Olin(OLN) - 2025 Q2 - Quarterly Results

Executive Summary & Highlights Second Quarter 2025 Financial Highlights Olin Corporation reported a $1.3 million net loss in Q2 2025, a sharp decline from $74.2 million net income in Q2 2024, with Adjusted EBITDA falling to $176.1 million despite sales growth, while completing acquisition financing, debt reduction, and share repurchases Q2 2025 Financial Performance | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (YoY) | | :-------------------------------- | :----------------- | :----------------- | :----------- | | Net (Loss) Income Attributable to Olin Corporation | ($1.3) | $74.2 | ($75.5) | | Diluted EPS | ($0.01) | $0.62 | ($0.63) | | Adjusted EBITDA | $176.1 | $278.1 | ($102.0) | | Sales | $1,758.3 | $1,644.0 | $114.3 | | Operating Cash Flow | $212.3 | N/A | N/A | - The company completed acquisition financing, reduced debt, and repurchased shares during the quarter[7] Business Segment Performance Overview Chlor Alkali Products and Vinyls saw seasonal demand improvement amid challenging markets, Epoxy continued to suffer from weak global demand and Asian subsidized competition, while Winchester's defense business grew but commercial sales faced macroeconomic headwinds and destocking - Chlor Alkali Products and Vinyls: Experienced seasonal demand improvement in a challenging market, focused on maximizing value from its integrated position with stable electrochemical unit (ECU) values, but faced operational challenges leading to increased costs[5] - Epoxy Business: Global demand remained subdued, with US and European operations severely impacted by Asian subsidized competition, while the company leveraged chlor alkali integration, prioritized structural cost reduction, and developed its formulated solutions business[6] - Winchester Business: Defense sales grew with increased domestic and international military ammunition and project revenue, but commercial sales faced challenges from consumer discretionary spending, customer destocking, rising raw material costs, and a highly competitive environment leading to weaker pricing[7][8] Third Quarter 2025 Outlook Olin projects Q3 2025 Adjusted EBITDA between $170 million and $210 million, citing ongoing market challenges, potential cost increases, and tariff uncertainties, while prioritizing prudent capital allocation for cash generation - Adjusted EBITDA for Q3 2025 is projected to be between $170 million and $210 million, driven by persistent market challenges, potential cost escalations, and tariff-related uncertainties[8] - The company remains committed to a prudent capital allocation approach, focusing on maximizing cash generation, supported by its strong financial foundation[8] Segment Performance Details Chlor Alkali Products and Vinyls Q2 2025 sales for Chlor Alkali Products and Vinyls increased due to higher volumes, but segment earnings significantly declined due to lower pricing, primarily for dichloroethane, and increased operating costs including planned maintenance Chlor Alkali Products and Vinyls Performance | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (YoY) | | :----------------- | :----------------- | :----------------- | :----------- | | Sales | $979.5 | $920.3 | $59.2 | | Segment Earnings | $64.9 | $99.3 | ($34.4) | - Sales growth was primarily driven by increased volumes, while segment earnings decreased by $34.4 million due to lower pricing, mainly for dichloroethane, and higher operating costs, including planned maintenance expenses, partially offset by increased volumes[12] Epoxy The Epoxy segment saw a slight sales increase in Q2 2025, but its segment loss widened compared to Q2 2024, primarily due to higher operating costs, including planned maintenance, with product margins remaining flat year-over-year Epoxy Performance | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (YoY) | | :----------------- | :----------------- | :----------------- | :----------- | | Sales | $331.2 | $317.7 | $13.5 | | Segment Loss | ($23.7) | ($3.0) | ($20.7) | - Segment performance declined by $20.7 million, primarily due to increased operating costs, including planned maintenance expenses, while product margins remained flat year-over-year[14] Winchester Winchester's Q2 2025 sales increased, driven by higher military sales and project revenue, but segment earnings significantly decreased due to lower commercial ammunition shipments and pricing, and rising raw material costs, partially offset by military segment growth Winchester Performance | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (YoY) | | :----------------- | :----------------- | :----------------- | :----------- | | Sales | $447.6 | $406.0 | $41.6 | | Segment Earnings | $25.0 | $70.3 | ($45.3) | - Sales growth was primarily due to increased military sales and military project revenue, partially offset by lower commercial ammunition sales, while segment earnings decreased by $45.3 million due to lower commercial ammunition shipments and pricing, and higher raw material costs (including propellants and commodity metals), partially offset by increased military shipments and military project revenue[16][17] Corporate and Other Costs Corporate and other unallocated costs increased by $2.9 million in Q2 2025 compared to Q2 2024, primarily due to higher incentive costs, including mark-to-market adjustments for equity incentives, partially offset by favorable foreign currency impacts - Corporate and other unallocated costs increased by $2.9 million in Q2 2025 compared to Q2 2024[19] - This increase was primarily due to higher incentive costs, including mark-to-market adjustments for equity incentives, partially offset by favorable foreign currency impacts[19] Financial Position & Liquidity Liquidity and Share Repurchases As of June 30, 2025, Olin held $223.8 million in cash with approximately $1.4 billion in available liquidity, net debt was about $2.8 billion with a 3.9x net debt to Adjusted EBITDA ratio, and the company repurchased 0.5 million common shares for $10.1 million with $2.0 billion remaining authorization Liquidity and Share Repurchase Summary | Metric | June 30, 2025 (Millions) | | :-------------------------------- | :----------------------- | | Cash Balance | $223.8 | | Net Debt | ~$2,800.0 | | Net Debt to Adjusted EBITDA Ratio | 3.9x | | Available Liquidity | ~$1,400.0 | | Shares Repurchased (Q2 2025) | 0.5 million shares | | Cost of Share Repurchases (Q2 2025) | $10.1 million | | Remaining Share Repurchase Authorization | ~$2,000.0 million | Company Information & Forward-Looking Statements Company Description Olin Corporation is a leading vertically integrated global chemical products manufacturer and distributor, including chlorine, caustic soda, vinyls, and epoxy resins, and a premier US ammunition manufacturer under the Winchester brand for sporting, law enforcement, and military applications - A leading vertically integrated global manufacturer and distributor of chemical products, including chlorine, caustic soda, vinyls, epoxy resins, chlorinated organics, bleach, hydrogen, and hydrochloric acid[25] - A premier US ammunition manufacturer, with Winchester's primary manufacturing facilities producing and distributing sporting ammunition, law enforcement ammunition, reloading components, small caliber military ammunition and components, industrial cartridges, and clay targets[25] Conference Call Information Olin's senior management will host a conference call on Tuesday, July 29, 2025, at 9:00 AM ET to discuss Q2 2025 financial results, with related slides and webcast available on Olin's website - A conference call will be hosted by Olin's senior management on Tuesday, July 29, 2025, at 9:00 AM ET to discuss the Q2 2025 financial results[23] - Related slides and a webcast of the conference call are available via Olin's website (www.olin.com), with an archived replay of the webcast also provided[23] Forward-Looking Statements and Risk Factors This communication contains forward-looking statements based on management's beliefs and forecasts, subject to various risks and uncertainties that could cause actual results to differ materially, including economic conditions, pricing, operational challenges, raw material costs, regulatory changes, and cyberattacks - This communication contains forward-looking statements based on management's beliefs, certain assumptions, projections of future results, and current expectations, estimates, and forecasts of market and economic conditions, involving numerous risks and uncertainties that could cause actual results to differ materially from those expressed or implied[28][29] - Key risk factors include: * Sensitivity to economic, business, and market conditions in the US and abroad, including economic instability or downturns in industries served * Declines in average selling prices for products and the supply/demand balance for products, including the impact of industry overcapacity or an imbalanced demand for chlor alkali products * Failure to successfully execute an operating model prioritizing electrochemical unit (ECU) margin over sales volume * Failure to control costs and inflationary impacts or to achieve targeted cost reductions * Reliance on a limited number of suppliers for specific raw materials and services and on third-party transportation * Availability and/or higher-than-anticipated costs of raw materials, energy, transportation, and/or logistics * Unanticipated production disruptions and outages, including those due to labor disputes and production hazards * Exposure to physical risks associated with the increasing severity and frequency of climate-related events or adverse weather events * Failures or interruptions of information technology systems, including cyberattacks * Risks associated with international sales and operations, including economic, political, or regulatory changes * Failure to identify, attract, develop, retain, and motivate qualified employees throughout the organization, and the ability to manage executive and other key senior management transitions * Inability to complete future acquisition or joint venture transactions or to successfully integrate them into the business * Adverse conditions in credit and capital markets, limiting or preventing the company's ability to borrow or raise capital * Weak industry conditions affecting the company's ability to comply with financial maintenance covenants in its senior credit facilities * The company's indebtedness and debt service obligations * Impact of declines in global equity markets on asset values, and declines in interest rates or other significant assumptions used to value pension plan liabilities and funding * Failure of long-term plan assumptions to materialize, resulting in non-cash impairment charges to long-lived assets * Changes in or failure to comply with legislative or governmental regulations or policies, including those concerning the company's ability to manufacture or use certain products and changes within the international markets in which the company operates * New regulations or changes in public policy concerning the transportation of hazardous chemicals and the security of chemical production facilities * Unanticipated outcomes of legal or regulatory claims and proceedings * Costs and other expenditures for environmental investigations and remediation or other legal proceedings in excess of expectations * Various risks associated with performance under the Lake City Army Ammunition Plant contract and other government contracts * Failure to effectively manage environmental, social, and governance (ESG) issues and related regulations, including climate change and sustainability[30][31][33] Financial Statements Consolidated Statements of Operations Olin reported a $1.3 million net loss in Q2 2025, a sharp decline from $74.2 million net income in Q2 2024, with sales up to $1.7583 billion but operating income significantly reduced by higher costs and restructuring Consolidated Statements of Operations | Metric (Millions, except per share) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :---------------------------------- | :------ | :------ | :------- | :------- | | Sales | $1,758.3 | $1,644.0 | $3,402.5 | $3,279.3 | | Cost of Goods Sold | $1,620.2 | $1,406.2 | $3,115.7 | $2,834.2 | | Operating Income | $35.3 | $136.4 | $79.0 | $233.7 | | Net (Loss) Income Attributable to Olin Corporation | ($1.3) | $74.2 | $0.1 | $122.8 | | Diluted EPS | ($0.01) | $0.62 | $0.00 | $1.01 | | Dividends per Common Share | $0.20 | $0.20 | $0.40 | $0.40 | Segment Information In Q2 2025, all three segments—Chlor Alkali, Epoxy, and Winchester—reported increased sales compared to Q2 2024; however, pre-tax income significantly decreased for Chlor Alkali and Winchester, and the loss widened for Epoxy Segment Performance (Income/Loss before Taxes) | Segment (Millions) | Q2 2025 Sales | Q2 2024 Sales | Q2 2025 Income (Loss) before Taxes | Q2 2024 Income (Loss) before Taxes | | :----------------- | :------------ | :------------ | :--------------------------------- | :--------------------------------- | | Chlor Alkali Products and Vinyls | $979.5 | $920.3 | $64.9 | $99.3 | | Epoxy | $331.2 | $317.7 | ($23.7) | ($3.0) | | Winchester | $447.6 | $406.0 | $25.0 | $70.3 | | Total Sales | $1,758.3 | $1,644.0 | N/A | N/A | Consolidated Balance Sheets As of June 30, 2025, Olin's total assets slightly increased to $7.6679 billion, while total liabilities rose from increased long-term debt, total equity slightly decreased, and cash and cash equivalents reached $223.8 million Consolidated Balance Sheets | Metric (Millions) | June 30, 2025 | Dec 31, 2024 | June 30, 2024 | | :------------------------ | :------------ | :----------- | :------------ | | Cash and Cash Equivalents | $223.8 | $175.6 | $182.1 | | Total Current Assets | $2,286.7 | $2,079.8 | $2,058.3 | | Total Assets | $7,667.9 | $7,579.1 | $7,660.6 | | Total Current Liabilities | $1,545.9 | $1,632.2 | $1,439.3 | | Long-term Debt | $2,977.5 | $2,713.2 | $2,789.1 | | Total Liabilities | $5,680.1 | $5,523.7 | $5,491.3 | | Total Equity | $1,987.8 | $2,055.4 | $2,169.3 | Consolidated Statements of Cash Flows Net cash from operating activities for the six months ended June 30, 2025, decreased to $126.3 million, net investing activities resulted in a $152.3 million outflow including an acquisition, and net financing activities saw a $73.4 million inflow, a notable improvement from the prior year's outflow Consolidated Statements of Cash Flows | Activity (Millions) | YTD 2025 | YTD 2024 | | :-------------------------- | :------- | :------- | | Net Operating Activities | $126.3 | $171.6 | | Net Investing Activities | ($152.3) | ($150.4) | | Net Financing Activities | $73.4 | ($8.9) | | Net Increase in Cash and Cash Equivalents | $48.2 | $11.8 | | Cash and Cash Equivalents, End of Period | $223.8 | $182.1 | - Business acquisitions, net of cash acquired, amounted to ($55.8) million for the first half of 2025[37] Non-GAAP Financial Measures Non-GAAP Financial Measures - Adjusted EBITDA Adjusted EBITDA, a non-GAAP metric, is defined as net income (loss) plus depreciation, amortization, interest, taxes, other expenses, restructuring, and certain non-recurring items, totaling $176.1 million in Q2 2025, down from $278.1 million in Q2 2024 - Adjusted EBITDA is defined as net income (loss) plus depreciation and amortization, interest expense (income), income tax provision (benefit), other expense (income), restructuring charges (income), and certain other non-recurring items[38] Adjusted EBITDA Reconciliation | Metric (Millions) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------ | :------ | :------ | :------- | :------- | | Net (Loss) Income | ($2.8) | $72.3 | ($1.6) | $120.1 | | Add Back: Interest Expense | $46.8 | $46.6 | $95.3 | $91.2 | | Add Back: Interest Income | ($1.2) | ($0.9) | ($2.4) | ($1.7) | | Add Back: Income Tax (Benefit) Provision | ($4.0) | $24.3 | ($3.1) | $36.8 | | Add Back: Depreciation and Amortization | $129.9 | $129.0 | $262.1 | $258.7 | | EBITDA | $168.7 | $271.3 | $350.3 | $505.1 | | Add Back: Restructuring Charges | $7.4 | $6.8 | $11.4 | $15.1 | | Adjusted EBITDA | $176.1 | $278.1 | $361.7 | $520.2 | Non-GAAP Financial Measures - Net Debt to Adjusted EBITDA Ratio The Net Debt to Adjusted EBITDA ratio, a non-GAAP metric, measures debt management by dividing net debt by trailing twelve months Adjusted EBITDA, standing at 3.9x as of June 30, 2025, up from 3.1x and 2.6x at December 31, 2024, and June 30, 2024, respectively, reflecting increased net debt and decreased trailing twelve months Adjusted EBITDA - The Net Debt to Adjusted EBITDA ratio is defined as net debt divided by Adjusted EBITDA, which management believes is significant for investors to assess the company's ability to manage its debt[40] Net Debt to Adjusted EBITDA Ratio | Metric (Millions) | June 30, 2025 | Dec 31, 2024 | June 30, 2024 | | :-------------------------------- | :------------ | :----------- | :------------ | | Total Debt | $2,996.7 | $2,842.2 | $2,910.9 | | Less: Cash and Cash Equivalents | ($223.8) | ($175.6) | ($182.1) | | Net Debt | $2,772.9 | $2,666.6 | $2,728.8 | | Trailing Twelve Months Adjusted EBITDA | $715.4 | $873.9 | $1,045.1 | | Net Debt to Adjusted EBITDA | 3.9 | 3.1 | 2.6 |