITDA. combined that demand Winchester’s The Winchester the increase continuing. year-over-year fourth Lake during the experiencing first improved in City the quarter XXXX start demand in business This should a and began commercial adjusted quarter increased result is meaningful army of

to Slide turn let’s that, X. With

first EBITDA recorded the $XXX.X adjusted of During Olin million. quarter,

COVID-XX majeure events related the rail included a onetime adjusted experienced closure that approximately production, phenol Canadian and resin reduced the events Olin in reductions operating $XX European by of shutdown Canadian mentioned. quarter chlor the that million. unplanned alkali forced Asia During plant blockades and the force The that that reduced facility epoxy our EBITDA I supplier

by chlor EBITDA. lower lower alkali $XX a and primary costs was The offset and Alkali sequentially. acid lower approximately improved pricing and results. driver of pricing million chlor quarter-over-quarter Winchester adjusted product alkali partially pricing caustic in raw Lower improvement for Chlor lower was our hydrochloric segment pricing EDC, epoxy material was soda

maintenance of Quarter approximately million included turnaround costs. $XX also adjusted XXXX EBITDA First planned

of million. point reference, $XX a costs XXXX fourth As quarter were planned maintenance turnaround approximately

for Chlor Slide of X. business more Alkali each segments our Vinyls Now, starting on with and I’ll provide Products bit a detail

Chlor First quarter turnaround XX% $XX.X Alkali Products Vinyls higher pricing decline This XXXX a the and adjusted quarter was sequential declines representing in of product XXXX. EBITDA and million, costs. for segment from reflects fourth maintenance reduction

of declined quarter first time, dichloride the same Olin soda declined X% system by XX% the XXXX, approximately fourth acid the and For compared pricing lower approximately in approximately ethylene caustic pricing experienced XX%. quarter pricing to XXXX. when sequentially, hydrochloric of At

overall XXXX demand fourth quarter experienced of XXXX business first in similar to quarter the The levels.

Products Chlor include turnaround costs Vinyls’ Freeport, EBITDA monomer maintenance chloride associated Alkali at vinyl our with $XX The second of planned in adjusted approximately will quarter facility and million Texas.

a Alkali That let’s take at the closer balance. on changing X. and chlorine Now, Slide supply/demand look Chlor is caustic

that on in calls, and imbalance demand have Alkali As discussed Vinyls favored we an chlorine. previous XXXX, in Chlor experienced business Products

goods quarter imbalance by durable and soda Current the over last seen reversing. indications Operating pricing demand. favor have and that caustic XXXX. resulted and XXXX we of that demand chlorine caustic the is driven were into weaker are construction first rates throughout This stronger year-and-a-half soda in in of relatively declines the

and isocyanates significantly, We to vinyls, demand expect operating industry rates. chlorine chlor alkali reducing American into global decline and urethanes North

soda to The applications there pull soda as is chlorine favorable indicates, expected lead key in a caustic reduced are imbalance. shifting be demand applications of will and combination rates the caustic demand operating and less As shift to demand chart back relative impacted.

look we’ll soda X. caustic on pricing at Now, Slide

and pricing fourth the Olin’s During the to X% XXXX. approximately to industry first compared when of caustic of soda quarter quarter XXXX, continued declined soda prices caustic decline

quarter, a demand. pricing tightening and point reflecting reached the soda caustic positive supply However, caustic during of soda believe the inflection we first

the ton additional in Export caustic increased soda price by metric an and X% of during indices sequentially $XX per April XXXX. first quarter

June. for soda Olin soda has per ton and price April. additional $XXX pricing by May announced increased $XX Domestic caustic totaling per indices in caustic increases ton

the expected to soda industry is which caustic soda lower improved American the chlor support expect second during caustic North to pricing. We supply, operating reduce rates alkali quarter

let’s move segment to performance which our Now, Slide Epoxy the on X. is of

adjusted Olin’s During the of first million. quarter EBITDA $XX.X generated of business Epoxy XXXX,

business experienced a Our epoxy production by precursor quarter, resin declaration which during supplier a phenol at epoxy facility. the first Stade, our resin European majeure and reduced Epoxy Germany force

challenges operating manufacturing $XX to and closures Epoxy reduced also The reductions Asia COVID-XX Epoxy and sequentially the operating volumes, these Epoxy segment issues The Epoxy due partially XXXX higher plant first business These approximately product our in faced costs. was lower and material higher to business earnings the by virus. raw offset pricing quarter through able million.

an its is to Europe costs experience and lower automotive, expected and the in related and and both quarter, second to business offset coatings, expected America. customers Lower benzene volumes. primarily resin the oil raw anticipated to In Epoxy North gas industrial demand are these weakening from propylene provide material

Texas, Finally, turnaround the the Freeport, Epoxy at with our associated planned EBITDA plant. XXXX second will quarter approximately adjusted maintenance costs of include million epichlorohydrin $XX

resin We shown look liquid at on are will now prices epoxy which Slide X.

American fourth pricing XXXX During sequentially quarter supply quarter to tight due liquid from epoxy resin European the levels first North conditions. improved and

resin resin The lower and with are raw America together quarter. material environment pressure weaker costs to second primarily expected North benzene during demand the pricing epoxy and an Europe in propylene expected

Slide our on which X. to is on Moving summarized Winchester business,

compared In For first segment the year, year-over-year improvement to a same of third earnings. XXXX, business in resulting quarter last quarter consecutive the the Winchester experienced in XX% experienced Winchester quarter the sales experienced $XX ammunition year-over-year million increase in to sales XX% EBITDA. customers in increase a to first quarter and adjusted a million increase in customers. Winchester sales enforcement and a in military commercial $XX law increase

reflecting year. XXXX. improved This this demand of since quarter doubled this last the demand, first since quarter strongest backlog of level more into XXXX represents commercial commercial improved in first Winchester’s The second time continued ammunition demand has quarter, commercial has the of than level

currently rates to stronger meet Our ammunition demand. the plants operating are increasing

Finally, announced its across from X% ranging price increases Winchester line. product to X%

from is annual and to on million. Moving ammunition months $XX provide Winchester’s multiyear increase Army XX, of expected assuming revenue million contract City facility. X U.S. million Army Winchester EBITDA to the by $XX project. I’ll million $XXX Lake to adjusted an operational of is City Lake control contribute $XXX Slide manufacturing This to now Winchester’s away update

from approximately contract to This facility of costs capital will to expects working Olin $XX than million knowledge XXXX, the and its invest capacity benefit dedicated workforce. incremental operational of ammunition and $XX scale a million acquisition. facility During experience. Winchester in from and production as Likewise, world-scale century incur Winchester will the benefit this offered of approximately and more $XX by transition million part this

to I��d Slater, And Officer. with like Todd Financial to Chief Todd? turn the that, call over Olin’s

Todd Slater

liquidity our the enhance and mitigate our partially of initiated enhancing a resources performance position. Slide impact John. that chemicals given our economic on demand of Several financial included mitigate also actions actions liquidity, our unclear. the will decline We’ve We’ve business these Thanks, and – outlook on believe near-term that our financial are we XX. is several for on ongoing and premium preserving the placed

equivalents were undrawn. XX at $XXX which Our senior Olin of cash March is and million. with revolving facility million, unsecured credit $XXX commitments cash has

of during an expanded by During And April, financing additional financing quarter receivables we expanded and we million. our the $XXX receivables agreement. first borrowed under million agreement XXXX, our $XXX

timing ability arrangements, receipts ratio our have also accelerate our credit programs receivable our of debt the covenants. We cash Neither to enhance factoring and cash impact position. which these increase of senior ultimately can receivable the facility, accounts

standing our portfolio, to senior the and debt, cash, and us uses markets. ability facility, access to high leasing of continuing our alternatives are all the evaluate of We yield expanding retirement sources under early debt credit to including available

repayments We of XXXX. until required have no August debt

is staggered towers of years. profile debt future in comprised manageable of maturities Our with debt

capital our improve flexibility. and maximize are a sheet We financial our working executing to balance our to strategy manage

to million levels. in approximately cash expects by Olin $XXX an working million, XXXX, would from During incremental XXXX flow March approximately which reduce capital result of $XXX

$XXX spending million levels. approximately which prior in $XXX are to than $XXX range be We XXXX, million capital is lower in the year million forecasting to

cash from expect Slide $XXX Based in and XXXX. late in sorry, spending we expect annual million we reduction our the XXXX, on $XXX beginning approximately an initiatives and in to XX. implement, In – on additional lead generation outlook XXXX, of million I’m incremental current capital time

has results. customer manufacturing significant transitioning on place most X, monomer that had Chlor agreement sale since The The facility beginning Vinyls XXXX. a contract the vinyl been the Alkali impact chloride on VCM X is our has arrangement a and in direct X from operations to Products January of acquisition toll is that

ammunition Army reduction plant New million a both expected in completed The Freeport, U.S. XXXX. contract cost these will the Texas. alkali chlor facility, operating of closures are production XXX,XXX and Freeport, structure announced previously allow and operations his of City, a chloride closures end vinylidene Lake chlor full with effect tons Texas. the and optimize before shutdown Olin’s in of Olin to $XX the And These expected in to year costs capacity permanent the from alkali of be

acquired conditions. the between integrate And chlorine will These independent the to approximately of Dow winding cash down technology the cash $XXX multiyear information to by capital significant million Olin, incremental million, of spending products industry approximately of $XXX expense. flows enhancements businesses project reduce provide flow

Finally, shareholders paid XX, XXXX the each by April record on Olin’s Thursday, stock. declared of on share close is on The XXXX. the dividend payable dividend June of May XX, on the of is common of Olin $X.XX Board XXXth This business consecutive a dividend Directors at XX, company. to of quarterly

are now ready questions. we to Operator, take

Operator

now the Carson question Please question-and-answer Don Financial. The with comes session. [Operator will We first go begin from ahead. Instructions] Susquehanna

Donald Carson

access you of payment do high you and $XXX final And that? Todd, bonds tranche, anticipate refinancing the funding million Dow Couple how financing current those? are for calling on ethylene to your at and yield questions, anticipating you. of rates still the the markets, Thank to

Todd Slater

as or far XXXX become they they as callable you XXXX. but as do, know, until the October, bonds, not are Don, Dow due in

to the continue chemical optional of businesses Given cash outlook we this visibility will our uses for evaluate lack in of in environment. our all

Dow our payment, to As the able based AR other liquidity remarks under through we end are factoring, the the securitization, the availability that far year. to items fully on and just of revolver, at Dow as payment had AR the the in be ethylene and I would fund and the went our of various expect, prepared expansion our

Donald Carson

in outlook, caustic caustic June and can May we up saw caustic April. on expectation And, back kind as the for $XX index strength price John, went What’s what of chlorine your a overweighting. swing to overweighting sort of that to, on up see follow for you from expand you and

John Fischer

view of reflected is announced. by price we I think our increases the Well, it

X. we’re on price a remarks, X, and said we price May increase there We looking XX% And out allocation as $XX for speak. $XX in for have at June caustic a increase I soda out to as there XX% the

on bullish least Thank run, you. are So I in think the we, caustic short at pricing.

Donald Carson

you. Thank

Operator

from Ahmed Global. Hassan Please Alembic Next comes go question from ahead.

Hassan Ahmed

Good morning, guys.

about China, Just terms capacity obviously open restarts around of in in different. of out sort quite today there obviously, you But up what this curve the sort cost a alkali guys all chatter particularly of and again chlor chlorovinyls seeing like. question to of or is beginning China the

down, come clearly, keeping particularly that impact exposed much, come that has in how down Oil But coal market doesn’t chlorovinyl production the is hard. in alkali chlor China. mind

you’re specific just thoughts the are side love your more about China, the would well. a Maybe that there maybe sort restart. in facilities hearing restart, as like, their So and which to delaying supply situation your just about hear the curtailing facilities are shuttering on some of global thoughts, china’s of and about even considering their little things

James Varilek

bit a a choppy It’s you imagine, picture, in might as of Jim. China. is this Hassan, Hi,

chlorine being with of some little initial were a the and derivatives chlorine there think I restarts that stronger. bit some

there and But that place. was so forth. taken about were you restarts So shutdowns then, there restarts and hear has some, also

think to down, to I would around lines of alkali so. refilling rates you expect think of I the XX% you know I which might some exactly of terms and as operating in that’s is right that is now, side rates, be, supply and you or expect, And restart So in range where gradually don’t China up so world things. operating in and the the them forth. – hear for are trying that –

that And a lot different you be that regions. hear it’s to interesting of in that something seems

specific what have would choppy, but of expect. insights don’t you China, very exactly of So is I which a lot inside

Hassan Ahmed

prices Understood, as back that fearing oil’s the of down. material coming a things, on up, will And side to again, lot be come the raw oil understood. follow theme, of A people there of of on side maybe bit. sort production associated nat-gas cuts shale fair a these the go tightens And and market fairly up cuts, things. gas the natural oil with deep production

thought guys camp mean, they maybe up? are you natural nat-gas prices as sort gas think locking processes is thinking you you the a as as it are them we even go see are near- do to prices your or today? about are into the How in guys pertains medium-term to you that And what locking, in maybe material? hedging I of about raw that where

Todd Slater

Hassan, is this Todd.

of As and hedged is, out, you natural that our a do price proxy we we spikes. for very costs energy, gas comes from know, know, hedge are program energy Generally, our a gas. rolling we natural quarter may we you hedged how have are to as XX% from heavily about hedge insulate us

low you You would the first think prices, we’ve in late some taken low futures that saw advantage of the of quarter.

And are continued. hedger we and process a has that so,

Hassan Ahmed

so guys. Thanks helpful. Very much,

Operator

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

Kevin McCarthy

Are extent intelligence. the to at caustic? for levels have some you your control that on point competitors market this …percent, glean of order similar

John Fischer

Kevin, We question? of would the hear part you repeat the first didn’t it.

Kevin McCarthy

Yes, apologies.

level So for the order XX%. question control your to to related caustic XX% of range and the is soda

where have levels. position restrict programs at caustic and this similar similarly supply of wondering point a to they in Just your on are similar competitors if adopt

James Varilek

everybody’s Jim. that Kevin, restriction. seeing. That’s I of is Yeah, some in this you’re level what think

You chlorine see PVC extreme the to now was on the And the favorable chlorine pullbacks there. things, that. of side the of of some imbalance that on to things side pullback months obviously side other shifting is ago that

is demand, chlorine forth very and demand low everything back. pulling so So, vinyls

on basis. limitation of on is degree a everybody some So, going forward

Kevin McCarthy

for that? And could how in to any facility. On And Todd I you if Slide that’s of terms on degrees a delayed still freedom to term available see you the what perhaps deploy any mention facility Olin? have then proceeds Is Okay, billion you might address I draw $X.X so, didn’t second that from available of XX, side. helpful. to had of question liquidity loan

Todd Slater

draw the to loan Kevin, available delayed term is Olin.

made As available heard agreement our to including evaluating the Dow everything as current only available we’re bonds. the stands, you it call facility. is credit as you under alternatives us But senior comment, –

Kevin McCarthy

that clarification. for Thank you Okay.

Operator

Sisson with Mike comes Fargo. ahead. question go next Please The from Wells

Michael Sison

seems So you that auto, a me the down. of the are to end-use, urethanes, inorganic, demand terms companies are the Slide of have that in other quick U.S. saying those by caustic X question flat alumina, it lot on areas on

flattish bit why could of you that XQ? give a in So maybe be little color could

James Varilek

Jim. what the to momentum place. or get I is the taking trying this Mike, Yeah, here change that’s do we’re to think

forth about been And or so you been. might down. where so talk it that’s alumina remaining why we relatively have That’s steady here. has It’s to yellow it

lot simply I So red, there’s this away hand the mean, a from takeaway what caustic mean but the of the significant left doesn’t forth. pullback lot slide should from dropped, on you a side demand, this caustic the a there’s is the hasn’t really, concern, of of take the things, chlorine on increasing. that is and there’s equation side whole so relative side on basis, it demand less that of Whereas

again, more left red, side, of than says momentum is you’ve that a resiliency. got anything the opposed So caustic heavy more it’s on hand the where which to pullback, chart and side, – as some more takeaway yellow the max

Michael Sison

don’t answer this of in the that sort see think do view over exactly you Understood. think these And a difficult asking of some be when. time. you rebuilding doldrums I’m How get term and chlor out alkali if about And then, not there’s point know of the sort normalized sort you level it’s at how at, EBITDA should caustic power? And But EBITDA at when segment But longer I chlor for obviously, time? of some you alkali, of and probably pretty rebuild to hopefully do you the for time. quickly. we

James Varilek

where molecule that structural supported long-term of is be, I event to to supply. get in growth that not would XXXX we in sides where into environment, are going I lower whatever got now, demand significant actually in a Investors pullback whatever And both on February our industry, we think presented undergoing talked to you get near-term. in additional of situation where go might within of chlor going to we’re the an the the what when built capacity you’re normal right demand be back the about getting by alkali probability like going you’ve the Day,

Michael Sison

you. Thank

Operator

with is ahead. Stanley. Please next go Neel Kumar The from question Morgan

Neel Kumar

the from my going the prices morning. us Thanks for pieces frame chlor wondering, as alkali said so? from to was What or for I benefit taking good rates any lower operating over just EDC offset headwind caustic you you that June of if well guess, last for help $XX increase? And Hi, I bit considering the moving a different improvement expect type with before quarter. May or could as the you month second April, up largely the quite price question. potential

John Fischer

would that under the Olin sold about I that sells is say EDC Neel, EDC, is the of contract. What majority

that spot opportunity. at recently wouldn’t that published, We you’ve prices on lag the really opportunistically, we’re going prices, the only and market as seen sell qualify So we’ve seen experience to in basis. a obviously the an

So question from is be across the the obviously much might I quite better as and us a tranche offset as not pretty and the and demand on is the negatives I other think, demand caustic. first of QX going side worst There case, end chlorine the at the like. say, would caustic we to EDC I EDC, negative think, about of in portfolio. the day, dramatic look it lower for talked will

Neel Kumar

how and chlorine And the this based to downturn, persist beyond then with there demand end That’s you typical anything helpful. allow caustic respect evolving to previous between Is do how may duration? market last? different demand thanks. with that imbalance on long downturn that to Okay, expect

John Fischer

then ended downturn we this chlorine where takes to about don’t place down first. rolled where weaken say not I’m broader post XX the is Chlorine period economy – housing before sure XX on ever XX happen I then recovers was was and to over, experienced of month this XXXX. ones stop didn’t the abrupt. up experienced And there cyclical although then broader what resilient tight, we and demand, sequence. caustic Usually typically, demand XX the its past starts to to in caustic what prior how its necessarily in global is at chlorine just would the this I wind was of would over back at that I any economy months. very a demand think comes economy. more say, anybody’s I compared What this mean, than core and the core.

Neel Kumar

Okay. Thank you.

Operator

comes Frank of question from Mitsch ahead. Research. The go Fermium Please next

Frank Mitsch

I on XQ? that on right want was And really can I heat that map X. availability Is comment an entirety we morning. the Slide good – control to that any And that April that to the for the Yes, to was XX% spot on you now. assume Or John, have come caustic comment? about order don’t just appreciated back of XX% caustic.

John Fischer

we is we period. order comment I control And have on outlook remain your the that the think will absolutely based entire for on accurate. QX, for on spot

no spot sell. We have to

Frank Mitsch

I given difficult we right. about in mean right Thank in kind Todd, prepaying I to the is But those very you. little visibility I probabilities? is financing that’d the And if to – Thank you. of to back not the that likely perhaps be or And poor, will due that wanted think offer end? understand be are but October. or the a there – I given visibility, is take comment it place to wanted it’s more more that understand year come you I now. do Those All about some retired – just the come how fact, more color, are that great. could callable notes out. everybody’s

John Fischer

John. Frank, this is

over with year I versus on benefit bonds there’s cash long-term. the of basis. look get to mind a a that goes the think which here significant a an immediate of to we cash we net is keep the pretty is, takes It call that, other bond need as thing a us in use forward premium

look perspective. is that have So from at a where we we cash element are that’s the to other

Frank Mitsch

Got you.

John Fischer

year, payment number. And the Dow a of the which which is asked end due or previous about is question obviously big the at

Todd Slater

all bonds or the not Frank, an nothing call. Dow are

$X.X that any billion. of portion You can call,

John Fischer

time, call any you right. can And at it

Todd Slater

XX. October After

Frank Mitsch

you. you. helpful. Very Thank Got

Operator

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

Eric Petrie

to prices going Interesting U.S. and prices trended range. the look export low caustic lower Europe per a at in But soda I was taking the caustic ton actually $XXX they’ve that up. china are and

do see on arbitrage into potential realizations? a export of world, potentially price any share taking you putting rest So and and China cap from

James Varilek

Eric, China. China Jim. and taking in did derivatives And they the are place initially. dynamics some this market is startup have not – about the I was chlorine earlier they something the ran chlorine, and caustic there spoke of

month export off seen So the they What course of do exports. and in the month of low some market over April. is that, the over you’ve it last about Asia started $XX in general, up the moved

So is I caustic seeing of worked China off. was there a that think, you’re bit what itself little excess in that

scheme China about relative whole is of to exporter to X the the small their last what XX% they by years. exports over be, used relatively X they things reduced to in

only and plants export. can on actually the – So the coast

here and over dramatic So don’t rates the impact up, I seen you few think, may see next we’ve growth shortness that going on something, a the it’s months. or the pullback but parcel to there operating show

So mixed, the but the of that’s that the you bit view. look the it’s important month trend course over of April. It’s at a

Eric Petrie

Okay, helpful.

announced Secondly, alkali shut due market fast-tracking or consider that X same the chlor Freeport, Could the Olin weak doing weeks conditions. down closures Texas? your a competitor plant to for

James Varilek

a look at to to materializes. basically our at we’re on is time, a we’re and the to I what do all think take look demand. we’re take that do already Where look the so to that assets we’re said mean, going we going order and, forth. see demand how I is what control

We’re downturn. month really so this or only into severe

assess we’ll next we to over months. several do the so And what need

Eric Petrie

you. Thank

Operator

next The ahead. Mike go from question Leithead Barclays. comes of Please

Mike Leithead

into see or but minus off I’m construction in just maybe and return I aircrafts, XX% the chart in not on caustic resilience want understand morning. to I X, way autos, I detergent Mike and ask that going soda Sison’s Slide or applications, question to the U.S. QX the Thanks, to is packaging XX%. is side. guess, guys, how meaningfully that’s struggling good GDP bottom another to for falling

markets? give more you’re caustic just your So can you color order cyclical on more in of book what us and seeing and those some for

James Varilek

I’ll the markets relatively markets. year-and-a-half. address specifically those for alumina, And quite soft year, aluminum honestly, been have a the last

trend they’re is seeing change they’ve think, America, actually Latin fact, are, in I in not whether running any consistently. whether And wherever consistent. think that relatively where, where we’re so been you’ll the from it’s hear And aluminum have that I they China it’s in plants been,

So change to they we’re if there’s – last saying we’re that’s have where over that’s not what a been quarters. relative the few

has period automotive time down well. been Clearly of as some for

where So yellow, certainly it’s although, been have major a it’s change not from operating. they

the chart. that’s way to So the read

Mike Leithead

Got it.

helpful. And That’s then for Todd. question Okay.

pulling of number a talked highlighted obviously up you free different all. You but you’re dividend levers at to the liquidity, haven’t about

guess, do how sacrosanct consider dividend? you paying I So the quarterly

John Fischer

the of a proposition, say decision time, component question. it’s XX I’ll been you And start obviously, a our excess dividend of shareholder in dividend board span John. start by a at is This dividend quarterly management value for paid long of a and that key if the saying I’d over to has answer look is also that we decision, consecutive years. not a Olin decision. would something I

key never, of and that just declared proposition component will So a shareholder value aligned management we is say, in are our never I say would I normal on board be the And it the would obviously core but payable dividend that. June.

Mike Leithead

Thank right. you. All

Operator

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

John Roberts

you’re Lake a since model. impede our people the ability earnings to Okay. If costs well. And City additional with a while your City intensive Or It’s reimbursed you couldn’t any Lake remember it plant? is new people I like very And down. for your highly are you slows in social current distancing largest you. all I’m old Winchester was and Does you’re your interact Thank been item there? operating glad as automated plant. like

John Fischer

might well in. plant because think, the by pieces are space our the all more Lake plants new the in like army looks not XXXX. The within plant. social an plants The was on temperature distancing relatively the It way plus it’s issue with. of old monitoring undergoing is City big and equipment start the you the as built plant much are to that of plant And

And So interact. X, go we in has before ability restrictions a of have today. We forward October been terms signed big the to not there. not constrained we’re on need living to issue of had our up that entered under most been actually the into well there we people we

John Roberts

$XX Okay. is obviously ethane lower a to how be is for degradation if by that that the impacted Olin earnings oil? here. And might the or VCM So But advantaged. less contract, to temporarily much is then ethane Shintech earnings disadvantaged advantaged? It degradation an is million less

John Fischer

contract, And biggest than the the the significant million. which is the that span contract details pretty piece contract for, that the look the as contract we XX to for $XX contract contract going of minimum we what of average of think I’m return on discuss years, is at an is a say over is Olin. not other to there’s the

Operator

you. question Thank Goldman Travis next ahead. Sachs. Please The comes from go with Edwards

Travis Edwards

Hey, our over Thanks sensitivity And for as liquidity estimates looking taking good that XXXX. we and VCM EBITDA it’s time. for at for the of morning. appreciate we’re benefit can that Quickly, contract. just

is take happening which there payment is any or and would wondering, that that it scenario further and push over maybe and later? XXXX? in it sure Or delay you Just for just could out

John Fischer

would for think, we prefer payment I reasons, say, would that of any happen. I that number

Travis Edwards

Got it.

that That’s over there’s conditions helpful. of of uncertainty market next of appreciate then months. And also lot kind Okay. a couple around the

maintenance on improve bit levers how the to of get maybe a context you’re thinking mentioned that but hoping color have. that you the with few liquidity, in about more considering you’re various have, factors covenant you financial the covenant those just that to a You

just larger in you upcoming other appreciated. Just color of front. some while Thank cash that gives thinking guess, remaining in your outflows in would to that maybe these on fund be compliance I as you’re confidence really outflows. ability worded what about Any way, you.

John Fischer

in. say that a would bank group we I – bank place are guess, basis. the I we are on our financial situation of the very agreements regular with that work have we the they aware or with And broadly, we’re in are our group, –

We’re situation get the deal aware ensure that that in. of get made. to to we’re great of a And payments there’s made, cooperation need the

Travis Edwards

I time. color. the Thanks the for appreciate

Operator

America] Please of [ph]. [Patrick go from is question ahead. next Bank with The Fritz

Unidentified Analyst

XXXX Lake i.e., without it working-capital Lake reduction includes Does other million, reduction build have of the you. $XXX the capital $XXX onetime City build? negative Thank in would the working been City $XX words, million, million of

John Fischer

does that. it include No, not

Unidentified Analyst

Okay.

please? liabilities Secondly, current in you the comment increase on March can of versus significant other the December, in driver

Todd Slater

Roger, current, is up this That long-term payment. ethylene current moving portion is the to from – from Todd. Dow the

Unidentified Analyst

Understood. Thank you very much.

Operator

next Your with ahead. Please comes Lalli question from Brian go Barclays.

Brian Lalli

guys. you? morning, are good How Hey,

John Fischer

Good.

Brian Lalli

did in size on billion couple just do you covenant with a Maybe follow smaller a up, amendment on could or existing – bit, fair ratio draw, but billion to the there that issue? little that know delayed need that expect if get that a some banking quick been be group, headroom maybe a just to would your no asked able of some allows we assume be is you the plans see to you with down say might at an facility for the direct be Or versus it’s an October refi? that, draw $X I from $X.X maintenance to to dig it point And if that? I on might facility, in times, maybe potentially tightness this

a it’s up. follow I to asked know just want ways, I but been few different

John Fischer

it is it’s The bonds we designed draw today, on would the transaction, call structured effect that neutral not with be Dow to down way that used the on facility bond, have because the issued it’d were be that. Dow covenant, would the so specifically an and the to

question I was… think the

Unidentified Analyst

were if do I I mean, guess case, wouldn’t some if wouldn’t those that, there appreciate it? that’s do the But you saying ratio. proceeds, I I guess the use expense obviously, redemptions. And – the is it those delaying reason why is is on you’re and follow-up to impact what the that, around to of for an from cheaper conservative are expensive But, much to some outlay I potentially loan of interest the appreciating of uses process thought cash. want get again standpoint. your messaging cash just around kind you

John Fischer

what we and I’d remarks. is what back the October. like don’t going times outlook that said today several in very said in to look have The things unclear we guess, we and come I are know to we’ve

Unidentified Analyst

maybe Okay. follow it. Got And one quick just up. then

that guess, agree in might accessible. as You to we use we’d that. bond you maybe much that capacity being Again, would how you might about chose And interest if end, high-yield secured be avenue? coming your high-yield the with market? have, talking market the how about mentioned to think to level generally I you open an to

fairly the terms how about Thanks you’re as your And thinking room under so would have that something over you have come with deals lower agreements, you liability you’d of those much topical in various been Obviously, imagine, last month, forward? moving management as think expenses. about? that interest much. Is

John Fischer

longer to listed at both we ensure the and the say term enhance near would options over the all and we’re liquidity things I of looking term.

Unidentified Analyst

Okay, so Thanks understood. much.

Operator

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

Aleksey Yefremov

number. segment? caustic morning, quarter be should not, assume your we volumes for the higher, we XX%? Good XX% that the Chlor typical XX% about providing Thank allocation can the you. in everyone. be that XXX% If or Thank roughly then Alkali you down Or would we a allocation if how sequential volumes soda little second assume in could your to think

John Fischer

We going talked said that also QX fact have about be were anything more we’ve the that turnarounds – we volumes but we in else. than had to down,

So going volumes be anyway. down to were

Aleksey Yefremov

apply for the But XX% the typical there maybe your fact allocation that, some turnarounds? logic quantify – to a compared is a excluding XX% reason? through, or went including not Is just to or reasonable I that XX% way to of math that here that Is just to XXX%? any

John Fischer

the as to have. magnitude don’t it’s of it because that we I the of reasonable, QX think relates turnarounds

Aleksey Yefremov

is to quarter? at in you book And compared Okay, look then, the volumes understood. in way April there your any if And QX maybe you order second your any other or quantify – way? could epoxy

John Fischer

we is can relatively this And best April. volumes and decline. the January and was, said across we for through quantification the we June to were similar that, expect volumes say give, we What see to May started is I prior would

Aleksey Yefremov

Understood, lot. thanks a

Operator

go Bank is Please The of from DeYoe next with Matthew question ahead. America.

Matthew DeYoe

wanted spirit ask avenues I Winchester. to Good boost about morning. In to liquidity, assessing of the

not look you or booking recovers year to in the monetizing business maybe that start you next As you at a past later and core. profits know year cash? that way against generate it I considered Lake as this City, would

John Fischer

success between Olin would no chemical that and What is say it is company synergy what admit as vitally we’re of tell in configured a you on I everybody an business startup commodity transition would and long-term orderly the focused to of is Winchester, the I there that to And the it’s today. now. important Winchester effect Lake would contract. right is that City

Matthew DeYoe

number I listed million. discrete for of XX, of a fair those Slide at to number than look kind But year’s next cash numbers if up enough. you much Okay, $XXX tailwinds a and And flow million. add $XXX higher

a of or wondering just kind to flow that maybe missing listed were if I’m Maybe that some error. I’m offsetting not cash there’s just something. So math headwind was

Todd Slater

This listed there include items well is capital. pre-tax numbers The Todd. as as

in the million $XXX to of real to incremental after-tax be pocket flow cash generation able is utilize. So an number, cash our

Matthew DeYoe

for Makes sense, clarification. yeah. the Thanks

Operator

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

Arun Viswanathan

pricing. Good Great, I all wanted I morning. ask thanks. to well. soda just guess, Hope caustic about you’re

export the guess, continue due domestic operating some to to rates, term. noted could just which in pricing. between lower I and momentum understand dynamic pricing wanted contract recent near You I the

prices to $XXX $XXX the to prices here question, were contract we response are level, considerably $XXX the in we that in Asian in noted an earlier level. and ton $XXX per to that above know that So,

reduction that, price be and a would guess, just the lower in remind thoughts that’s coming. if weave coal included that is case, potentially your cost Could oil new continue on maybe you why why to just so us environment, in high? the contract I a with that and supports the you potentially in in reduction in could domestic what

John Fischer

to The the cost price a is delivered not in States delivered the Asia export to or price United United States.

get you’d have the from U.S. you’d where deliver into it ocean it majority shipment freight, et River terminal, in terminal of at have the shipping port, looking and on it that probably out incur the You to that a it the of get then put to Valley would you’re to of another to are cetera. Mississippi $XXX are customers depending to who a

that’s somewhere trail different as export be always someplace lower general because that a believe the put versus delivering down you that Coast different unloaded is of evident is customer logistics a and who caustic takes that think. to why U.S. very might gets the is boat States a arbitrage every it similar So as is send export structure. tear United in price to the and price, with And on the China where the from it cost inland price in railcars we not domestic U.S. it the reason from XX a And not the can day. Gulf

Arun Viswanathan

And last understand helpful. the curve, have with oil the in that’s to cost change or two? the we’ve prices this, month in you that Okay, observed again, just seen any reduction over

James Varilek

last No, I last two. month your was think or comment

cost don’t time. I think very in there place of that So or take in a is to dramatic change anything period curves short

short not not, we’d see anything term. or So have is sustained to in but whether a

Arun Viswanathan

thanks. Okay,

Operator

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

John Fischer

everybody Thank about joining about second in talking you you. for thank today. X Yes, I’d to quarter. like months us look to to And we forward our

Operator

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

disconnect. now all may You

Olin (OLN) 30 Apr 202020 Q1 Earnings call transcript