Winchester Posts Record First Quarter
CLAYTON, MO -- (Marketwire) -- 04/26/10 -- Olin Corporation (NYSE: OLN) announced today
that its first quarter 2010 net income was $14.1 million, or $0.18 per
diluted share, which compares to $46.7 million, or $0.60 per diluted share
in the first quarter of 2009. Sales in the first quarter of 2010 were
$362.0 million, compared to $400.6 million in the first quarter of 2009.
Joseph D. Rupp, Chairman, President, and Chief Executive Officer, said,
"Winchester achieved the highest level of first quarter earnings in its
history, and the second best quarterly results ever, reflecting the
continuation of the stronger than normal demand that began in the fourth
quarter of 2008. In the first quarter of 2010, Winchester benefited from
lower commodity costs and reduced bad debt related expenses compared to the
first quarter of 2009, which more than offset lower sales volumes. First
quarter 2010 Winchester volumes remained well above 2008 levels.
Winchester's first quarter 2010 segment earnings were $19.5 million
compared to $17.0 million in the first quarter of 2009.
"Chlor Alkali first quarter 2010 segment earnings of $10.6 million
reflected a sequential improvement from the fourth quarter of 2009 earnings
of $5.2 million. Both ECU netbacks and product volumes improved from the
fourth quarter of 2009. First quarter 2010 Chlor Alkali segment earnings
include approximately $1.4 million of costs directly associated with the
first quarter force majeure event at the McIntosh, Alabama facility. The
first quarter 2010 Chlor Alkali operating rate was 75%, which was higher
than the fourth quarter 2009 level of 70%.
"First quarter 2010 earnings include $2.6 million of pretax recoveries from
third parties of environmental costs incurred and expensed in prior
periods, a $1.3 million pretax charge associated with an agreement to
withdraw from a multi-employer defined benefit pension plan, and $3.8
million of favorable adjustments to income tax expense.
"Second quarter 2010 net income is forecast to be in the $0.15 to $0.20 per
diluted share range. Second quarter 2010 Chlor Alkali segment earnings are
expected to more than double compared to the first quarter of 2010
reflecting both improved pricing and improved demand. Segment earnings for
Winchester are projected to decline from first quarter levels primarily due
to higher commodity costs. Charges to income for environmental and
remedial activities are forecast to increase to the $6 million to $8
million range in the second quarter of 2010. This second quarter 2010
forecast for environmental and remedial costs does not include any recovery
of costs incurred and expensed in prior periods. The second quarter 2010
forecast includes approximately $2 million of favorable adjustments to
income tax expense."
SEGMENT REPORTING
We define segment earnings as income (loss) before interest expense,
interest income, other operating income, other income, and income taxes and
include the results of non-consolidated affiliates in segment results
consistent with management's monitoring of the operating segments.
CHLOR ALKALI PRODUCTS
Chlor Alkali product sales for the first quarter of 2010 were $230.6
million compared to $267.7 million in the first quarter of 2009. First
quarter 2010 chlorine and caustic soda volumes increased 20% compared to
the first quarter 2009 levels. Volumes for potassium hydroxide more than
tripled in the first quarter of 2010 primarily reflecting a raw material
supply disruption that impacted first quarter 2009 volumes. Bleach volumes
increased 12% during the first quarter of 2010 compared to the first
quarter of 2009, while volumes for hydrochloric acid declined 23% compared
to first quarter 2009 levels. ECU netbacks in the first quarter of 2010
decreased by 42% compared to the first quarter of 2009. Freight costs
included in the ECU netbacks decreased 6% in the first quarter of 2010
compared to the first quarter of 2009, which reflects the benefits of
increased pipeline shipments associated with the restart of the St.
Gabriel, Louisiana facility. First quarter 2010 Chlor Alkali segment
earnings were $10.6 million compared to $68.7 million in the first quarter
of 2009, due to lower prices, which more than offset higher volumes and
lower bad debt expenses.
WINCHESTER
Winchester first quarter 2010 sales were $131.4 million compared to $132.9
million in the first quarter of 2009. This decrease primarily reflects
lower sales volumes. Commercial sales decreased during the quarter which
more than offset increases in military, law enforcement and industrial
sales. Winchester's first quarter 2010 segment earnings were $19.5 million
compared to $17.0 million in the first quarter of 2009. The increase in
segment earnings reflects the lower material and bad debt costs, which more
than offset lower commercial volumes.
CORPORATE AND OTHER COSTS
Pension income included in the first quarter 2010 Corporate and Other
segment was $4.7 million, compared to income of $4.8 million in the first
quarter of 2009. First quarter 2010 pension income included a $1.3 million
charge associated with an agreement to withdraw the Henderson, Nevada chlor
alkali hourly workforce from a multi-employer defined benefit pension plan.
First quarter credits to income for environmental investigatory and
remedial activities were $2.0 million in 2010, which includes the $2.6
million of pretax recoveries for costs incurred and expensed in prior
periods. Without these recoveries, charges to income for environmental
investigatory and remedial activities would have been $0.6 million in the
first quarter of 2010 compared to $4.8 million in the first quarter of
2009. These charges relate primarily to remedial and investigatory
activities associated with former waste sites and past operations.
Other corporate and unallocated costs in the first quarter of 2010
increased $1.5 million compared to the first quarter of 2009. Stock based
compensation costs increased in the first quarter of 2010 compared to the
first quarter of 2009 due to higher mark-to-market adjustments.
INCOME TAX EXPENSE
First quarter 2010 income tax expense includes $3.8 million of adjustments
from prior periods reflecting a $1.8 million reduction in expense related
to the expiration of the statute of limitations in domestic jurisdictions,
a $1.6 million reduction in expense related to the release of a valuation
allowance associated with foreign tax credits generated by our Canadian
operations, and a $0.4 million benefit related to prior years' tax returns.
DIVIDEND
On April 22, 2010, Olin's Board of Directors declared a dividend of $0.20
on each share of Olin common stock. The dividend is payable on June 10,
2010 to shareholders of record at the close of business on May 10, 2010.
This is the 334th consecutive dividend to be paid by the Company.
CONFERENCE CALL INFORMATION
The Company's first quarter earnings conference call with securities
analysts is scheduled for 11:00 A.M. Eastern Time, Tuesday, April 27. The
call will feature remarks by Joseph D. Rupp, Olin's Chairman, President and
Chief Executive Officer; John E. Fischer, Olin's Vice President and Chief
Financial Officer; John L. McIntosh, Vice President and President Chlor
Alkali Products Division; and Larry P. Kromidas, Olin's Assistant Treasurer
and Director, Investor Relations. Anyone wishing to listen to the call may
do so via the Internet by following the instructions posted under the
Conference Call icon on Olin's website, www.olin.com. Listeners should log
on to the website at least 5 minutes before the call. The call will also
be audio archived on the Olin website for future replay. A transcript of
the conference call will be available on the website in the Investor
section later in the day.
COMPANY DESCRIPTION
Olin Corporation is a manufacturer concentrated in two business segments:
Chlor Alkali Products and Winchester. Chlor Alkali Products manufactures
chlorine and caustic soda, sodium hydrosulfite, hydrochloric acid,
hydrogen, potassium hydroxide and bleach products. Winchester products
include sporting ammunition, reloading components, small caliber military
ammunition and components, and industrial cartridges.
Click here 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," "project," "estimate," "forecast," 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.
Relative to the dividend, 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, 2009, include,
but are not limited to, the following:
-- 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, housing, vinyls, 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;
-- 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;
-- costs and other expenditures in excess of those projected for
environmental investigation and remediation or other legal proceedings;
-- changes in legislation or government regulations or policies, including
proposed legislation that would phase out the use of mercury in the
manufacture of chlorine, caustic soda, and related products;
-- unexpected litigation outcomes;
-- new regulations or public policy changes regarding the transportation
of hazardous chemicals and the security of chemical manufacturing
facilities;
-- the occurrence of unexpected manufacturing interruptions and outages,
including those occurring as a result of labor disruptions and
production hazards;
-- higher-than-expected raw material and energy, transportation, and/or
logistics costs;
-- continuing weak industry conditions could affect our ability to comply
with the financial maintenance covenants in our senior revolving credit
facility and our accounts receivable facility;
-- 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;
-- an increase in our indebtedness or higher-than-expected interest rates,
affecting our ability to generate sufficient cash flow for debt service;
and
-- adverse conditions in the credit and capital markets, limiting or
preventing our ability to borrow or raise capital.
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.
2010 - 09
Olin Corporation
Consolidated Statements of Income (a)
Three Months Ended
March 31,
(In millions, except per share amounts) 2010 2009
----------- -----------
Sales $ 362.0 $ 400.6
Operating Expenses:
Cost of Goods Sold 312.5 306.2
Selling and Administration 32.1 39.2
Other Operating Income (b) 2.3 5.5
----------- -----------
Operating Income 19.7 60.7
Earnings of Non-consolidated Affiliates 2.2 14.8
Interest Expense (c) 6.9 1.6
Interest Income 0.2 0.5
----------- -----------
Income before Taxes 15.2 74.4
Income Tax Provision 1.1 27.7
----------- -----------
Net Income $ 14.1 $ 46.7
----------- -----------
Net Income Per Common Share:
Basic $ 0.18 $ 0.60
Diluted $ 0.18 $ 0.60
----------- -----------
Dividends Per Common Share $ 0.20 $ 0.20
----------- -----------
Average Common Shares Outstanding - Basic 78.8 77.5
----------- -----------
Average Common Shares Outstanding - Diluted 79.4 77.6
----------- -----------
(a) Unaudited.
(b) Other operating income for the three months ended March 31, 2010 and
2009 included $2.0 million and $1.3 million, respectively, of gains on
the disposal of assets primarily associated with the St. Gabriel, LA
conversion and expansion project. Other operating income for the three
months ended March 31, 2009 also included a $3.7 million gain on the
sale of land.
(c) Interest expense was reduced by capitalized interest of $0.1 million
and $2.5 million for the three months ended March 31, 2010 and 2009,
respectively.
Olin Corporation
Segment Information (a)
(In millions) Three Months Ended
March 31,
2010 2009
---------- ----------
Sales:
Chlor Alkali Products $ 230.6 $ 267.7
Winchester 131.4 132.9
---------- ----------
Total Sales $ 362.0 $ 400.6
---------- ----------
Income before Taxes:
Chlor Alkali Products (b) $ 10.6 $ 68.7
Winchester 19.5 17.0
Corporate/Other:
Pension Income (c) 4.7 4.8
Environmental Income (Expense) (d) 2.0 (4.8)
Other Corporate and Unallocated Costs (17.2) (15.7)
Other Operating Income (e) 2.3 5.5
Interest Expense (f) (6.9) (1.6)
Interest Income 0.2 0.5
---------- ----------
Income before Taxes $ 15.2 $ 74.4
---------- ----------
(a) Unaudited.
(b) Earnings of non-consolidated affiliates are included in the Chlor
Alkali Products segment results consistent with management's monitoring
of the operating segments. The earnings from non-consolidated
affiliates were $2.2 million and $14.8 million for the three months
ended March 31, 2010 and 2009, respectively.
(c) 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. Pension income for the three months ended March 31, 2010
included a charge of $1.3 million associated with an agreement to
withdraw our Henderson, NV chlor alkali hourly workforce from a
multi-employer defined benefit pension plan.
(d) Environmental income (expense) for the three months ended March 31,
2010 included $2.6 million of recoveries from third parties for costs
incurred and expensed in prior periods.
(e) Other operating income for the three months ended March 31, 2010 and
2009 included $2.0 million and $1.3 million, respectively, of gains on
the disposal of assets primarily associated with the St. Gabriel, LA
conversion and expansion project. Other operating income for the
three months ended March 31, 2009 also included a $3.7 million gain on
the sale of land.
(f) Interest expense was reduced by capitalized interest of $0.1 million
and $2.5 million for the three months ended March 31, 2010 and 2009,
respectively.
Olin Corporation
Consolidated Balance Sheets (a)
(In millions, except per share data)
March 31, December 31, March 31,
2010 2009 2009
---------- ---------- ----------
Assets:
Cash & Cash Equivalents $ 411.0 $ 458.5 $ 168.6
Accounts Receivable, Net 197.1 183.3 216.4
Income Taxes Receivable 19.3 19.4 2.7
Inventories 156.4 123.8 166.5
Current Deferred Income Taxes 50.1 50.5 60.1
Other Current Assets 22.3 24.8 11.5
---------- ---------- ----------
Total Current Assets 856.2 860.3 625.8
Property, Plant and Equipment
(Less Accumulated Depreciation of
$1,017.5, $1,001.3 and $970.6) 688.5 695.4 659.4
Prepaid Pension Costs 14.5 5.0 -
Deferred Income Taxes - - 23.5
Other Assets 71.8 71.0 83.3
Goodwill 300.3 300.3 301.9
---------- ---------- ----------
Total Assets $ 1,931.3 $ 1,932.0 $ 1,693.9
---------- ---------- ----------
Liabilities and Shareholders' Equity:
Accounts Payable $ 121.1 $ 117.8 $ 124.2
Accrued Liabilities 192.4 193.1 202.6
---------- ---------- ----------
Total Current Liabilities 313.5 310.9 326.8
Long-Term Debt 397.1 398.4 253.4
Accrued Pension Liability 55.7 56.6 43.3
Deferred Income Taxes 26.6 25.8 6.0
Other Liabilities 316.4 318.0 304.3
---------- ---------- ----------
Total Liabilities 1,109.3 1,109.7 933.8
---------- ---------- ----------
Commitments and Contingencies
Shareholders' Equity:
Common Stock, Par Value $1 Per
Share, Authorized 120.0 Shares:
Issued and Outstanding 78.9
Shares (78.7 and 77.9 in 2009) 78.9 78.7 77.9
Additional Paid-In Capital 826.8 823.1 809.3
Accumulated Other Comprehensive
Loss (250.7) (248.2) (253.8)
Retained Earnings 167.0 168.7 126.7
---------- ---------- ----------
Total Shareholders' Equity 822.0 822.3 760.1
---------- ---------- ----------
Total Liabilities and Shareholders'
Equity $ 1,931.3 $ 1,932.0 $ 1,693.9
---------- ---------- ----------
(a) Unaudited.
Olin Corporation
Consolidated Statements of Cash Flows (a)
(In millions)
Three Months Ended March 31, 2010 2009
---------- ----------
Operating Activities:
Net Income $ 14.1 $ 46.7
Earnings of Non-consolidated Affiliates (2.2) (14.8)
Gains on Disposition of Property, Plant and
Equipment (2.0) (5.0)
Stock-Based Compensation 1.5 1.1
Depreciation and Amortization 21.6 16.6
Deferred Income Taxes 2.5 21.2
Qualified Pension Plan Contributions (2.4) (1.0)
Qualified Pension Plan Income (6.0) (5.0)
Common Stock Issued Under Employee Benefit Plans 0.3 0.6
Changes in:
Receivables (13.8) (3.4)
Income Taxes Receivable 0.1 (3.3)
Inventories (32.6) (35.1)
Other Current Assets (4.4) (0.6)
Accounts Payable and Accrued Liabilities 8.8 (46.3)
Other Assets (0.1) -
Other Noncurrent Liabilities 0.4 0.8
Other Operating Activities (0.2) 0.2
---------- ----------
Net Operating Activities (14.4) (27.3)
---------- ----------
Investing Activities:
Capital Expenditures (21.4) (49.8)
Proceeds from Disposition of Property, Plant and
Equipment 2.5 5.5
(Advances to) Distributions from Affiliated
Companies, Net (0.2) 1.4
Other Investing Activities (0.4) (0.3)
---------- ----------
Net Investing Activities (19.5) (43.2)
---------- ----------
Financing Activities:
Long Term Debt Borrowings - 1.5
Issuance of Common Stock 2.2 6.6
Dividends Paid (15.8) (15.5)
---------- ----------
Net Financing Activities (13.6) (7.4)
---------- ----------
Net Decrease in Cash and Cash Equivalents (47.5) (77.9)
Cash and Cash Equivalents, Beginning of Year 458.5 246.5
---------- ----------
Cash and Cash Equivalents, End of Period $ 411.0 $ 168.6
========== ==========
(a) Unaudited.
Investor Contact:
Larry P. Kromidas
Email Contact
(618) 258-3206
|
