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) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): | |
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)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). | |
o | Emerging growth company |
o | If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. |
(d) Exhibit No. | Exhibit |
99.1 | Press Release announcing first quarter 2017 earnings, dated May 2, 2017. |
OLIN CORPORATION | |||
By: | /s/ Eric A. Blanchard | ||
Name: | Eric A. Blanchard | ||
Title: | Vice President, General Counsel and Secretary |
Exhibit No. | Exhibit |
99.1 | Press Release announcing first quarter 2017 earnings, dated May 2, 2017. |
• | Net income of $13.4 million and adjusted EBITDA of $220.4 million |
• | Reiterated full year 2017 adjusted EBITDA forecast of $1 billion |
• | Higher domestic and export caustic soda pricing compared to 2016; |
• | Lower ethylene costs associated with the acquisition of additional cost-based ethylene from The Dow Chemical Company beginning mid-year; |
• | Improved ethylene dichloride pricing of approximately 25% year-over-year; |
• | Incremental cost synergy realizations of approximately $50 million to $75 million; |
• | Improved Epoxy segment results driven by higher volumes compared to the prior year; |
• | Higher electricity costs, primarily driven by higher natural gas costs compared to 2016; |
• | Higher planned maintenance turnaround costs of $20 million to $30 million compared to 2016; |
• | Lower Winchester segment results due to lower commercial ammunition demand and higher commodity and material costs; |
• | Higher corporate costs reflecting lower pension income and higher legacy environmental costs compared to 2016; |
• | Pre-tax acquisition-related integration and restructuring costs of approximately $50 million; |
• | Capital spending in the $300 million to $350 million range, excluding the investment associated with acquiring additional cost-based ethylene; and |
• | Depreciation and amortization costs comparable with 2016. |
• | 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; |
• | higher-than-expected raw material and energy, transportation, and/or logistics costs; |
• | 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 and certain tax-exempt bonds; |
• | our reliance on a limited number of suppliers for specified feedstock and services and our reliance on third-party transportation; |
• | failure to control costs or to achieve targeted cost reductions; |
• | the occurrence of unexpected manufacturing interruptions and outages, including those occurring as a result of labor disruptions and production hazards; |
• | 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; |
• | 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; |
• | complications resulting from our multiple enterprise resource planning (ERP) systems; |
• | the failure or an interruption of our information technology systems; |
• | unexpected litigation outcomes; |
• | costs and other expenditures in excess of those projected for environmental investigation and remediation or other legal proceedings; |
• | the integration of the Acquired Business may not be successful in realizing the benefits of the anticipated synergies; |
• | 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; |
• | fluctuations in foreign currency exchange rates; |
• | adverse conditions in the credit and capital markets, limiting or preventing our ability to borrow or raise capital; |
• | failure to attract, retain and motivate key employees; |
• | our assumptions included in long range plans not realized causing a non-cash impairment charge of long-lived assets; |
• | the effects of restrictions imposed on our business following the transaction with TDCC in order to avoid significant tax-related liabilities; and |
• | differences between the historical financial information of Olin and the Acquired Business and our future operating performance. |
Three Months Ended March 31, | ||||||||
(In millions, except per share amounts) | 2017 | 2016 | ||||||
Sales | $ | 1,567.1 | $ | 1,348.2 | ||||
Operating Expenses: | ||||||||
Cost of Goods Sold | 1,393.7 | 1,175.4 | ||||||
Selling and Administration | 88.2 | 88.1 | ||||||
Restructuring Charges(b) | 8.2 | 92.8 | ||||||
Acquisition-related Costs(c) | 7.0 | 10.2 | ||||||
Other Operating (Expense) Income(d) | (0.4 | ) | 10.9 | |||||
Operating Income (Loss) | 69.6 | (7.4 | ) | |||||
Earnings of Non-consolidated Affiliates | 0.5 | 0.2 | ||||||
Interest Expense(e) | 52.4 | 48.5 | ||||||
Interest Income | 0.2 | 0.3 | ||||||
Income (Loss) before Taxes | 17.9 | (55.4 | ) | |||||
Income Tax Provision (Benefit) | 4.5 | (17.5 | ) | |||||
Net Income (Loss) | $ | 13.4 | $ | (37.9 | ) | |||
Net Income (Loss) Per Common Share: | ||||||||
Basic | $ | 0.08 | $ | (0.23 | ) | |||
Diluted | $ | 0.08 | $ | (0.23 | ) | |||
Dividends Per Common Share | $ | 0.20 | $ | 0.20 | ||||
Average Common Shares Outstanding - Basic | 165.6 | 165.1 | ||||||
Average Common Shares Outstanding - Diluted | 167.9 | 165.1 |
(a) | Unaudited. |
(b) | Restructuring charges for the three months ended March 31, 2017 and 2016 were primarily associated with the closure of 433,000 tons of chlor alkali capacity across three separate Olin locations. For the three months ended March 31, 2016, $76.6 million of these charges were non-cash impairment charges for equipment and facilities. |
(c) | Acquisition-related costs for the three months ended March 31, 2017 and 2016 were associated with our integration of the Acquired Business. |
(d) | Other operating (expense) 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. |
(e) | Interest expense for the three months ended March 31, 2017 included $2.7 million for the write-off of unamortized deferred debt issuance costs associated with the redemption of the Sumitomo Credit Facility and the refinancing of Olin's senior credit facility. |
Three Months Ended March 31, | ||||||||
(In millions) | 2017 | 2016 | ||||||
Sales: | ||||||||
Chlor Alkali Products and Vinyls | $ | 836.9 | $ | 704.3 | ||||
Epoxy | 567.6 | 460.2 | ||||||
Winchester | 162.6 | 183.7 | ||||||
Total Sales | $ | 1,567.1 | $ | 1,348.2 | ||||
Income (Loss) before Taxes: | ||||||||
Chlor Alkali Products and Vinyls | $ | 87.5 | $ | 68.1 | ||||
Epoxy | (1.2 | ) | 8.2 | |||||
Winchester | 25.1 | 28.7 | ||||||
Corporate/Other: | ||||||||
Pension Income(b) | 10.3 | 12.2 | ||||||
Environmental Expense | (2.6 | ) | (2.7 | ) | ||||
Other Corporate and Unallocated Costs | (33.4 | ) | (29.6 | ) | ||||
Restructuring Charges(c) | (8.2 | ) | (92.8 | ) | ||||
Acquisition-related Costs(d) | (7.0 | ) | (10.2 | ) | ||||
Other Operating (Expense) Income(e) | (0.4 | ) | 10.9 | |||||
Interest Expense(f) | (52.4 | ) | (48.5 | ) | ||||
Interest Income | 0.2 | 0.3 | ||||||
Income (Loss) before Taxes | $ | 17.9 | $ | (55.4 | ) |
(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, 2017 and 2016 were primarily associated with the closure of 433,000 tons of chlor alkali capacity across three separate Olin locations. For the three months ended March 31, 2016, $76.6 million of these charges were non-cash impairment charges for equipment and facilities. |
(d) | Acquisition-related costs for the three months ended March 31, 2017 and 2016 were associated with our integration of the Acquired Business. |
(e) | Other operating (expense) 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. |
(f) | Interest expense for the three months ended March 31, 2017 included $2.7 million for the write-off of unamortized deferred debt issuance costs associated with the redemption of the Sumitomo Credit Facility and the refinancing of Olin's senior credit facility. |
March 31, | December 31, | March 31, | ||||||||||
(In millions, except per share data) | 2017 | 2016 | 2016 | |||||||||
Assets: | ||||||||||||
Cash & Cash Equivalents | $ | 168.5 | $ | 184.5 | $ | 315.6 | ||||||
Accounts Receivable, Net | 774.5 | 675.0 | 813.2 | |||||||||
Income Taxes Receivable | 25.5 | 25.5 | 36.3 | |||||||||
Inventories | 656.3 | 630.4 | 679.5 | |||||||||
Other Current Assets | 44.9 | 30.8 | 32.8 | |||||||||
Total Current Assets | 1,669.7 | 1,546.2 | 1,877.4 | |||||||||
Property, Plant and Equipment (Less Accumulated Depreciation of $2,001.1, $1,891.6 and $1,587.9) | 3,659.2 | 3,704.9 | 3,859.0 | |||||||||
Deferred Income Taxes | 112.7 | 119.5 | 107.4 | |||||||||
Other Assets | 637.2 | 644.4 | 463.8 | |||||||||
Intangibles, Net | 615.4 | 629.6 | 663.2 | |||||||||
Goodwill | 2,119.0 | 2,118.0 | 2,146.1 | |||||||||
Total Assets | $ | 8,813.2 | $ | 8,762.6 | $ | 9,116.9 | ||||||
Liabilities and Shareholders' Equity: | ||||||||||||
Current Installments of Long-term Debt | $ | 81.8 | $ | 80.5 | $ | 205.1 | ||||||
Accounts Payable | 637.3 | 570.8 | 478.1 | |||||||||
Income Taxes Payable | 8.1 | 7.5 | 14.1 | |||||||||
Accrued Liabilities | 258.2 | 263.8 | 352.3 | |||||||||
Total Current Liabilities | 985.4 | 922.6 | 1,049.6 | |||||||||
Long-term Debt | 3,530.8 | 3,537.1 | 3,627.9 | |||||||||
Accrued Pension Liability | 627.5 | 638.1 | 635.2 | |||||||||
Deferred Income Taxes | 1,033.0 | 1,032.5 | 1,091.0 | |||||||||
Other Liabilities | 364.9 | 359.3 | 340.4 | |||||||||
Total Liabilities | 6,541.6 | 6,489.6 | 6,744.1 | |||||||||
Commitments and Contingencies | ||||||||||||
Shareholders' Equity: | ||||||||||||
Common Stock, Par Value $1 Per Share, Authorized 240.0 Shares: Issued and Outstanding 165.9 Shares (165.4 and 165.2 in 2016) | 165.9 | 165.4 | 165.2 | |||||||||
Additional Paid-in Capital | 2,253.7 | 2,243.8 | 2,238.9 | |||||||||
Accumulated Other Comprehensive Loss | (502.1 | ) | (510.0 | ) | (470.2 | ) | ||||||
Retained Earnings | 354.1 | 373.8 | 438.9 | |||||||||
Total Shareholders' Equity | 2,271.6 | 2,273.0 | 2,372.8 | |||||||||
Total Liabilities and Shareholders' Equity | $ | 8,813.2 | $ | 8,762.6 | $ | 9,116.9 |
(a) | Unaudited. |
Three Months Ended March 31, | ||||||||
(In millions) | 2017 | 2016 | ||||||
Operating Activities: | ||||||||
Net Income (Loss) | $ | 13.4 | $ | (37.9 | ) | |||
Earnings of Non-consolidated Affiliates | (0.5 | ) | (0.2 | ) | ||||
Losses on Disposition of Property, Plant and Equipment | 0.3 | 0.2 | ||||||
Stock-Based Compensation | 1.5 | 2.2 | ||||||
Depreciation and Amortization | 135.1 | 129.7 | ||||||
Deferred Income Taxes | 9.5 | (14.7 | ) | |||||
Write-off of Equipment and Facility Included in Restructuring Charges | - | 76.6 | ||||||
Qualified Pension Plan Contributions | (0.1 | ) | (0.5 | ) | ||||
Qualified Pension Plan Income | (6.7 | ) | (9.0 | ) | ||||
Changes in: | ||||||||
Receivables | (80.2 | ) | (16.8 | ) | ||||
Income Taxes Receivable/Payable | 0.1 | 5.6 | ||||||
Inventories | (23.8 | ) | 6.3 | |||||
Other Current Assets | (17.5 | ) | 6.5 | |||||
Accounts Payable and Accrued Liabilities | 56.3 | (99.7 | ) | |||||
Other Assets | 3.1 | 2.1 | ||||||
Other Noncurrent Liabilities | 4.6 | (0.3 | ) | |||||
Other Operating Activities | 4.8 | (3.1 | ) | |||||
Net Operating Activities | 99.9 | 47.0 | ||||||
Investing Activities: | ||||||||
Capital Expenditures | (83.0 | ) | (76.1 | ) | ||||
Proceeds from Disposition of Property, Plant and Equipment | - | 0.1 | ||||||
Proceeds from Disposition of Affiliated Companies | - | 2.2 | ||||||
Net Investing Activities | (83.0 | ) | (73.8 | ) | ||||
Financing Activities: | ||||||||
Long-term Debt: | ||||||||
Borrowings | 1,875.0 | - | ||||||
Repayments | (1,872.7 | ) | (17.1 | ) | ||||
Stock Options Exercised | 8.8 | - | ||||||
Dividends Paid | (33.1 | ) | (33.0 | ) | ||||
Debt Issuance Costs | (11.2 | ) | - | |||||
Net Financing Activities | (33.2 | ) | (50.1 | ) | ||||
Net Decrease in Cash and Cash Equivalents | (16.3 | ) | (76.9 | ) | ||||
Effect of Exchange Rate Changes on Cash and Cash Equivalents | 0.3 | 0.5 | ||||||
Cash and Cash Equivalents, Beginning of Period | 184.5 | 392.0 | ||||||
Cash and Cash Equivalents, End of Period | $ | 168.5 | $ | 315.6 |
(a) | Unaudited. |
Three Months Ended March 31, | ||||||||
(In millions) | 2017 | 2016 | ||||||
Reconciliation of Net Income (Loss) to Adjusted EBITDA: | ||||||||
Net Income (Loss) | $ | 13.4 | $ | (37.9 | ) | |||
Add Back: | ||||||||
Interest Expense | 52.4 | 48.5 | ||||||
Interest Income | (0.2 | ) | (0.3 | ) | ||||
Income Tax Provision (Benefit) | 4.5 | (17.5 | ) | |||||
Depreciation and Amortization | 135.1 | 129.7 | ||||||
EBITDA | 205.2 | 122.5 | ||||||
Add Back: | ||||||||
Restructuring Charges(b) | 8.2 | 92.8 | ||||||
Acquisition-related Costs(c) | 7.0 | 10.2 | ||||||
Certain Non-recurring Items(d) | — | (11.0 | ) | |||||
Adjusted EBITDA | $ | 220.4 | $ | 214.5 |
(a) | Unaudited. |
(b) | Restructuring charges for the three months ended March 31, 2017 and 2016 were primarily associated with the closure of 433,000 tons of chlor alkali capacity across three separate Olin locations. For the three months ended March 31, 2016, $76.6 million of these charges were non-cash impairment charges for equipment and facilities. |
(c) | Acquisition-related costs for the three months ended March 31, 2017 and 2016 were associated with our integration of the Acquired Business. |
(d) | 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 Henderson, NV chlor alkali facility incident. |
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