Olin Corporation Q4 FY2025 earnings call

Fourth Quarter Highlights

• December had operational issues with Freeport, Texas chlorinated organics assets and raw material supply constraints, impacting core alkali assets, plus decline in chlorine pipeline demand. Preserved ECU values with value-first approach, announced EDC supply agreement with BroadsChem and expanded Brazil infrastructure.

Chlor Alkali Products and Vinyls

• Macro conditions challenging, chlor alkali capacity rationalization seen, Olin well-positioned for market recovery. First quarter faces headwinds from power, raw materials, and VCM turnaround. Global caustic soda demand healthy, low inventories and industry turnarounds expected to tighten caustic supply. 2026 chlor alkali outlook challenging with vinyls pricing pressure and US cost headwinds.

Epoxy

• Fourth quarter epoxy results improved sequentially, expect Q1 2026 profitability at low level, structural changes and European market growth to support 2026 profitability. Reduced global cash cost by ~19% over three years, closed Brazil epoxy plants for savings.

Winchester

• Fourth quarter took action to adjust operating model, reduce inventory. 2026 faces cost headwinds but has military sales growth, expected commercial volume and pricing improvement.

Beyond $250 Structural Cost Savings Program

• Focus on identifying inefficiencies, delivered $44 million in 2025, expect $100-$120 million in 2026, Freeport plant as pilot for improvement program, Winchester rightsizing staffing, expecting savings from Stade, Germany site and Brazil plant closure.

Chlor Alkali Products and Vinyls

Macro conditions remain challenging. Merchant chlorine demand is under pressure. Global vinyls pricing is expected to remain under pressure. Olin ended 2025 with very low caustic soda inventories and sees good momentum on caustic soda price increase. The full-year 2026 chlor alkali outlook is challenging with rising US natural gas and feedstock costs as a headwind.

Epoxy

Fourth quarter epoxy results sequentially increased due to improved product mix, etc., but had partial offsets. Expect epoxy business to return to profitability in Q1 2026 at a low level, with structural changes and formulated solutions portfolio growth supporting return to profitability in 2026. Over past three years, reduced global cash cost by about 19% and closed Brazil epoxy plants for $10 million annual savings.

Winchester

Fourth quarter Winchester took aggressive action to adjust operating model, reduce inventory. 2026 faces cost headwinds from higher copper, brass, and propellant costs but has tailwinds from military sales growth and expected commercial volume and pricing improvement.

Chlor Alkali

• 2026 chlor alkali outlook challenging, global vinyls pricing expected to remain under pressure, US natural gas and feedstock costs a headwind.

Epoxy

• Expect epoxy business to return to profitability in Q1 2026 at low level, and return to profitability in 2026 with structural changes and formulated solutions growth.

Winchester

• 2026 faces cost headwinds from higher copper, brass, and propellant costs but has tailwinds from military sales growth and expected commercial volume and pricing improvement.

Beyond $250

• Expect to add $100-$120 million of annual savings in 2026, confident to exceed $250 million savings commitment.

Operational Risks

• Extended turnaround of Freeport, Texas chlorinated organics assets and third-party raw material supply constraints in December impacted core alkali assets.

Market Risks

• Sharp decline in chlorine pipeline demand in seasonally weaker quarter, global vinyls pricing under pressure, rising US natural gas and feedstock costs as headwind.

Other Risks

• Stranded costs of approximately $70 million from Dow's closure of Freeport propylene oxide plant.

Q: Aleksey Yefremov asked about chlorine pipeline demand decline, if it remains a headwind in Q1 and when demand might recover.

A: Ken Lane said the decline in December was related to destocking, seasonally low demand in Q1 2026, no large bounce back before second quarter, caustic has no demand issue but availability issue.

Q: David Begleiter asked about competitors' capacity closures and impact on Olin.

A: Ken Lane said capacity rationalization is occurring, Olin is preparing assets, focusing on safety, reliability, and cost-competitiveness.

Q: Kevin McCarthy asked about Winchester's military and commercial demand.

A: Ken Lane said military demand grew in 2025, commercial demand starting to trend positively, seeing weekly improvements in retailer sales.

Q: Patrick Cunningham asked about downstream participation in chlorovinyls.

A: Ken Lane said considering options, including joint ventures, looking at technology providers and locations, long-term optimistic on PVC market.

Q: Hassan Ahmed asked about Q1 guidance and nat gas pricing.

A: Ken Lane said difficult to give specific numbers, mentioned turnaround spend, power and gas costs, winter storm impact.

Q: Frank Mitsch asked about $70 million stranded costs.

A: Ken Lane said known about it, planning to offset through Beyond $250 program, winding down assets.

Q: Josh Spector asked about Q4 and Q1 chlor alkali impact.

A: Ken Lane said difficult to give details, market tighter than believed.

Q: Matthew DeYoe asked about epoxy cost savings.

A: Ken Lane said $40-$50 million savings expected in 2026, epoxy to be positive, improvement from cost reductions.

Q: Mike Sison asked about EBITDA improvement.

A: Ken Lane said focused on efficiency, caustic pricing momentum, epoxy cost reductions, Freeport turnaround execution.

Q: Matthew Blair asked about hedging strategy.

A: Todd Slater said continue to be hedged, winter storm impact on unhedged component.

Q: Peter Osterland asked about Winchester margin improvement.

A: Ken Lane said need more pricing to offset cost increases, commercial teams focused on getting prices up.

Q: Arun Viswanathan asked about earnings trajectory.

A: Ken Lane said heavy turnaround year in 2026, seasonal improvement in Q2, Q3, but turnaround relief in 2027.

Q: John Roberts asked about caustic pricing.

A: Ken Lane said caustic pricing to pick up in second quarter, PCI includes mix effect.