Olin Announces Third Quarter 2022 Results
Olin Corporation (NYSE: OLN) reported third quarter 2022 net income of $315.2 million or $2.18 per diluted share, down from $390.7 million or $2.38 in Q3 2021. Adjusted EBITDA was $547.8 million, a decline from $707.0 million in the prior year. Sales were $2,321.7 million, slightly lower than $2,340.1 million in Q3 2021. Olin expects a 15% to 20% decline in Q4 adjusted EBITDA. The company repurchased approximately 13% of its shares year-to-date, reflecting its commitment to capital allocation and maintaining an investment-grade balance sheet.
- Repurchased approximately 13% of outstanding shares year-to-date from available cash flow.
- Maintained a strong balance sheet with net debt of $2.4 billion and a net debt to adjusted EBITDA ratio of 0.9 times.
- Net income decreased from $390.7 million in Q3 2021 to $315.2 million in Q3 2022.
- Adjusted EBITDA fell from $707.0 million in Q3 2021 to $547.8 million in Q3 2022.
- Sales in the Epoxy segment dropped 29% year-over-year, leading to a substantial earnings decline.
- Sales in Chlor Alkali Products and Vinyls were impacted by 17% lower volumes.
Highlights
- Third quarter 2022 net income of
$315.2 million , or$2.18 per diluted share - Quarterly adjusted EBITDA of
$547.8 million - Share repurchases of
$410.9 million in third quarter 2022
CLAYTON, Mo., Oct. 26, 2022 /PRNewswire/ -- Olin Corporation (NYSE: OLN) announced financial results for the third quarter ended September 30, 2022. Third quarter 2022 reported net income was
Scott Sutton, Chairman, President, and Chief Executive Officer, said, "We are experiencing recessionary global economic conditions. Our third quarter adjusted EBITDA performance begins to demonstrate how our winning model, that emphasizes 'value first' versus a volume maximization approach, should dramatically improve our recessionary level of adjusted EBITDA compared to Olin's historical performance. While our chemical businesses have been challenged by European and North American epoxy and vinyls intermediate demand shortfalls and increased Asian exports, the core electrochemical unit (ECU) pricing for merchant chlorine and caustic soda continued to move higher.
"We expect Chlor Alkali Products and Vinyls fourth quarter segment results to be slightly lower than third quarter 2022 levels, as we expect chlorine and caustic soda pricing to continue to improve, while vinyls intermediates pricing is likely to remain under pressure. Our Epoxy segment fourth quarter results are expected to seasonally decline from third quarter 2022 levels, exacerbated by increased Chinese exports precipitated by continuing weak Chinese domestic demand. Our team continues to adeptly reduce operating rates and increase product purchases; thereby, refraining from selling incremental volume into poor-quality markets. We expect Winchester segment fourth quarter results to seasonally decline from third quarter 2022 levels as we execute our holiday shutdowns. Overall, we expect Olin's fourth quarter 2022 adjusted EBITDA to decline approximately
"So far in 2022, we repurchased approximately
SEGMENT REPORTING
Olin defines segment earnings as income (loss) before interest expense, interest income, other operating income (expense), non-operating pension income, other income, and income taxes.
CHLOR ALKALI PRODUCTS AND VINYLS
Chlor Alkali Products and Vinyls sales for the third quarter 2022 were
EPOXY
Epoxy sales for the third quarter 2022 were
WINCHESTER
Winchester sales for the third quarter 2022 were
CORPORATE AND OTHER COSTS
Other corporate and unallocated costs in the third quarter of 2022 decreased
LIQUIDITY AND SHARE REPURCHASES
The cash balance on September 30, 2022, was
During third quarter 2022, approximately 8.2 million shares of common stock were repurchased at a cost of
CONFERENCE CALL INFORMATION
Olin senior management will host a conference call to discuss third quarter 2022 financial results at 9:00 a.m. Eastern time on Thursday, October 27, 2022. Remarks will be followed by a question-and-answer session. Associated slides, which will be available the evening before the call, and the conference call will be accessible via webcast through Olin's website, www.olin.com, under the third quarter conference call icon. An archived replay of the webcast will also be available in the Investor Relations section of Olin's website beginning at 12:00 p.m. Eastern time. A final transcript of the call will be posted the next business day.
COMPANY DESCRIPTION
Olin Corporation is a leading vertically-integrated global manufacturer and distributor of chemical products and a leading U.S. manufacturer of ammunition. The chemical products produced include chlorine and caustic soda, vinyls, epoxies, chlorinated organics, bleach, hydrogen, and hydrochloric acid. Winchester's principal manufacturing facilities produce and distribute sporting ammunition, law enforcement ammunition, reloading components, small caliber military ammunition and components, and industrial cartridges.
Visit www.olin.com for more information on Olin.
FORWARD-LOOKING STATEMENTS
This communication includes forward-looking statements. These statements relate to analyses and other information that are based on management's beliefs, certain assumptions made by management, forecasts of future results, and current expectations, estimates and projections about the markets and economy in which we and our various segments operate. The statements contained in this communication that are not statements of historical fact may include forward-looking statements that involve a number of risks and uncertainties.
We have used the words "anticipate," "intend," "may," "expect," "believe," "should," "plan," "outlook," "project," "estimate," "forecast," "optimistic," "target," and variations of such words and similar expressions in this communication to identify such forward-looking statements. These forward-looking statements include, but are not limited to, statements regarding the Company's intent to repurchase, from time to time, the Company's common stock. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict and many of which are beyond our control. Therefore, actual outcomes and results may differ materially from those matters expressed or implied in such forward-looking statements. We undertake no obligation to update publicly any forward-looking statements, whether as a result of future events, new information or otherwise. The payment of cash dividends is subject to the discretion of our board of directors and will be determined in light of then-current conditions, including our earnings, our operations, our financial conditions, our capital requirements and other factors deemed relevant by our board of directors. In the future, our board of directors may change our dividend policy, including the frequency or amount of any dividend, in light of then-existing conditions.
The risks, uncertainties and assumptions involved in our forward-looking statements, many of which are discussed in more detail in our filings with the SEC, including without limitation the "Risk Factors" section of our Annual Report on Form 10-K for the year ended December 31, 2021, and our Quarterly Reports on Form 10-Q and other reports furnished or filed with the SEC, include, but are not limited to, the following:
Business, Industry and Operational Risks
- 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;
- declines in average selling prices for our products 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;
- unsuccessful execution of our strategic operating model, which prioritizes Electrochemical Unit (ECU) margins over sales volumes;
- failure to control costs and inflation impacts or failure to achieve targeted cost reductions;
- our reliance on a limited number of suppliers for specified feedstock and services and our reliance on third-party transportation;
- availability of and/or higher-than-expected costs of raw material, energy, transportation, and/or logistics;
- the occurrence of unexpected manufacturing interruptions and outages, including those occurring as a result of labor disruptions, production hazards and weather-related events;
- the failure or an interruption of our information technology systems;
- failure to identify, attract, develop, retain and motivate qualified employees throughout the organization;
- our inability to complete future acquisitions or joint venture transactions or successfully integrate them into our business;
- our substantial amount of indebtedness and significant debt service obligations;
- risks associated with our international sales and operations, including economic, political or regulatory changes;
- the negative impact from the COVID-19 pandemic and the global response to the pandemic, including without limitation adverse impacts in complying with governmental mandates;
- weak industry conditions affecting our ability to comply with the financial maintenance covenants in our senior credit facility;
- adverse conditions in the credit and capital markets, limiting or preventing our ability to borrow or raise capital;
- the effects of any declines in global equity markets on asset values and any declines in interest rates or other significant assumptions used to value the liabilities in, and funding of, our pension plans;
- our long-range plan assumptions not being realized causing a non-cash impairment charge of long-lived assets;
Legal, Environmental and Regulatory Risks
- changes in, or failure to comply with, legislation or government regulations or policies, including changes regarding our ability to manufacture or use certain products and changes within the international markets in which we operate;
- new regulations or public policy changes regarding the transportation of hazardous chemicals and the security of chemical manufacturing facilities;
- unexpected outcomes from legal or regulatory claims and proceedings;
- costs and other expenditures in excess of those projected for environmental investigation and remediation or other legal proceedings;
- various risks associated with our Lake City U.S. Army Ammunition Plant contract and performance under other governmental contracts; and
- failure to effectively manage environmental, social and governance (ESG) issues and related regulations, including climate change and sustainability.
All of our forward-looking statements should be considered in light of these factors. In addition, other risks and uncertainties not presently known to us or that we consider immaterial could affect the accuracy of our forward-looking statements.
2022-18
Olin Corporation | ||||||
Consolidated Statements of Operations (a) | ||||||
Three Months | Nine Months | |||||
Ended September 30, | Ended September 30, | |||||
(In millions, except per share amounts) | 2022 | 2021 | 2022 | 2021 | ||
Sales | $ 2,321.7 | $ 2,340.1 | $ 7,399.2 | $ 6,480.2 | ||
Operating Expenses: | ||||||
Cost of Goods Sold | 1,840.9 | 1,679.8 | 5,599.8 | 4,815.8 | ||
Selling and Administration | 92.7 | 107.2 | 296.0 | 314.7 | ||
Restructuring Charges | 7.6 | 3.6 | 14.3 | 24.5 | ||
Other Operating Income (Expense) (b) | 13.0 | (0.5) | 16.3 | - | ||
Operating Income | 393.5 | 549.0 | 1,505.4 | 1,325.2 | ||
Interest Expense (c) | 36.0 | 54.0 | 103.4 | 204.4 | ||
Interest Income | 0.5 | 0.1 | 1.2 | 0.2 | ||
Non-operating Pension Income | 9.9 | 9.2 | 29.0 | 26.7 | ||
Income before Taxes | 367.9 | 504.3 | 1,432.2 | 1,147.7 | ||
Income Tax Provision (d) | 52.7 | 113.6 | 301.9 | 157.6 | ||
Net Income | $ 315.2 | $ 390.7 | $ 1,130.3 | $ 990.1 | ||
Net Income Per Common Share: | ||||||
Basic | $ 2.23 | $ 2.44 | $ 7.62 | $ 6.21 | ||
Diluted | $ 2.18 | $ 2.38 | $ 7.44 | $ 6.07 | ||
Dividends Per Common Share | $ 0.20 | $ 0.20 | $ 0.60 | $ 0.60 | ||
Average Common Shares Outstanding - Basic | 141.2 | 160.1 | 148.3 | 159.4 | ||
Average Common Shares Outstanding - Diluted | 144.3 | 163.9 | 151.9 | 163.0 |
(a) | Unaudited. |
(b) | Other operating income (expense) for both the three and nine months ended September 30, 2022 included |
(c) | Interest expense for the three and nine months ended September 30, 2021 included a loss on extinguishment of debt of |
(d) | Income tax provision for both the three and nine months ended September 30, 2022 included a benefit of |
Olin Corporation | ||||||||
Segment Information (a) | ||||||||
Three Months | Nine Months | |||||||
Ended September 30, | Ended September 30, | |||||||
(In millions) | 2022 | 2021 | 2022 | 2021 | ||||
Sales: | ||||||||
Chlor Alkali Products and Vinyls | $ 1,263.5 | $ 1,062.4 | $ 3,912.2 | $ 2,896.7 | ||||
Epoxy | 644.1 | 877.7 | 2,206.3 | 2,390.3 | ||||
Winchester | 414.1 | 400.0 | 1,280.7 | 1,193.2 | ||||
Total Sales | $ 2,321.7 | $ 2,340.1 | $ 7,399.2 | $ 6,480.2 | ||||
Income before Taxes: | ||||||||
Chlor Alkali Products and Vinyls | $ 253.9 | $ 263.0 | $ 929.0 | $ 703.0 | ||||
Epoxy | 80.1 | 215.2 | 358.0 | 445.7 | ||||
Winchester | 89.0 | 115.3 | 327.2 | 310.3 | ||||
Corporate/Other: | ||||||||
Environmental Expense (b) | (7.4) | (3.6) | (18.0) | (8.6) | ||||
Other Corporate and Unallocated Costs | (27.5) | (36.8) | (92.8) | (100.7) | ||||
Restructuring Charges | (7.6) | (3.6) | (14.3) | (24.5) | ||||
Other Operating Income (Expense) (c) | 13.0 | (0.5) | 16.3 | - | ||||
Interest Expense (d) | (36.0) | (54.0) | (103.4) | (204.4) | ||||
Interest Income | 0.5 | 0.1 | 1.2 | 0.2 | ||||
Non-operating Pension Income | 9.9 | 9.2 | 29.0 | 26.7 | ||||
Income before Taxes | $ 367.9 | $ 504.3 | $ 1,432.2 | $ 1,147.7 |
(a) | Unaudited. | |||||||
(b) | Environmental expense for the nine months ended September 30, 2021 included | |||||||
(c) | Other operating income (expense) for both the three and nine months ended September 30, 2022 included | |||||||
(d) | Interest expense for the three and nine months ended September 30, 2021 included a loss on extinguishment of debt of | |||||||
Olin Corporation | |||||
Consolidated Balance Sheets (a) | |||||
September 30, | December 31, | September 30, | |||
(In millions, except per share data) | 2022 | 2021 | 2021 | ||
Assets: | |||||
Cash & Cash Equivalents | $ 163.6 | $ 180.5 | $ 306.1 | ||
Accounts Receivable, Net | 1,075.4 | 1,106.5 | 1,041.7 | ||
Income Taxes Receivable | 26.0 | 0.3 | 3.0 | ||
Inventories, Net | 945.1 | 868.3 | 826.8 | ||
Other Current Assets | 74.9 | 92.7 | 127.7 | ||
Total Current Assets | 2,285.0 | 2,248.3 | 2,305.3 | ||
Property, Plant and Equipment | |||||
(Less Accumulated Depreciation of | 2,690.8 | 2,913.6 | 2,934.5 | ||
Operating Lease Assets, Net | 371.4 | 372.4 | 386.8 | ||
Deferred Income Taxes | 81.9 | 99.3 | 104.9 | ||
Other Assets | 1,090.7 | 1,131.8 | 1,152.4 | ||
Intangibles, Net | 279.2 | 331.7 | 348.5 | ||
Goodwill | 1,421.2 | 1,420.6 | 1,420.3 | ||
Total Assets | $ 8,220.2 | $ 8,517.7 | $ 8,652.7 | ||
Liabilities and Shareholders' Equity: | |||||
Current Installments of Long-term Debt | $ 1.0 | $ 201.1 | $ 201.1 | ||
Accounts Payable | 892.6 | 847.7 | 811.7 | ||
Income Taxes Payable | 183.2 | 98.4 | 62.1 | ||
Current Operating Lease Liabilities | 74.3 | 76.8 | 78.1 | ||
Accrued Liabilities | 467.6 | 458.1 | 434.0 | ||
Total Current Liabilities | 1,618.7 | 1,682.1 | 1,587.0 | ||
Long-term Debt | 2,580.4 | 2,578.2 | 2,823.5 | ||
Operating Lease Liabilities | 305.1 | 302.0 | 314.7 | ||
Accrued Pension Liability | 286.3 | 381.9 | 654.2 | ||
Deferred Income Taxes | 546.8 | 558.9 | 526.8 | ||
Other Liabilities | 333.2 | 362.4 | 358.6 | ||
Total Liabilities | 5,670.5 | 5,865.5 | 6,264.8 | ||
Commitments and Contingencies | |||||
Shareholders' Equity: | |||||
Common Stock, | |||||
Issued and Outstanding 137.0 Shares (156.8 and 159.4 in 2021) | 137.0 | 156.8 | 159.4 | ||
Additional Paid-in Capital | 920.3 | 1,969.6 | 2,133.1 | ||
Accumulated Other Comprehensive Loss | (562.3) | (488.0) | (643.8) | ||
Retained Earnings | 2,054.7 | 1,013.8 | 739.2 | ||
Total Shareholders' Equity | 2,549.7 | 2,652.2 | 2,387.9 | ||
Total Liabilities and Shareholders' Equity | $ 8,220.2 | $ 8,517.7 | $ 8,652.7 | ||
(a) Unaudited. |
Olin Corporation | |||
Consolidated Statements of Cash Flows (a) | |||
Nine Months Ended | |||
September 30, | |||
(In millions) | 2022 | 2021 | |
Operating Activities: | |||
Net Income | $ 1,130.3 | $ 990.1 | |
Gains on Disposition of Property, Plant and Equipment | (13.0) | - | |
Loss on Debt Extinguishment | - | 47.6 | |
Stock-based Compensation | 10.4 | 5.0 | |
Depreciation and Amortization | 450.3 | 432.4 | |
Deferred Income Taxes | (3.7) | (25.2) | |
Qualified Pension Plan Contributions | (0.9) | (1.0) | |
Qualified Pension Plan Income | (24.7) | (20.8) | |
Changes in: | |||
Receivables | (25.8) | (291.6) | |
Income Taxes Receivable/Payable | 75.5 | 64.8 | |
Inventories | (102.9) | (161.8) | |
Other Current Assets | 5.8 | 18.4 | |
Accounts Payable and Accrued Liabilities | 31.7 | 157.9 | |
Other Assets | (17.5) | (9.2) | |
Other Noncurrent Liabilities | (9.1) | 41.3 | |
Other Operating Activities | 3.3 | 3.8 | |
Net Operating Activities | 1,509.7 | 1,251.7 | |
Investing Activities: | |||
Capital Expenditures | (168.4) | (135.8) | |
Proceeds from Disposition of Property, Plant and Equipment | 14.9 | - | |
Net Investing Activities | (153.5) | (135.8) | |
Financing Activities: | |||
Long-term Debt Repayments, Net | (200.9) | (851.1) | |
Debt Early Redemption Premiums | - | (37.7) | |
Common Stock Repurchased and Retired | (1,100.6) | (68.3) | |
Stock Options Exercised | 21.3 | 58.3 | |
Dividends Paid | (89.4) | (95.8) | |
Debt Issuance Costs | - | (3.8) | |
Net Financing Activities | (1,369.6) | (998.4) | |
Net (Decrease) Increase in Cash and Cash Equivalents | (13.4) | 117.5 | |
Effect of Exchange Rate Changes on Cash and Cash Equivalents | (3.5) | (1.1) | |
Cash and Cash Equivalents, Beginning of Year | 180.5 | 189.7 | |
Cash and Cash Equivalents, End of Period | $ 163.6 | $ 306.1 | |
(a) Unaudited. |
Olin Corporation | |||||
Olin's definition of Adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization) is net income (loss) plus an add-back for | |||||
Three Months | Nine Months | ||||
Ended September 30, | Ended September 30, | ||||
(In millions) | 2022 | 2021 | 2022 | 2021 | |
Reconciliation of Net Income to Adjusted EBITDA: | |||||
Net Income | $ 315.2 | $ 390.7 | $ 1,130.3 | $ 990.1 | |
Add Back: | |||||
Interest Expense | 36.0 | 54.0 | 103.4 | 204.4 | |
Interest Income | (0.5) | (0.1) | (1.2) | (0.2) | |
Income Tax Provision | 52.7 | 113.6 | 301.9 | 157.6 | |
Depreciation and Amortization | 149.8 | 145.2 | 450.3 | 432.4 | |
EBITDA | 553.2 | 703.4 | 1,984.7 | 1,784.3 | |
Add Back: | |||||
Restructuring Charges | 7.6 | 3.6 | 14.3 | 24.5 | |
Environmental Recoveries (b) | - | - | - | (2.2) | |
Certain Non-recurring Items (c) | (13.0) | - | (13.0) | - | |
Adjusted EBITDA | $ 547.8 | $ 707.0 | $ 1,986.0 | $ 1,806.6 |
(a) | Unaudited. | ||||
(b) | Environmental recoveries for the nine months ended September 30, 2021 included insurance recoveries for costs incurred and expensed in prior periods. | ||||
(c) | Certain non-recurring items for both the three and nine months ended September 30, 2022 included |
Olin Corporation | ||||||
Olin's definition of Net Debt to Adjusted EBITDA is Net Debt divided by Adjusted EBITDA. Net Debt at the end of any reporting period is defined as the sum of our current | ||||||
September 30, | December 31, | September 30, | ||||
(In millions) | 2022 | 2021 | 2021 | |||
Current Installments of Long-term Debt | $ 1.0 | $ 201.1 | $ 201.1 | |||
Long-term Debt | 2,580.4 | 2,578.2 | 2,823.5 | |||
Total Debt | 2,581.4 | 2,779.3 | 3,024.6 | |||
Less: Cash and Cash Equivalents | (163.6) | (180.5) | (306.1) | |||
Net Debt | $ 2,417.8 | $ 2,598.8 | $ 2,718.5 | |||
Trailing Twelve Months Adjusted EBITDA (b) | $ 2,672.7 | $ 2,493.3 | $ 2,052.8 | |||
Net Debt to Adjusted EBITDA | 0.9 | 1.0 | 1.3 |
(a) | Unaudited. | |||||
(b) | Trailing Twelve Months Adjusted EBITDA as of September 30, 2022 is calculated as the nine months ended September 30, 2022 plus the year ended December 31, 2021 less the nine months ended September 30, 2021. Trailing Twelve Months Adjusted EBITDA as of September 30, 2021 is calculated as the nine months ended September 30, 2021 plus the year ended December 31, 2020 less the nine months ended September 30, 2020. |
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SOURCE Olin Corporation
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