Virginia | 1-1070 | 13-1872319 |
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
190 Carondelet Plaza, Suite 1530 Clayton, MO (Address of principal executive offices) | 63105 (Zip Code) |
(314) 480-1400 (Registrant's telephone number, including area code) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
(d) Exhibit No. | Exhibit |
99.1 | Press Release announcing first quarter 2016 earnings, dated May 2, 2016. |
OLIN CORPORATION | |||
By: | /s/ George H. Pain | ||
Name: | George H. Pain | ||
Title: | Senior Vice President, General Counsel and Secretary |
Exhibit No. | Exhibit |
99.1 | Press Release announcing first quarter 2016 earnings, dated May 2, 2016. |
• | Adjusted EBITDA of $214.5 million, at the top end of Company forecast range |
• | Reaffirmed full year adjusted EBITDA guidance range of $915 million to $985 million |
• | Closed 433,000 tons of chlor alkali capacity across three locations |
• | Announced second quarter 2016 adjusted EBITDA guidance range of $220 million to $240 million |
• | Improved results in Epoxy, which we expect to experience stronger second half results compared to the first half; |
• | Improved results in Winchester; |
• | Cost synergy realization at the high end of the $40 million to $60 million range; and |
• | Lower electricity costs, primarily due to lower natural gas costs. |
• | Chlor alkali products pricing similar to first quarter levels with improved volumes; |
• | Slightly improved pricing and improved volumes for vinyls products compared to first quarter levels; |
• | Sequentially lower Epoxy results due to the timing of maintenance-related outage costs partially offset by improved volumes; and |
• | Modest sequential improvement in Winchester. |
• | A reported net income in the range of $0.10 to $0.20 per diluted share, including approximately $0.21 per share of restructuring costs, acquisition-related integration costs and acquisition step-up depreciation and amortization; |
• | Pretax restructuring costs of approximately $8 million; |
• | Pretax acquisition-related integration costs of approximately $10 million; and |
• | Acquisition step-up depreciation and amortization expense of approximately $35 million. |
• | sensitivity to economic, business and market conditions in the United States and overseas, including economic instability or a downturn in the sectors served by us, such as ammunition, vinyls, urethanes, and pulp and paper, and the migration by United States customers to low-cost foreign locations; |
• | the cyclical nature of our operating results, particularly declines in average selling prices in the chlor alkali industry and the supply/demand balance for our products, including the impact of excess industry capacity or an imbalance in demand for our chlor alkali products; |
• | our substantial amount of indebtedness and significant debt service obligations; |
• | weak industry conditions could affect our ability to comply with the financial maintenance covenants in our senior credit facilities; |
• | the integration of the Acquired Business being more difficult, time-consuming or costly than expected; |
• | higher-than-expected raw material and energy, transportation, and/or logistics costs; |
• | our reliance on a limited number of suppliers for specified feedstock and services and our reliance on third-party transportation; |
• | economic and industry downturns that result in diminished product demand and excess manufacturing capacity in any of our segments and that, in many cases, result in lower selling prices and profits; |
• | new regulations or public policy changes regarding the transportation of hazardous chemicals and the security of chemical manufacturing facilities; |
• | changes in legislation or government regulations or policies; |
• | failure to control costs or to achieve targeted cost reductions; |
• | adverse conditions in the credit and capital markets, limiting or preventing our ability to borrow or raise capital; |
• | costs and other expenditures in excess of those projected for environmental investigation and remediation or other legal proceedings; |
• | unexpected litigation outcomes; |
• | complications resulting from our multiple enterprise resource planning (ERP) systems; |
• | the failure or an interruption of our information technology systems; |
• | the occurrence of unexpected manufacturing interruptions and outages, including those occurring as a result of labor disruptions and production hazards; |
• | the effects of any declines in global equity markets on asset values and any declines in interest rates used to value the liabilities in our pension plan; |
• | future funding obligations to our qualified defined benefit pension plan attributable to assumed pension liabilities; |
• | fluctuations in foreign currency exchange rates; |
• | failure to attract, retain and motivate key employees; |
• | our ability to provide the same types and levels of benefits, services and resources to the Acquired Business that historically have been provided by TDCC at the same cost; |
• | differences between the historical financial information of Olin and the Acquired Business and our future operating performance; |
• | the effect of any changes resulting from the transaction with TDCC in customer, supplier and other business relationships; and |
• | the effects of restrictions imposed on our business following the transaction with TDCC in order to avoid significant tax-related liabilities. |
Three Months Ended | ||||||||
(In millions, except per share amounts) | March 31, 2016 | December 31, 2015 | ||||||
Sales | $ | 1,348.2 | $ | 1,267.4 | ||||
Operating Expenses: | ||||||||
Cost of Goods Sold | 1,175.4 | 1,148.1 | ||||||
Selling and Administration | 88.1 | 63.8 | ||||||
Restructuring Charges(b) | 92.8 | 0.5 | ||||||
Acquisition-related Costs(c) | 10.2 | 88.0 | ||||||
Other Operating Income(d) | 10.9 | 3.6 | ||||||
Operating Loss | (7.4 | ) | (29.4 | ) | ||||
Earnings of Non-consolidated Affiliates | 0.2 | 0.4 | ||||||
Interest Expense(e) | 48.5 | 57.3 | ||||||
Interest Income | 0.3 | 0.2 | ||||||
Other Income | — | 0.2 | ||||||
Loss before Taxes | (55.4 | ) | (85.9 | ) | ||||
Income Tax Benefit | (17.5 | ) | (23.2 | ) | ||||
Net Loss | $ | (37.9 | ) | $ | (62.7 | ) | ||
Net Loss Per Common Share: | ||||||||
Basic | $ | (0.23 | ) | $ | (0.39 | ) | ||
Diluted | $ | (0.23 | ) | $ | (0.39 | ) | ||
Dividends Per Common Share | $ | 0.20 | $ | 0.20 | ||||
Average Common Shares Outstanding - Basic | 165.1 | 161.6 | ||||||
Average Common Shares Outstanding - Diluted | 165.1 | 161.6 |
(a) | Unaudited. |
(b) | Restructuring charges for the three months ended March 31, 2016 were primarily associated with the closure of 433,000 tons of chlor alkali capacity across three separate locations, of which $76.6 million was non-cash impairment charges for equipment and facilities. |
(c) | Acquisition-related costs for the three months ended March 31, 2016 and December 31, 2015 were associated with our acquisition and integration of the Acquired Business. |
(d) | Other operating income for the three months ended March 31, 2016 included an $11.0 million insurance recovery for property damage and business interruption related to a 2008 chlor alkali facility incident. Other operating income for the three months ended December 31, 2015 included $3.7 million of insurance recoveries for property damage and business interruption related to the McIntosh, AL chlor alkali facility. |
(e) | Interest expense for the three months ended December 31, 2015 included acquisition financing expenses of $10.8 million primarily for the bridge financing associated with our acquisition of the Acquired Business. |
Three Months Ended | ||||||||
(In millions) | March 31, 2016 | December 31, 2015 | ||||||
Sales: | ||||||||
Chlor Alkali Products and Vinyls | $ | 704.3 | $ | 681.1 | ||||
Epoxy | 460.2 | 429.6 | ||||||
Winchester | 183.7 | 156.7 | ||||||
Total Sales | $ | 1,348.2 | $ | 1,267.4 | ||||
Income (Loss) before Taxes: | ||||||||
Chlor Alkali Products and Vinyls | $ | 68.1 | $ | 46.6 | ||||
Epoxy | 8.2 | (7.5 | ) | |||||
Winchester | 28.7 | 21.8 | ||||||
Corporate/Other: | ||||||||
Pension Income(b) | 12.2 | 13.4 | ||||||
Environmental Expense | (2.7 | ) | (2.6 | ) | ||||
Other Corporate and Unallocated Costs | (29.6 | ) | (15.8 | ) | ||||
Restructuring Charges(c) | (92.8 | ) | (0.5 | ) | ||||
Acquisition-related Costs(d) | (10.2 | ) | (88.0 | ) | ||||
Other Operating Income(e) | 10.9 | 3.6 | ||||||
Interest Expense(f) | (48.5 | ) | (57.3 | ) | ||||
Interest Income | 0.3 | 0.2 | ||||||
Other Income | — | 0.2 | ||||||
Loss before Taxes | $ | (55.4 | ) | $ | (85.9 | ) |
(a) | Unaudited. |
(b) | The service cost and the amortization of prior service cost components of pension expense related to the employees of the operating segments are allocated to the operating segments based on their respective estimated census data. All other components of pension costs are included in Corporate/Other and include items such as the expected return on plan assets, interest cost and recognized actuarial gains and losses. |
(c) | Restructuring charges for the three months ended March 31, 2016 were primarily associated with the closure of 433,000 tons of chlor alkali capacity across three separate locations, of which $76.6 million was non-cash impairment charges for equipment and facilities. |
(d) | Acquisition-related costs for the three months ended March 31, 2016 and December 31, 2015 were associated with our acquisition and integration of the Acquired Business. |
(e) | Other operating income for the three months ended March 31, 2016 included an $11.0 million insurance recovery for property damage and business interruption related to a 2008 chlor alkali facility incident. Other operating income for the three months ended December 31, 2015 included $3.7 million of insurance recoveries for property damage and business interruption related to the McIntosh, AL chlor alkali facility. |
(f) | Interest expense for the three months ended December 31, 2015 included acquisition financing expenses of $10.8 million primarily for the bridge financing associated with our acquisition of the Acquired Business. |
March 31, | December 31, | |||||||
(In millions, except per share data) | 2016 | 2015 | ||||||
Assets: | ||||||||
Cash & Cash Equivalents | $ | 315.6 | $ | 392.0 | ||||
Accounts Receivable, Net | 813.2 | 783.4 | ||||||
Income Taxes Receivable | 36.3 | 32.9 | ||||||
Inventories | 679.5 | 685.2 | ||||||
Other Current Assets | 32.8 | 39.9 | ||||||
Total Current Assets | 1,877.4 | 1,933.4 | ||||||
Property, Plant and Equipment (Less Accumulated Depreciation of $1,587.9 and $1,499.4) | 3,859.0 | 3,953.4 | ||||||
Deferred Income Taxes | 107.4 | 95.9 | ||||||
Other Assets | 463.8 | 454.6 | ||||||
Intangibles, Net | 663.2 | 677.5 | ||||||
Goodwill | 2,146.1 | 2,174.1 | ||||||
Total Assets | $ | 9,116.9 | $ | 9,288.9 | ||||
Liabilities and Shareholders' Equity: | ||||||||
Current Installments of Long-Term Debt | $ | 205.1 | $ | 205.0 | ||||
Accounts Payable | 478.1 | 608.2 | ||||||
Income Taxes Payable | 14.1 | 4.9 | ||||||
Accrued Liabilities | 352.3 | 328.1 | ||||||
Total Current Liabilities | 1,049.6 | 1,146.2 | ||||||
Long-Term Debt | 3,627.9 | 3,643.8 | ||||||
Accrued Pension Liability | 635.2 | 648.9 | ||||||
Deferred Income Taxes | 1,091.0 | 1,095.2 | ||||||
Other Liabilities | 340.4 | 336.0 | ||||||
Total Liabilities | 6,744.1 | 6,870.1 | ||||||
Commitments and Contingencies | ||||||||
Shareholders' Equity: | ||||||||
Common Stock, Par Value $1 Per Share, Authorized 240.0 Shares: Issued and Outstanding 165.2 Shares (165.1 in 2015) | 165.2 | 165.1 | ||||||
Additional Paid-In Capital | 2,238.9 | 2,236.4 | ||||||
Accumulated Other Comprehensive Loss | (470.2 | ) | (492.5 | ) | ||||
Retained Earnings | 438.9 | 509.8 | ||||||
Total Shareholders' Equity | 2,372.8 | 2,418.8 | ||||||
Total Liabilities and Shareholders' Equity | $ | 9,116.9 | $ | 9,288.9 |
(a) | Unaudited. |
(In millions) | Three Months Ended March 31, 2016 | |||
Operating Activities: | ||||
Net Loss | $ | (37.9 | ) | |
Earnings of Non-consolidated Affiliates | (0.2 | ) | ||
Losses on Disposition of Property, Plant and Equipment | 0.2 | |||
Stock-Based Compensation | 2.2 | |||
Depreciation and Amortization | 129.7 | |||
Deferred Income Taxes | (14.7 | ) | ||
Write-off of Equipment and Facility Included in Restructuring Charges | 76.6 | |||
Qualified Pension Plan Contributions | (0.5 | ) | ||
Qualified Pension Plan Income | (9.0 | ) | ||
Changes in: | ||||
Receivables | (16.8 | ) | ||
Income Taxes Receivable/Payable | 5.6 | |||
Inventories | 6.3 | |||
Other Current Assets | 6.5 | |||
Accounts Payable and Accrued Liabilities | (99.7 | ) | ||
Other Assets | 2.1 | |||
Other Noncurrent Liabilities | (0.3 | ) | ||
Other Operating Activities | (3.1 | ) | ||
Net Operating Activities | 47.0 | |||
Investing Activities: | ||||
Capital Expenditures | (76.1 | ) | ||
Proceeds from Disposition of Property, Plant and Equipment | 0.1 | |||
Proceeds from Disposition of Affiliated Companies | 2.2 | |||
Net Investing Activities | (73.8 | ) | ||
Financing Activities: | ||||
Long-Term Debt Repayments | (17.1 | ) | ||
Dividends Paid | (33.0 | ) | ||
Net Financing Activities | (50.1 | ) | ||
Net Decrease in Cash and Cash Equivalents | (76.9 | ) | ||
Effect of Exchange Rate Changes on Cash and Cash Equivalents | 0.5 | |||
Cash and Cash Equivalents, Beginning of Year | 392.0 | |||
Cash and Cash Equivalents, End of Period | $ | 315.6 |
(a) | Unaudited. |
Three Months Ended | ||||||||
(In millions) | March 31, 2016 | December 31, 2015 | ||||||
Reconciliation of Net Loss to Adjusted EBITDA: | ||||||||
Net Loss | $ | (37.9 | ) | $ | (62.7 | ) | ||
Add Back: | ||||||||
Interest Expense(b) | 48.5 | 57.3 | ||||||
Interest Income | (0.3 | ) | (0.2 | ) | ||||
Income Tax Benefit | (17.5 | ) | (23.2 | ) | ||||
Depreciation and Amortization | 129.7 | 124.0 | ||||||
EBITDA | 122.5 | 95.2 | ||||||
Add Back: | ||||||||
Restructuring Charges(c) | 92.8 | 0.5 | ||||||
Acquisition-related Costs(d) | 10.2 | 88.0 | ||||||
Fair Value Inventory Purchase Accounting Adjustment(e) | — | 24.0 | ||||||
Certain Non-recurring Items(f) | (11.0 | ) | (3.7 | ) | ||||
Other Income | — | (0.2 | ) | |||||
Adjusted EBITDA | $ | 214.5 | $ | 203.8 |
(a) | Unaudited. |
(b) | Interest expense for the three months ended December 31, 2015 included acquisition financing expenses of $10.8 million primarily for the bridge financing associated with our acquisition of the Acquired Business. |
(c) | Restructuring charges for the three months ended March 31, 2016 were primarily associated with the closure of 433,000 tons of chlor alkali capacity across three separate locations, of which $76.6 million was non-cash impairment charges for equipment and facilities. |
(d) | Acquisition-related costs for the three months ended March 31, 2016 and December 31, 2015 were associated with our acquisition and integration of the Acquired Business. |
(e) | Fair value inventory purchase accounting adjustment for the three months ended December 31, 2015 was associated with non-recurring expenses included within costs of goods sold of $24.0 million due to the increase of inventory to fair value at the acquisition date related to the purchase accounting of the Acquired Business. |
(f) | Certain non-recurring items for the three months ended March 31, 2016 included an $11.0 million insurance recovery for property damage and business interruption related to a 2008 chlor alkali facility incident. Certain non-recurring items for the three months ended December 31, 2015 included $3.7 million of insurance recoveries for property damage and business interruption related to the McIntosh, AL chlor alkali facility. |