Olin Corporation Q2 FY2025 earnings call

• Continued validation of the Value First commercial approach over seven quarters of trough demand. • Chlor alkali: Caustic soda demand stable, EDC price decline due to oil price, and unplanned operating events occurred. • Epoxy: Formulated solutions volume and margin grew, faced import competition, and had an upcoming Stade Germany key supplier contract. • Winchester: Defense business grew, commercial business was challenged by multiple factors, and the Manitowoc acquisition was expected to generate EBITDA. • Beyond 250 cost savings project: Anticipated 2025 year-end run rate cost savings of $70 to $90 million, with Freeport site piloting transformation, rightsizing facilities, and driving a performance culture.

In the second quarter of 2025, Olin's chemicals business saw North American chlorine index values remain stable despite trough demand. Caustic soda demand was robust with global demand into alumina and domestic seasonal factors. EDC values faced a steeper decline than expected due to oil price softness. Epoxy resins faced strong import competition but formulated solutions business grew. Winchester's defense business was strong, while commercial business was impacted by customer destocking, lower pricing, and higher raw material costs. The Manitowoc, Wisconsin ammunition plant acquisition is expected to generate incremental EBITDA.

• Third quarter expected seasonal demand strength across businesses. • Chemical earnings were expected to benefit from lower turnaround expenses. • Winchester sales were seasonally stronger, and earnings were expected to improve slightly despite higher costs, with third quarter adjusted EBITDA expected to be in the range of $170 to $210 million.

• Tariff retaliation impacts on chlor alkali exports, particularly to South America. • EDC market demand recovery was slow due to supply and demand dynamics. • Winchester commercial business challenges included ongoing destocking, high costs, and a competitive environment. • Unplanned operating events and their impact on results.

Q: David Begleiter asked about the progress of the caustic soda price increase.

A: Ken Lane stated that caustic demand was strong but tariff uncertainty was causing short-term headwinds.

Q: Patrick Cunningham asked about EDC pricing.

A: Ken Lane said EDC prices dipped due to oil price, were at a floor now with oil stability and North American cost advantage.

Q: Patrick Cunningham further asked about EDC support.

A: Ken Lane said curtailments were seen in Asia and demand recovery was needed.

Q: Duffy Fischer asked about Winchester commercial price and costs.

A: Ken Lane said Winchester commercial price decline was half volume and half cost, with propellants still a headwind.

Q: Josh Spector asked about the cost savings program.

A: Ken Lane and Todd Slater said cost savings were from Freeport and other sites, with expected $70 - $90M in 2025.

Q: Aleksey Yefremov asked about Winchester risk.

A: Ken Lane said Winchester challenges were not structural and expected third quarter improvement.

Q: Hassan Ahmed asked about Q3 guidance.

A: Ken Lane said the broad range was due to uncertainty and expected third quarter to be similar to second quarter.

Q: Matthew DeYoe asked about the ECI index.

A: Ken Lane said focus was on value at trough with volume element.

Q: Frank Mitsch asked about caustic tariff retaliation.

A: Ken Lane said possible month to two months of noise with trade flows to normalize.

Q: Kevin McCarthy asked about tariff impact on chlor alkali rates.

A: Ken Lane said tariff was net neutral now, and Freeport chlorine leak was resolved.

Q: Bhavesh Lodaya asked about customer inventory.

A: Ken Lane said customers were not restocking until market recovered.

Q: Mike Sison asked about Winchester EBITDA and chemical profitability.

A: Ken Lane said Winchester margins would recover and chemical market rationalization was expected.

Q: John Roberts asked about caustic tariff September impact.

A: Ken Lane said hard to put a number, with trade flows taking time.

Q: Jeff Zekauskas asked about caustic tariff and deferred tax.

A: Ken Lane said retaliatory tariff was different, and Todd Slater said cash taxes were expected $175M in 2025.

Q: Vincent Andrews asked about Winchester pricing.

A: Ken Lane said Winchester saw price erosion and focus was on margin improvement.

Q: Arun Viswanathan asked about value over volume and Q4 guide.

A: Ken Lane said value over volume strategy continued and Q4 was typically weakest.

Q: Pete Osterland asked about epoxy competitive dynamics.

A: Ken Lane said disappointed in EU antidumping duties and was the last integrated epoxy supplier.

Q: Roger Spitz asked about PVC tolling.

A: Ken Lane said testing PVC market with ChemOne was in early stage.