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Jun 30, 2020
Olin Q2 2020 Earnings Report
Olin's financial performance declined due to weaker customer demand and planned maintenance, but Winchester segment earnings improved.
Key Takeaways
Olin Corporation reported a net loss of $120.1 million for Q2 2020, a significant decrease compared to the net loss of $20.0 million in Q2 2019. Sales also decreased to $1,241.2 million from $1,592.9 million year-over-year. The decline was attributed to weaker customer demand in the Chlor Alkali Products and Vinyls and Epoxy businesses, alongside planned maintenance activities. However, the Winchester segment experienced improved earnings due to higher commercial ammunition sales.
Olin Corporation reported a net loss of $120.1 million, or $0.76 per diluted share, for the second quarter of 2020.
Second quarter 2020 sales were $1,241.2 million, a decrease from $1,592.9 million in the second quarter 2019.
The Winchester business experienced year-over-year improvement in segment earnings due to elevated commercial ammunition demand.
Olin completed several refinancing actions to enhance liquidity and provide flexibility amidst current economic conditions.
Olin
Olin
Olin Revenue by Segment
Revenue by Segment
Chlor Alkali & Vinyls Revenue
CapyFin.comEpoxy Revenue
CapyFin.com Forward Guidance
Olin expects improved sales volumes, higher product pricing and lower maintenance turnaround costs to generate a third quarter 2020 adjusted EBITDA that is more than double second quarter 2020 levels.
Positive Outlook
- Refinancing of high-cost bonds expected to reduce interest expense by approximately $30 million annually.
- Winding down IT project to reduce annual spending by approximately $110 million.
- New VCM contract expected to improve annual adjusted EBITDA by approximately $50 million to $75 million.
- Winchester contract to operate Lake City ammunition facility expected to increase annual revenue by $450 million to $550 million.
- Winchester contract to operate Lake City ammunition facility expected to improve annual adjusted EBITDA of $40 million to $50 million.
Challenges Ahead
- Chlor Alkali Products and Vinyls businesses remain challenged by current economic conditions.
- Epoxy businesses remain challenged by current economic conditions.
- Visibility around future demand continues to be limited.
- Customer order patterns remain volatile.
- The combination of lower maintenance turnaround costs, improved sales volumes, and higher product pricing are forecast to generate a third quarter 2020 adjusted EBITDA that is more than double second quarter 2020 levels.
Revenue & Expenses
Visualization of income flow from segment revenue to net income