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Dec 31, 2019
Olin Q4 2019 Earnings Report
Olin reported a net loss and a decrease in sales compared to the same quarter last year, but Winchester segment earnings improved year-over-year.
Key Takeaways
Olin Corporation reported a net loss of $77.2 million for Q4 2019, a significant drop from the net income of $53.3 million in Q4 2018. Sales also decreased from $1,635.0 million to $1,387.1 million. Adjusted EBITDA was $173.2 million, excluding certain charges. The decrease in sales and earnings was primarily due to weaker demand and lower pricing in the Chlor Alkali Products and Vinyls and Epoxy businesses.
Olin reported a net loss of $77.2 million in Q4 2019, compared to a net income of $53.3 million in Q4 2018.
Sales decreased to $1,387.1 million from $1,635.0 million in the same quarter last year.
Adjusted EBITDA was $173.2 million, excluding depreciation, restructuring charges, and IT integration costs.
Winchester segment earnings improved year-over-year due to higher commercial sales.
Olin
Olin
Olin Revenue by Segment
Revenue by Segment
Chlor Alkali & Vinyls Revenue
CapyFin.comEpoxy Revenue
CapyFin.comWinchester Revenue
CapyFin.com Forward Guidance
Olin expects to face a challenging pricing environment entering 2020 but anticipates cost containment and productivity initiatives to partially offset the pricing pressures. Several initiatives are expected to create long-term improvement in cash flow during 2020, including refinancing high-cost bonds, winding down the IT integration project, transitioning the vinyl chloride monomer contract, and the new Lake City ammunition facility contract.
Positive Outlook
- Refinancing of high-cost bonds expected to reduce interest expense by $50 million to $70 million annually.
- Winding down the IT integration project will reduce annual spending by approximately $110 million.
- Vinyl chloride monomer contract transitioning to a direct customer sale agreement beginning January 1, 2021.
- Lake City ammunition facility contract is expected to increase Winchester’s annual revenue by $450 million to $550 million.
- Lake City ammunition facility contract is expected to improve annual adjusted EBITDA of $40 million to $50 million.
Challenges Ahead
- Olin continues to face a challenging pricing environment as we enter 2020.
- Caustic soda and ethylene dichloride pricing in January 2020 is expected to be approximately 15% lower than the average 2019 price.
- The Chlor Alkali Products and Vinyls business experienced weaker demand from urethane, agricultural, refrigerant, alumina, and pulp and paper customers.
- The Epoxy business also has faced weaker product demand from automotive, electrical laminate, and industrial coatings customers throughout 2019.
- Lower demand environment put downward pressure on pricing in both chemical businesses.
Revenue & Expenses
Visualization of income flow from segment revenue to net income