Olin(OLN) - 2024 Q3 - Quarterly Report

Part I — Financial Information Item 1. Financial Statements This section presents Olin Corporation's unaudited condensed financial statements, including balance sheets, statements of operations, comprehensive income, shareholders' equity, and cash flows, along with detailed notes providing context and breakdowns of various financial accounts and activities Condensed Balance Sheets | Metric | Sep 30, 2024 ($M) | Dec 31, 2023 ($M) | Sep 30, 2023 ($M) | | :----- | :---------------- | :---------------- | :---------------- | | Total Assets | 7,518.3 | 7,713.2 | 7,815.2 | | Total Liabilities | 5,428.7 | 5,444.9 | 5,447.7 | | Total Equity | 2,089.6 | 2,268.3 | 2,367.5 | Condensed Statements of Operations | Metric | 3 Months Ended Sep 30, 2024 ($M) | 3 Months Ended Sep 30, 2023 ($M) | 9 Months Ended Sep 30, 2024 ($M) | 9 Months Ended Sep 30, 2023 ($M) | | :----- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Sales | 1,589.5 | 1,671.4 | 4,868.8 | 5,218.4 | | Operating Income | 15.5 | 166.0 | 249.2 | 613.1 | | Net (Loss) Income | (25.2) | 104.5 | 94.9 | 403.2 | | Net (Loss) Income Attributable to Olin Corporation | (24.9) | 104.1 | 97.9 | 407.3 | | Basic EPS | (0.21) | 0.84 | 0.83 | 3.19 | | Diluted EPS | (0.21) | 0.82 | 0.81 | 3.12 | Condensed Statements of Comprehensive Income | Metric | 3 Months Ended Sep 30, 2024 ($M) | 3 Months Ended Sep 30, 2023 ($M) | 9 Months Ended Sep 30, 2024 ($M) | 9 Months Ended Sep 30, 2023 ($M) | | :----- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net (Loss) Income | (25.2) | 104.5 | 94.9 | 403.2 | | Total Other Comprehensive Income, Net of Tax | 7.8 | 3.1 | 30.1 | 15.6 | | Comprehensive (Loss) Income | (17.4) | 107.6 | 125.0 | 418.8 | | Comprehensive (Loss) Income Attributable to Olin Corporation | (17.1) | 107.2 | 128.0 | 422.9 | Condensed Statements of Shareholders' Equity | Metric | Sep 30, 2024 ($M) | Sep 30, 2023 ($M) | | :----- | :---------------- | :---------------- | | Common Stock | 116.6 | 122.5 | | Additional Paid-In Capital | — | 130.1 | | Accumulated Other Comprehensive Loss | (466.2) | (480.3) | | Retained Earnings | 2,406.3 | 2,555.2 | | Olin Corporation's Shareholders' Equity | 2,056.7 | 2,327.5 | | Total Equity | 2,089.6 | 2,367.5 | | Dividends Declared per Share | 0.20 | 0.20 | - Common stock repurchased and retired for the nine months ended September 30, 2024, totaled $256.8 million (4.9 million shares), compared to $595.1 million (10.8 million shares) in the prior year[14][55] Condensed Statements of Cash Flows | Metric | 9 Months Ended Sep 30, 2024 ($M) | 9 Months Ended Sep 30, 2023 ($M) | | :----- | :------------------------------- | :------------------------------- | | Net Operating Activities | 361.5 | 557.7 | | Net Investing Activities | (207.0) | (194.0) | | Net Financing Activities | (98.9) | (398.7) | | Net Increase (Decrease) in Cash and Cash Equivalents | 55.6 | (35.7) | | Cash and Cash Equivalents, End of Period | 225.9 | 158.3 | - Capital expenditures decreased to $144.1 million (9M 2024) from $173.0 million (9M 2023)[16][110] - Common stock repurchases and retirements decreased to $256.8 million (9M 2024) from $595.1 million (9M 2023)[16][112] Notes to Condensed Financial Statements Detailed notes explain Olin's financial statements, covering business, accounting policies, acquisitions, restructuring, EPS, assets, liabilities, equity, segments, and market risks NOTE 1. DESCRIPTION OF BUSINESS - Olin is a leading vertically integrated global manufacturer and distributor of chemical products and a leading U.S. manufacturer of ammunition, operating in three capital-intensive segments: Chlor Alkali Products and Vinyls, Epoxy, and Winchester[17][81] - Olin holds a 51% controlling interest in Blue Water Alliance (BWA), a joint venture with Mitsui & Co., Ltd., focused on global trading of ECU-based derivatives, consolidated within the Chlor Alkali Products and Vinyls segment[17] NOTE 2. RECENT ACCOUNTING PRONOUNCEMENTS - SEC's climate-related disclosures (SEC Release No. 33-11042) will require greenhouse gas emissions (Scope 1 & 2) and climate-related targets disclosure, effective FY2025, though currently stayed[18] - FASB ASU 2023-09 (Income Taxes) enhances disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction, effective FY2025, with early adoption optional[18] - FASB ASU 2023-07 (Segment Reporting) improves segment expense disclosures, effective FY2024 for annual and FY2025 for interim periods, with retrospective adoption[18] NOTE 3. ACQUISITIONS - Olin acquired White Flyer Targets, LLC on October 1, 2023, for $63.5 million, integrating it into the Winchester segment[19] Acquisition Detail | Acquisition Detail | Amount ($M) | | :----------------- | :---------- | | Purchase Price | 63.5 | | Goodwill Allocated | 2.4 | | Intangible Assets | 4.5 | | Total Assets Acquired (excl. goodwill/intangibles) | 66.6 | | Liabilities Assumed | 10.0 | NOTE 4. RESTRUCTURING CHARGES Restructuring Plan | Restructuring Plan | 3 Months Ended Sep 30, 2024 ($M) | 3 Months Ended Sep 30, 2023 ($M) | 9 Months Ended Sep 30, 2024 ($M) | 9 Months Ended Sep 30, 2023 ($M) | | :----------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Epoxy Optimization Plan | 6.3 | 8.6 | 15.6 | 79.7 | | McIntosh Plan | — | 0.7 | 2.0 | 4.6 | | Freeport 2021 Plan | 0.3 | 0.7 | 1.0 | 2.8 | | Freeport 2019 Plan | 1.3 | 1.9 | 4.4 | 4.9 | | Total | 7.9 | 11.9 | 23.0 | 92.0 | - Cumulative restructuring charges through September 30, 2024, totaled $216.2 million, with $122.5 million in cash expenditures and $79.9 million in non-cash charges. A remaining balance of $13.8 million is expected to be paid through 2027[24] - Olin expects to incur additional restructuring charges of approximately $10 million through 2025 related to the Epoxy Optimization Plan and approximately $40 million through 2027 for other plans[20][104] NOTE 5. EARNINGS PER SHARE Earnings Per Share | Metric | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :----- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Basic EPS | (0.21) | 0.84 | 0.83 | 3.19 | | Diluted EPS | (0.21) | 0.82 | 0.81 | 3.12 | | Basic Shares Outstanding (M) | 116.9 | 124.2 | 118.4 | 127.5 | | Diluted Shares Outstanding (M) | 116.9 | 127.0 | 120.2 | 130.6 | NOTE 6. ACCOUNTS RECEIVABLES - Olin maintains a $425.0 million Receivables Financing Agreement, with $339.8 million drawn as of September 30, 2024, and $0.3 million additional borrowing capacity[28][114] - Trade accounts receivable factoring arrangements (AR Facilities) allow for sales of receivables up to $134.5 million (domestic) and €16.5 million (foreign)[28][114] AR Facilities Activity | AR Facilities Activity | 9 Months Ended Sep 30, 2024 ($M) | 9 Months Ended Sep 30, 2023 ($M) | | :--------------------- | :------------------------------- | :------------------------------- | | Balance at beginning of year | 63.3 | 111.8 | | Gross receivables sold | 528.5 | 749.5 | | Payments received from customers | (539.5) | (788.6) | | Balance at end of period | 52.3 | 72.7 | NOTE 7. INVENTORIES Inventory Category | Inventory Category | Sep 30, 2024 ($M) | Dec 31, 2023 ($M) | Sep 30, 2023 ($M) | | :----------------- | :---------------- | :---------------- | :---------------- | | Supplies | 147.6 | 160.3 | 150.3 | | Raw materials | 189.0 | 171.1 | 178.3 | | Work in process | 159.9 | 153.5 | 188.4 | | Finished goods | 499.1 | 507.6 | 615.5 | | Inventories excluding LIFO reserve | 995.6 | 992.5 | 1,132.5 | | LIFO reserve | (167.9) | (133.7) | (154.8) | | Inventories, net | 827.7 | 858.8 | 977.7 | NOTE 8. OTHER ASSETS Other Assets Category | Other Assets Category | Sep 30, 2024 ($M) | Dec 31, 2023 ($M) | Sep 30, 2023 ($M) | | :-------------------- | :---------------- | :---------------- | :---------------- | | Supply contracts | 1,067.2 | 1,061.8 | 1,060.6 | | Other | 64.3 | 56.7 | 56.7 | | Total Other Assets | 1,131.5 | 1,118.5 | 1,117.3 | - Payments of $58.6 million were made under other long-term supply contracts for energy modernization projects in the U.S. Gulf Coast for the nine months ended September 30, 2024[32][111] NOTE 9. GOODWILL AND INTANGIBLE ASSETS Goodwill by Segment | Goodwill by Segment | Jan 1, 2023 ($M) | Sep 30, 2023 ($M) | Jan 1, 2024 ($M) | Sep 30, 2024 ($M) | | :------------------ | :--------------- | :--------------- | :--------------- | :--------------- | | Chlor Alkali Products and Vinyls | 1,275.8 | 1,275.9 | 1,276.1 | 1,276.1 | | Epoxy | 145.1 | 145.1 | 145.2 | 145.2 | | Winchester | — | — | 2.7 | 2.4 | | Total Goodwill | 1,420.9 | 1,421.0 | 1,424.0 | 1,423.7 | Intangible Assets (Net) | Intangible Assets (Net) | Sep 30, 2024 ($M) | Dec 31, 2023 ($M) | Sep 30, 2023 ($M) | | :---------------------- | :---------------- | :---------------- | :---------------- | | Customers, contracts, relationships | 208.6 | 234.2 | 241.2 | | Trade names | 3.0 | 3.4 | — | | Acquired technology | 2.5 | 4.0 | 3.4 | | Other | 4.2 | 4.2 | 4.0 | | Total Intangible Assets, Net | 218.3 | 245.8 | 248.6 | NOTE 10. DEBT Debt Category | Debt Category | Sep 30, 2024 ($M) | Dec 31, 2023 ($M) | Sep 30, 2023 ($M) | | :------------ | :---------------- | :---------------- | :---------------- | | Variable-rate Term Loan Facility | 334.7 | 341.3 | 343.4 | | Variable-rate Senior Revolving Credit Facility | 350.0 | 68.0 | 165.0 | | 9.50% senior notes, due 2025 | 108.6 | 108.6 | 108.6 | | 5.625% senior notes, due 2029 | 669.3 | 669.3 | 669.3 | | 5.125% senior notes, due 2027 | 500.0 | 500.0 | 500.0 | | 5.00% senior notes, due 2030 | 515.3 | 515.3 | 515.3 | | Receivables Financing Agreement | 339.8 | 328.5 | 350.0 | | Total Debt | 2,889.5 | 2,670.1 | 2,790.1 | | Amounts due within one year | 123.9 | 78.8 | 78.9 | | Total Long-Term Debt | 2,765.6 | 2,591.3 | 2,711.2 | - Net long-term debt borrowings for the nine months ended September 30, 2024, were $216.7 million, with $490.0 million borrowed and $208.0 million repaid under the Senior Revolving Credit Facility[37][38] - Olin was in compliance with all debt covenants as of September 30, 2024, with $849.6 million available under its $1,200.0 million Senior Revolving Credit Facility[38][113] NOTE 11. PENSION PLANS AND RETIREMENT BENEFITS Components of Net Periodic Benefit (Income) Cost | Components of Net Periodic Benefit (Income) Cost | 9 Months Ended Sep 30, 2024 (Pension Benefits, $M) | 9 Months Ended Sep 30, 2023 (Pension Benefits, $M) | 9 Months Ended Sep 30, 2024 (Other Postretirement Benefits, $M) | 9 Months Ended Sep 30, 2023 (Other Postretirement Benefits, $M) | | :--------------------------------------------- | :------------------------------------------------- | :------------------------------------------------- | :-------------------------------------------------------------- | :-------------------------------------------------------------- | | Service cost | 3.9 | 4.2 | 0.4 | 0.5 | | Interest cost | 76.1 | 79.1 | 1.1 | 1.3 | | Expected return on plans' assets | (101.2) | (98.5) | — | — | | Amortization of prior service cost | (0.5) | (0.3) | (0.2) | 0.1 | | Recognized actuarial loss | 4.9 | 0.9 | 0.4 | 0.4 | | Net periodic benefit (income) cost | (16.8) | (14.6) | 1.7 | 2.3 | - Cash contributions to international qualified defined benefit pension plans were $0.9 million for the nine months ended September 30, 2024, down from $1.6 million in the prior year[43] NOTE 12. INCOME TAXES - Effective tax rate (excluding discrete items) for Q3 2024 was 11.5% (vs. 23.2% in Q3 2023) and for 9M 2024 was 28.2% (vs. 24.1% in 9M 2023)[44][90][91] Unrecognized Tax Benefits | Unrecognized Tax Benefits | 9 Months Ended Sep 30, 2024 ($M) | 9 Months Ended Sep 30, 2023 ($M) | | :------------------------ | :------------------------------- | :------------------------------- | | Balance at beginning of year | 50.3 | 51.6 | | Increases for prior year tax positions | 5.6 | 1.3 | | Decreases for prior year tax positions | (0.4) | (0.3) | | Increases for current year tax positions | 1.2 | 10.1 | | Decreases due to tax settlements | (1.0) | — | | Foreign currency translation adjustments | 0.2 | (0.6) | | Balance at end of period | 55.9 | 62.1 | - Olin anticipates a decrease of approximately $38.0 million in unrecognized tax benefits over the next twelve months due to expected settlements and expiration of statutes of limitation[46] NOTE 13. DEFINED CONTRIBUTION PLAN Defined Contribution Plan Expense | Defined Contribution Plan Expense | 3 Months Ended Sep 30, 2024 ($M) | 3 Months Ended Sep 30, 2023 ($M) | 9 Months Ended Sep 30, 2024 ($M) | 9 Months Ended Sep 30, 2023 ($M) | | :------------------------------ | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Company Contribution | 8.0 | 8.4 | 27.4 | 28.6 | | Company Match | 3.2 | 3.6 | 10.5 | 11.0 | | Total Expense | 11.2 | 12.0 | 37.9 | 39.6 | NOTE 14. STOCK-BASED COMPENSATION Stock Compensation Expense | Stock Compensation Expense | 3 Months Ended Sep 30, 2024 ($M) | 3 Months Ended Sep 30, 2023 ($M) | 9 Months Ended Sep 30, 2024 ($M) | 9 Months Ended Sep 30, 2023 ($M) | | :----------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Stock-based compensation | 6.3 | 6.7 | 17.3 | 19.5 | | Mark-to-market adjustments | 0.3 | (2.3) | (2.9) | (2.4) | | Total Expense | 6.6 | 4.4 | 14.4 | 17.1 | - The fair value of stock options granted in 2024 was estimated at $24.79 using the Black-Scholes model, compared to $28.74 in 2023[52] - Performance share awards are based on Olin's total shareholder returns (TSR) and net income, with payouts split half in cash and half in stock[53] NOTE 15. SHAREHOLDERS' EQUITY - Olin's Board of Directors authorized a $2.0 billion share repurchase program in July 2022[55][114] Share Repurchase Activity | Period | Total Shares Purchased | Average Price Paid per Share ($) | Total Shares Purchased as Part of Plan | Maximum Dollar Value Remaining Under Plan ($) | | :----- | :--------------------- | :------------------------------- | :------------------------------------- | :-------------------------------------------- | | July 1-31, 2024 | 750,370 | 46.66 | 750,370 | N/A | | August 1-31, 2024 | 233,438 | 42.85 | 233,438 | N/A | | September 1-30, 2024 | — | — | — | N/A | | Total | 983,808 | N/A | N/A | 741,951,628 | - Accumulated other comprehensive loss was $(466.2) million as of September 30, 2024, reflecting changes in foreign currency translation, cash flow hedges, and pension/postretirement benefits[57] NOTE 16. SEGMENT INFORMATION Segment Sales | Segment Sales | 3 Months Ended Sep 30, 2024 ($M) | 3 Months Ended Sep 30, 2023 ($M) | 9 Months Ended Sep 30, 2024 ($M) | 9 Months Ended Sep 30, 2023 ($M) | | :------------ | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Chlor Alkali Products and Vinyls | 871.6 | 969.6 | 2,676.5 | 3,089.0 | | Epoxy | 285.1 | 321.6 | 944.1 | 1,016.1 | | Winchester | 432.8 | 380.2 | 1,248.2 | 1,113.3 | | Total Sales | 1,589.5 | 1,671.4 | 4,868.8 | 5,218.4 | Segment Income (Loss) Before Taxes | Segment Income (Loss) Before Taxes | 3 Months Ended Sep 30, 2024 ($M) | 3 Months Ended Sep 30, 2023 ($M) | 9 Months Ended Sep 30, 2024 ($M) | 9 Months Ended Sep 30, 2023 ($M) | | :--------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Chlor Alkali Products and Vinyls | 45.3 | 172.3 | 221.2 | 598.3 | | Epoxy | (42.8) | (28.8) | (57.6) | (7.9) | | Winchester | 53.4 | 64.5 | 195.9 | 190.2 | - Hurricane Beryl negatively impacted Chlor Alkali Products and Vinyls by $76.7 million and Epoxy by $32.7 million in Q3 2024[85][95][97] NOTE 17. ENVIRONMENTAL Environmental Liabilities | Environmental Liabilities | Sep 30, 2024 ($M) | Dec 31, 2023 ($M) | Sep 30, 2023 ($M) | | :------------------------ | :---------------- | :---------------- | :---------------- | | Reserves for future environmental expenditures | 154.2 | 153.6 | 153.5 | | Classified as other noncurrent liabilities | 122.2 | 121.6 | 128.5 | Environmental Provisions Charged to Income | Environmental Provisions Charged to Income | 3 Months Ended Sep 30, 2024 ($M) | 3 Months Ended Sep 30, 2023 ($M) | 9 Months Ended Sep 30, 2024 ($M) | 9 Months Ended Sep 30, 2023 ($M) | | :--------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Charges to income | 7.2 | 6.9 | 19.4 | 23.1 | NOTE 18. COMMITMENTS AND CONTINGENCIES - Accrued liabilities for legal actions, including proceedings based on alleged exposures to asbestos, were $14.1 million as of September 30, 2024[65] - Management does not believe that these legal actions will materially adversely affect Olin's financial position, cash flows, or results of operations[65] NOTE 19. DERIVATIVE FINANCIAL INSTRUMENTS - Olin uses derivative instruments, including futures, forward contracts, commodity swaps, and options, to manage market risks from commodity price volatility (e.g., natural gas, ethane, metals) and foreign currency exchange rates[66][68] Derivative Financial Instruments | Derivative Financial Instruments | Sep 30, 2024 ($M) | Dec 31, 2023 ($M) | Sep 30, 2023 ($M) | | :------------------------------- | :---------------- | :---------------- | :---------------- | | Total Derivative Assets | 20.7 | 5.3 | 5.6 | | Total Derivative Liabilities | 9.8 | 32.4 | 20.0 | Cash Flow Hedges Impact on OCI | Cash Flow Hedges Impact on OCI | 3 Months Ended Sep 30, 2024 ($M) | 3 Months Ended Sep 30, 2023 ($M) | 9 Months Ended Sep 30, 2024 ($M) | 9 Months Ended Sep 30, 2023 ($M) | | :----------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Commodity contracts (OCI) | (1.0) | (1.9) | 13.1 | (33.4) | | Commodity contracts (COGS) | (7.2) | (10.2) | (25.8) | (61.4) | | Foreign exchange contracts (S&A) | (6.1) | 3.6 | 3.4 | (9.6) | NOTE 20. FAIR VALUE MEASUREMENTS - Fair value measurements are categorized into a three-level hierarchy based on input observability: Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (unobservable inputs)[75] - Commodity contracts and foreign currency contracts are valued as Level 2 instruments, based on observable market prices and parameters[76][77] - The fair value of long-term debt is classified as Level 2, totaling $2,887.5 million as of September 30, 2024[78] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Olin's financial condition, operating results, outlook, environmental matters, legal issues, liquidity, and capital resources Business Background - Olin Corporation is a leading vertically integrated global manufacturer and distributor of chemical products and a leading U.S. manufacturer of ammunition[80] - Operations are concentrated in three capital-intensive business segments: Chlor Alkali Products and Vinyls, Epoxy, and Winchester[81] Executive Summary Net (Loss) Income and Diluted EPS | Metric | 3 Months Ended Sep 30, 2024 ($M) | 3 Months Ended Sep 30, 2023 ($M) | 9 Months Ended Sep 30, 2024 ($M) | 9 Months Ended Sep 30, 2023 ($M) | | :----- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net (Loss) Income Attributable to Olin Corporation | (24.9) | 104.1 | 97.9 | 407.3 | | Diluted EPS | (0.21) | 0.82 | 0.81 | 3.12 | - Net (loss) income decreased significantly from prior year periods, primarily due to a decline in operating results across the Chemicals businesses (Chlor Alkali Products and Vinyls, Epoxy)[82] - Hurricane Beryl resulted in a negative pretax impact of $109.4 million in Q3 2024, affecting Chlor Alkali Products & Vinyls ($76.7 million) and Epoxy ($32.7 million), with an expected residual $25 million impact in Q4[85] Consolidated Results of Operations Consolidated Financial Performance | Metric | 3 Months Ended Sep 30, 2024 ($M) | 3 Months Ended Sep 30, 2023 ($M) | 9 Months Ended Sep 30, 2024 ($M) | 9 Months Ended Sep 30, 2023 ($M) | | :----- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Sales | 1,589.5 | 1,671.4 | 4,868.8 | 5,218.4 | | Gross Margin | 134.5 | 269.1 | 579.6 | 981.8 | | Operating Income | 15.5 | 166.0 | 249.2 | 613.1 | - Sales decreased by $81.9 million (5%) for Q3 2024 and $349.6 million (7%) for 9M 2024, primarily due to lower pricing in Chlor Alkali Products and Vinyls and Epoxy, partially offset by increased Winchester sales[88][91] - Gross margin decreased by $134.6 million for Q3 2024 and $402.2 million for 9M 2024, with gross margin as a percentage of sales falling from 16% to 8% in Q3 and 19% to 12% in 9M[88][91] Segment Results Segment Sales | Segment Sales | 3 Months Ended Sep 30, 2024 ($M) | 3 Months Ended Sep 30, 2023 ($M) | 9 Months Ended Sep 30, 2024 ($M) | 9 Months Ended Sep 30, 2023 ($M) | | :------------ | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Chlor Alkali Products and Vinyls | 871.6 | 969.6 | 2,676.5 | 3,089.0 | | Epoxy | 285.1 | 321.6 | 944.1 | 1,016.1 | | Winchester | 432.8 | 380.2 | 1,248.2 | 1,113.3 | Segment Income (Loss) Before Taxes | Segment Income (Loss) Before Taxes | 3 Months Ended Sep 30, 2024 ($M) | 3 Months Ended Sep 30, 2023 ($M) | 9 Months Ended Sep 30, 2024 ($M) | 9 Months Ended Sep 30, 2023 ($M) | | :--------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Chlor Alkali Products and Vinyls | 45.3 | 172.3 | 221.2 | 598.3 | | Epoxy | (42.8) | (28.8) | (57.6) | (7.9) | | Winchester | 53.4 | 64.5 | 195.9 | 190.2 | - Chlor Alkali Products and Vinyls segment income decreased by $127.0 million in Q3 2024, primarily due to Hurricane Beryl ($76.7 million impact) and lower caustic soda pricing ($79.5 million)[95] Outlook - Olin anticipates a residual negative impact of approximately $25 million from Hurricane Beryl on its Chemicals businesses in Q4 2024, with seasonal declines expected[105] - Winchester's Q4 results are projected to decline from Q3 levels due to seasonally weaker commercial ammunition demand and inventory destocking by retail customers[105] Outlook Metric (2024) | Outlook Metric (2024) | Estimate | Prior Year (2023) | | :-------------------- | :------- | :---------------- | | Capital Spending | ~$200M (incl. $10M Beryl) | N/A | | Depreciation & Amortization | ~$525M | N/A | | Environmental Expenses | $25M - $30M | $23.7M | | Non-operating Pension Income | Similar to $24.0M | $24.0M | | Effective Tax Rate | 25% - 30% | N/A | | Cash Taxes Paid | ~$110M | N/A | Environmental Matters Environmental Liabilities | Environmental Liabilities | Sep 30, 2024 ($M) | Dec 31, 2023 ($M) | Sep 30, 2023 ($M) | | :------------------------ | :---------------- | :---------------- | :---------------- | | Reserves for future environmental expenditures | 154.2 | 153.6 | 153.5 | | Classified as other noncurrent liabilities | 122.2 | 121.6 | 128.5 | Environmental Liability Activity | Environmental Liability Activity | 9 Months Ended Sep 30, 2024 ($M) | 9 Months Ended Sep 30, 2023 ($M) | | :----------------------------- | :------------------------------- | :------------------------------- | | Balance at beginning of year | 153.6 | 146.6 | | Charges to income | 19.4 | 23.1 | | Remedial and investigatory spending | (18.8) | (16.2) | | Balance at end of period | 154.2 | 153.5 | - Environmental provisions charged to income were $7.2 million for Q3 2024 and $19.4 million for 9M 2024. Estimated spending for investigatory and remedial efforts in 2024 is approximately $30 million[64][106] Legal Matters and Contingencies - Accrued liabilities for legal actions, including asbestos-related proceedings, were $14.1 million as of September 30, 2024[65] - Management does not believe these legal actions will materially adversely affect the company's financial position, cash flows, or results of operations[65] Liquidity and Capital Resources Cash Flow Data | Cash Flow Data | 9 Months Ended Sep 30, 2024 ($M) | 9 Months Ended Sep 30, 2023 ($M) | | :------------- | :------------------------------- | :------------------------------- | | Net operating activities | 361.5 | 557.7 | | Net investing activities | (207.0) | (194.0) | | Net financing activities | (98.9) | (398.7) | - Total debt to total capitalization increased to 58.0% as of September 30, 2024, from 54.1% at December 31, 2023, primarily due to higher debt outstanding and lower shareholders' equity[112] - Olin had $849.6 million available under its $1,200.0 million Senior Revolving Credit Facility as of September 30, 2024, and believes it has sufficient liquidity to meet its short-term and long-term needs[113][114] Item 3. Quantitative and Qualitative Disclosures about Market Risk Olin manages market risks from commodity prices, foreign currency, and interest rates using derivatives, with hypothetical scenarios illustrating potential impacts - Olin is exposed to market risks from commodity prices (electricity, natural gas, raw materials), foreign currency exchange rates (primarily Euro), and interest rates[120] - A hypothetical 10% increase in hedged commodity prices would result in a $20.7 million increase in inventory costs, largely offset by hedging instruments[120] - A hypothetical 10% unfavorable shift in exchange rates would negatively affect the fair value of currency derivatives by $14.9 million, generally offset by underlying exposures. A 100-basis point increase in SOFR would impact annual interest expense by $11.1 million[121] Item 4. Controls and Procedures CEO and CFO affirmed effective disclosure controls as of September 30, 2024, with no material changes in internal control over financial reporting - Olin's CEO and CFO concluded that disclosure controls and procedures were effective as of September 30, 2024[122] - No material changes in internal control over financial reporting occurred during the quarter ended September 30, 2024[122] Cautionary Statement Regarding Forward-Looking Statements Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, with no obligation to update - Forward-looking statements are identified by specific terminology (e.g., "anticipate," "expect," "believe") and are not guarantees of future performance, involving inherent risks and uncertainties[123] - Key risks include economic conditions, product pricing, strategic execution, cost control, supply chain disruptions, manufacturing outages, climate-related events, IT system failures, acquisitions, international operations, indebtedness, and regulatory changes[124][125] - The payment of cash dividends is at the discretion of the Board of Directors and may change based on current conditions[123] Part II — Other Information Item 1. Legal Proceedings Legal proceedings, detailed in Note 18, show $14.1 million in accrued liabilities, with no expected material adverse effect on financial position - Legal proceedings information is detailed in Note 18, "Commitments and Contingencies"[127] - Accrued liabilities for legal actions were $14.1 million as of September 30, 2024, with no expected material adverse effect on financial position[65] Item 1A. Risk Factors No new material risk factors are applicable in this quarterly report, consistent with the prior annual report - "Not Applicable" for new material risk factors in this quarterly report[127] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Olin repurchased 983,808 shares for $45.6 million in Q3 2024, with $742.0 million remaining under the repurchase authorization Share Repurchase Activity | Period | Total Shares Purchased | Average Price Paid per Share ($) | Total Shares Purchased as Part of Plan | Maximum Dollar Value Remaining Under Plan ($) | | :----- | :--------------------- | :------------------------------- | :------------------------------------- | :-------------------------------------------- | | July 1-31, 2024 | 750,370 | 46.66 | 750,370 | N/A | | August 1-31, 2024 | 233,438 | 42.85 | 233,438 | N/A | | September 1-30, 2024 | — | — | — | N/A | | Total | 983,808 | N/A | N/A | 741,951,628 | - As of September 30, 2024, $742.0 million of common stock remained authorized for repurchase under the $2.0 billion 2022 Repurchase Authorization program[127] Item 3. Defaults Upon Senior Securities No defaults upon senior securities are applicable for this reporting period - "Not Applicable" for defaults upon senior securities[128] Item 4. Mine Safety Disclosures No mine safety disclosures are applicable for this reporting period - "Not Applicable" for mine safety disclosures[129] Item 5. Other Information No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted, terminated, or modified by directors or officers in Q3 2024 - No director or officer adopted, terminated, or modified a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended September 30, 2024[130] Item 6. Exhibits This section lists filed exhibits, including certifications, XBRL taxonomy documents, and amendments to retirement savings plans - Includes certifications (Section 302, 906), XBRL taxonomy documents, and amendments to retirement savings plans (Amended and Restated Retirement Savings Plan, Supplemental Retirement Savings Plan)[132] SIGNATURES - The report is signed by Todd A. Slater, Senior Vice President and Chief Financial Officer of Olin Corporation, on October 25, 2024[134]