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Sep 30, 2020
Olin Q3 2020 Earnings Report
Olin reported a net loss due to goodwill impairment charges, while sales decreased compared to the same quarter last year, but chemical business sales increased sequentially. The Winchester segment saw improved earnings driven by strong ammunition demand.
Key Takeaways
Olin Corporation reported a net loss of $736.8 million for Q3 2020, a significant downturn compared to the net income of $44.2 million in Q3 2019. Sales also decreased to $1,437.6 million from $1,576.6 million in the same period last year. However, sales for the Chemicals businesses increased sequentially from Q2 2020 by approximately 17%. The Winchester business continued to drive improved segment earnings from strong commercial ammunition demand.
Olin reported a net loss of $736.8 million, or $4.67 per diluted share, compared to a net income of $44.2 million, or $0.27 per diluted share, in Q3 2019.
Sales decreased to $1,437.6 million from $1,576.6 million in Q3 2019, but chemical business sales increased sequentially by approximately 17% from Q2 2020.
The Winchester business experienced improved segment earnings due to strong commercial ammunition demand.
Olin expects price increases for chlorine, epoxy resins, bleach, ethylene dichloride, and chlorinated organics to positively contribute to their ECU Profit Contribution Index in Q4.
Olin
Olin
Olin Revenue by Segment
Revenue by Segment
Chlor Alkali & Vinyls Revenue
CapyFin.comEpoxy Revenue
CapyFin.com Forward Guidance
Olin anticipates that recent price increases will positively impact the ECU Profit Contribution Index in the fourth quarter, while fourth quarter volumes are expected to be challenged based on customer year-end inventory reductions and Olin selectively selling less into poor quality markets.
Positive Outlook
- Price increases for chlorine, epoxy resins, bleach, ethylene dichloride and chlorinated organics are expected to positively contribute to our ECU Profit Contribution Index in the fourth quarter.
- Winchester began to operate the Lake City U.S. Army Ammunition Plant (Lake City).
- Winchester expects to generate sequential incremental adjusted EBITDA of approximately $10 million in fourth quarter 2020 from both Lake City and price increases across the commercial ammunition portfolio.
- Olin drove sequential pricing improvement in the third quarter 2020 for chlorine and almost all chlorine derivatives.
- Olin's newly established ECU (Electrochemical Unit) Profit Contribution Index improved in the third quarter compared to the second quarter.
Challenges Ahead
- Fourth quarter volumes are expected to be challenged based on customer year-end inventory reductions.
- Olin selectively selling less into poor quality markets.
- Third quarter 2020 reported net loss was $736.8 million.
- Third quarter 2020 sales were $1,437.6 million compared to $1,576.6 million in the third quarter 2019.
- The decreases in the third quarter sales and segment earnings compared to the third quarter of 2019 were primarily due to lower ECU pricing, mainly caustic soda and ethylene dichloride, and lower volumes.
Revenue & Expenses
Visualization of income flow from segment revenue to net income