Olin Announces Third Quarter 2016 Earnings

Olin defines segment earnings as income (loss) before interest expense, interest income, other operating income (expense) and income taxes and include the earnings of non-consolidated affiliates in segment results consistent with management's monitoring of the operating segments.

Beginning in the fourth quarter of 2015, Olin modified its reportable segments to incorporate the acquisition of Dow's chlorine products businesses (the Acquired Business).  Olin reports in three operating segments:  Chlor Alkali Products and Vinyls, Epoxy and Winchester.  The new reporting structure has been retrospectively applied to the financial results for all periods presented.  The former Olin Chlor Alkali Products and Olin Chemical Distribution segments have been included in the new Chlor Alkali Products and Vinyls segment.

During 2016, Olin is providing sequential segment comparisons.  Year-over-year segment comparisons for Chlor Alkali Products and Vinyls and Epoxy are not meaningful because Olin did not own the Acquired Business until October of 2015.

CHLOR ALKALI PRODUCTS AND VINYLS

Chlor Alkali Products and Vinyls sales for the third quarter 2016 were $779.4 million compared to $733.0 million in the second quarter 2016.  Third quarter 2016 segment earnings of $53.7 million improved compared to $30.7 million in the second quarter 2016 primarily due to higher caustic soda pricing, increased caustic soda volumes, and decreased expenses for maintenance outages.  This was partially offset by increased raw materials costs associated with purchased ethylene and natural gas pricing.  Chlor Alkali Products and Vinyls third quarter 2016 results included depreciation and amortization expense of $106.3 million compared to $103.4 million in second quarter 2016.

EPOXY

Epoxy sales for the third quarter 2016 were $470.1 million compared to $450.0 million in the second quarter 2016.  This increase in Epoxy sales is primarily due to higher volumes and increased prices.  Third quarter 2016 segment earnings were $10.3 million compared to breakeven in the second quarter of 2016.  The Epoxy segment earnings improvement is primarily due to an increase in volumes and a decrease of expenses for maintenance outages partially offset by increased raw materials costs associated with benzene and propylene pricing.  Epoxy third quarter 2016 results included depreciation and amortization expense of $22.6 million compared to $23.0 million in second quarter 2016.

WINCHESTER

Winchester sales for the third quarter 2016 were $203.2 million compared to $181.0 million in the second quarter 2016.  The increase is primarily due to increased shipments to commercial customers.  Third quarter 2016 segment earnings were $36.0 million compared to $31.2 million in the second quarter 2016.  The increase in segment earnings reflects higher commercial shipments, lower commodity and material costs and lower manufacturing and other costs.  Winchester third quarter 2016 results included depreciation and amortization expense of $4.7 million compared to $4.5 million in second quarter 2016. 

CORPORATE AND OTHER COSTS

Pension income included in the third quarter 2016 Corporate and Other segment was $15.4 million compared to $12.6 million in the second quarter of 2016.

Third quarter 2016 charges to income for environmental investigatory and remedial activities were $0.4 million compared to $2.4 million in the second quarter 2016.  These charges relate primarily to remedial and investigatory activities associated with former waste sites and past operations of the legacy Olin businesses.

Other corporate and unallocated costs in the third quarter 2016 increased $4.3 million compared to the second quarter 2016, primarily due to higher legal and litigation costs partially offset by decreased management incentive compensation costs which includes mark-to-market adjustments on stock-based compensation expense.

DIVIDEND

On October 26, 2016, Olin's Board of Directors declared a dividend of $0.20 on each share of Olin common stock.  The dividend is payable on December 9, 2016 to shareholders of record at the close of business on November 10, 2016.  This will be the 360th consecutive quarterly dividend to be paid by the Company.

CONFERENCE CALL INFORMATION

Olin management will host a conference call to discuss third quarter 2016 earnings at 10:00 A.M. ET on Tuesday, November 1, 2016.  The call, along with associated slides, which will be available one hour prior to the call, will be accessible via webcast through Olin's website, www.olin.com.  An archived replay of the webcast will also be available on Olin's Investor Relations website beginning at 12:00 P.M. ET.  A final transcript of the call will be posted the day following the event.

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.  These statements may include statements regarding the recent acquisition of the Acquired Business from The Dow Chemical Company (TDCC), the expected benefits and synergies of the transaction, and future opportunities for the combined company following the transaction.  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," "optimistic," 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, 2015, 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, vinyls, urethanes, 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;
• our substantial amount of indebtedness and significant debt service obligations;
• weak industry conditions could affect our ability to comply with the financial maintenance covenants in our senior credit facilities;
• the integration of the Acquired Business being more difficult, time-consuming or costly than expected;
• higher-than-expected raw material and energy, transportation, and/or logistics costs;
• our reliance on a limited number of suppliers for specified feedstock and services and our reliance on third-party transportation;
• 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;
• new regulations or public policy changes regarding the transportation of hazardous chemicals and the security of chemical manufacturing facilities;
• changes in legislation or government regulations or policies;
• failure to control costs or to achieve targeted cost reductions;
• adverse conditions in the credit and capital markets, limiting or preventing our ability to borrow or raise capital;
• costs and other expenditures in excess of those projected for environmental investigation and remediation or other legal proceedings;
• unexpected litigation outcomes;
• complications resulting from our multiple enterprise resource planning (ERP) systems;
• the failure or an interruption of our information technology systems;
• the occurrence of unexpected manufacturing interruptions and outages, including those occurring as a result of labor disruptions and production hazards;
• 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;
• future funding obligations to our qualified defined benefit pension plan attributable to assumed pension liabilities;
• fluctuations in foreign currency exchange rates;
• failure to attract, retain and motivate key employees;
• our ability to provide the same types and levels of benefits, services and resources to the Acquired Business that historically have been provided by TDCC at the same cost;
• differences between the historical financial information of Olin and the Acquired Business and our future operating performance;
• the effect of any changes resulting from the transaction with TDCC in customer, supplier and other business relationships; and
• the effects of restrictions imposed on our business following the transaction with TDCC in order to avoid significant tax-related liabilities.

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.

2016-20

Olin Corporation
Consolidated Statements of Operations(a)
		Three Months Ended						Nine Months Ended
		September 30,			June 30,			September 30,
(In millions, except per share amounts)		2016			2016			2016
Sales		$	1,452.7		$	1,364.0		$	4,164.9
Operating Expenses:
Cost of Goods Sold		1,284.4			1,236.9			3,696.7
Selling and Administration		82.0			79.3			249.4
Restructuring Charges (b)		5.2			8.2			106.2
Acquisition-related Costs (c)		13.1			16.3			39.6
Other Operating (Expense) Income (d)		(0.2)			(0.2)			10.5
Operating Income		67.8			23.1			83.5
Earnings of Non-consolidated Affiliates		0.5			0.4			1.1
Interest Expense		47.5			47.6			143.6
Interest Income		0.5			0.5			1.3
Income (Loss) before Taxes		21.3			(23.6)			(57.7)
Income Tax Provision (Benefit)		3.8			(22.6)			(36.3)
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