PR Newswire
CLAYTON, Mo., Jan. 27, 2022 /PRNewswire/ —
Highlights
- Fourth quarter 2021 net income of $306.6 million and adjusted EBITDA of $686.7 million
- Net debt to adjusted EBITDA ratio down to 1.0 times
- Share repurchases of $183.6 million in fourth quarter 2021
- Expects 2022 adjusted EBITDA to improve to $2.5 billion to $2.8 billion
Olin Corporation (NYSE: OLN) announced financial results for the fourth quarter ended December 31, 2021.
Fourth quarter 2021 reported net income was $306.6 million, or $1.89 per diluted share, which compares to fourth quarter 2020 reported net loss of $33.0 million, or ($0.21) per diluted share. Fourth quarter 2021 interest expense included a loss on extinguishment of debt of $104.6 million from the $391.4 million prepayment of the 9.5% Senior Notes due in 2025. Fourth quarter 2021 adjusted EBITDA of $686.7 million excludes depreciation and amortization expense of $150.1 million and restructuring charges and other non-recurring items of $2.0 million. Fourth quarter 2020 adjusted EBITDA was $246.2 million. Sales in the fourth quarter 2021 were $2,430.4 million compared to $1,654.1 million in the fourth quarter 2020. Full year 2021 reported net income was $1,296.7 million, or $7.96 per diluted share, which compares to full year 2020 reported net loss of $969.9 million, or ($6.14) per diluted share.
Scott Sutton, Chairman, President and Chief Executive Officer, said, “Our team’s performance in 2021 demonstrated the success of our unique winning model, which prioritizes value, and highlights the potential still to be unlocked across our Chemicals and Winchester businesses. Our fourth quarter performance demonstrated how our model can adapt in real-time to emphasize ‘value first’ versus our historical sales volume maximization approach, as our Chemical businesses reduced operating rates and increased product purchases to fulfill our participation level. As a result, our fourth quarter 2021 adjusted EBITDA delivered our forecasted guidance. Our Electrochemical Unit Profit Contribution Index (ECU PCI) continued to move higher, as Olin drove sequential pricing improvement in the fourth quarter 2021 for chlorine, chlorine derivatives, including epoxy resins, and caustic soda. Winchester continued to deliver on both commercial and military fronts, as we launched our Shoot United™ initiative during the quarter to promote recreational sport shooting.
“We enter 2022 with our model of focusing on system value fully effective and ready to incorporate organic and inorganic growth initiatives. In early 2022, we expect sequentially higher raw material and operating costs, mainly increased natural gas and electrical power costs. As a result, we expect the first quarter 2022 results from our Chemical businesses to be similar to fourth quarter 2021 levels. We expect our Winchester business first quarter 2022 results to increase sequentially from fourth quarter 2021.”
SEGMENT REPORTING
Olin defines segment earnings as income (loss) before interest expense, interest income, goodwill impairment charges, 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 fourth quarter 2021 were $1,244.1 million compared to $793.7 million in the fourth quarter 2020. The increase in Chlor Alkali Products and Vinyls sales was primarily due to higher pricing, partially offset by lower volumes. Fourth quarter 2021 segment earnings were $294.8 million compared to $57.0 million in the fourth quarter 2020. The $237.8 million increase in segment earnings was primarily due to higher pricing across all products. The segment earnings also reflected lower volumes and higher raw material and operating costs. Chlor Alkali Products and Vinyls fourth quarter 2021 results included depreciation and amortization expense of $119.4 million compared to $112.3 million in the fourth quarter 2020.
EPOXY
Epoxy sales for the fourth quarter 2021 were $795.7 million compared to $519.8 million in the fourth quarter 2020. The increase in Epoxy sales was primarily due to higher pricing. Fourth quarter 2021 segment earnings were $170.8 million compared to $27.2 million in the fourth quarter 2020. The $143.6 million increase in Epoxy segment earnings was primarily due to higher product margins, as higher pricing was partially offset by higher benzene and propylene raw material costs. The segment earnings also reflected lower volumes and higher operating costs. Epoxy fourth quarter 2021 results included depreciation and amortization expense of $22.6 million compared to $23.7 million in the fourth quarter 2020.
WINCHESTER
Winchester sales for the fourth quarter 2021 were $390.6 million compared to $340.6 million in the fourth quarter 2020. The increase in Winchester sales was primarily due to higher commercial ammunition pricing. Fourth quarter 2021 segment earnings were $101.8 million compared to $44.8 million in the fourth quarter 2020. The $57.0 million increase in segment earnings was primarily due to higher commercial ammunition pricing which was partially offset by higher commodity and other materials costs. Winchester fourth quarter 2021 results included depreciation and amortization expense of $6.5 million compared to $5.4 million in the fourth quarter 2020.
CORPORATE AND OTHER COSTS
Other corporate and unallocated costs in the fourth quarter of 2021 decreased $7.7 million compared to the fourth quarter 2020 primarily due to lower costs associated with the absence of implementation of new enterprise resource planning, manufacturing, and engineering systems, and the related infrastructure costs. This project was completed in late 2020. This reduction was partially offset by higher incentive costs, which includes mark-to-market adjustments on stock-based compensation.
CASH, DEBT REDUCTION AND SHARE REPURCHASES
The cash balance on December 31, 2021, was $180.5 million. During 2021, Olin reduced debt by approximately $1.1 billion, ending the year with net debt of approximately $2.6 billion and a net debt to adjusted EBITDA ratio of 1.0 times.
During fourth quarter 2021, approximately 3.2 million shares of common stock were repurchased at a cost of $183.6 million. In 2021, Olin repurchased approximately 4.7 million shares of common stock at a cost of $251.9 million. As of December 31, 2021, Olin had approximately $1,052.2 million available under its current share repurchase authorizations.
CONFERENCE CALL INFORMATION
Olin senior management will host a conference call to discuss fourth quarter 2021 financial results at 9:00 a.m. Eastern time on Friday, January 28, 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 fourth 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, 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 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, 2020, 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;
- our reliance on a limited number of suppliers for specified feedstock and services and our reliance on third-party transportation;
- our inability to complete future acquisitions or successfully integrate them into our business;
- failure to control costs and inflation impacts or failure to achieve targeted cost reductions;
- higher-than-expected raw material, energy, transportation, and/or logistics costs;
- 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;
- our substantial amount of indebtedness and significant debt service obligations;
- the negative impact from the COVID-19 pandemic and the global response to the pandemic, including without limitation adverse impacts in complying with governmental COVID-19 mandates;
- weak industry conditions affecting our ability to comply with the financial maintenance covenants in our senior secured credit facility;
- failure to identify, attract, develop, retain and motivate qualified employees throughout the organization;
- risks associated with our international sales and operations, including economic, political or regulatory changes;
- 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;
- adverse conditions in the credit and capital markets, limiting or preventing our ability to borrow or raise capital;
- our long-range plan assumptions not being realized causing a non-cash impairment charge of long-lived assets;
Legal, Environmental and Regulatory Risks
- new regulations or public policy changes regarding the transportation of hazardous chemicals and the security of chemical manufacturing facilities;
- 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;
- unexpected outcomes from legal or regulatory claims and proceedings;
- failure to effectively manage environmental, social and governance (ESG) issues and related regulations, including climate change and sustainability;
- costs and other expenditures in excess of those projected for environmental investigation and remediation or other legal proceedings; and
- various risks associated with our Lake City U.S. Army Ammunition Plant contract and performance under other governmental contracts.
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.
2022-03
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View original content to download multimedia:https://www.prnewswire.com/news-releases/olin-announces-fourth-quarter-2021-results-301470147.html
SOURCE Olin Corporation