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Mar 31, 2020
Olin Q1 2020 Earnings Report
Olin reported a net loss and a decrease in sales compared to the previous year, while Winchester's segment earnings improved.
Key Takeaways
Olin Corporation reported a net loss of $80 million for Q1 2020, a significant downturn compared to the net income of $41.7 million in Q1 2019. Sales also decreased to $1,425.1 million from $1,553.4 million in the same quarter last year. Winchester was the only segment that experienced year-over-year improvement in earnings.
Olin reported a net loss of $80 million, a decrease from the net income of $41.7 million in the first quarter of 2019.
Sales decreased to $1,425.1 million compared to $1,553.4 million in the first quarter of 2019.
Winchester's segment earnings improved year-over-year due to higher commercial and military sales.
The Chlor Alkali Products and Vinyls business experienced decreased caustic soda and ethylene dichloride pricing, leading to a segment loss.
Olin
Olin
Olin Revenue by Segment
Revenue by Segment
Chlor Alkali & Vinyls Revenue
CapyFin.comEpoxy Revenue
CapyFin.com Forward Guidance
Olin expects sequential improvement in caustic soda pricing and sequentially lower ethylene dichloride pricing in Q2 2020. Overall planned maintenance turnaround costs in the second half of 2020 are expected to be approximately $50 million lower than the first half of 2020.
Positive Outlook
- Expect sequential improvement in caustic soda pricing in Q2 2020.
- Commercial ammunition demand improved throughout the first quarter of 2020, and is expected to continue in the second quarter.
- Expect the volumes in the second half of 2020 to improve from first half 2020 levels due to lower maintenance turnaround activity.
- Winchester's multi-year contract is expected to increase Winchester’s annual revenue by $450 million to $550 million.
- Winchester's multi-year contract is expected to have a corresponding improvement in annual adjusted EBITDA of $40 million to $50 million.
Challenges Ahead
- Expect sequentially lower ethylene dichloride pricing in Q2 2020.
- Expect second quarter 2020 Chlor Alkali Products and Vinyls volumes to be meaningfully lower compared to first quarter 2020, despite higher bleach volumes due to weaker customer demand and a high level of maintenance turnaround activity.
- The Epoxy business is expected to face weaker product demand from automotive and industrial coatings customers, in both Europe and North America in the second quarter.
- The near term demand outlook for chemical businesses is unclear.
- Forecasting planned maintenance turnaround costs in the second quarter of approximately $55 million.
Revenue & Expenses
Visualization of income flow from segment revenue to net income