CLAYTON, Mo., Oct. 31, 2016 /PRNewswire/ -- Olin Corporation
(NYSE: OLN) announced today financial results for the third quarter ended September 30, 2016.
The third quarter 2016 reported net income was $17.5 million, or $0.11 per diluted share. Third quarter 2016 adjusted EBITDA of $221.9
million reflects depreciation and amortization expense of $135.3 million, restructuring
charges of $5.2 million, and acquisition-related integration costs of $13.1
million. Adjusted net income from operations per share was $0.33 per diluted share,
which excludes the aforementioned restructuring charges, acquisition-related integration costs and $40.4
million of step-up depreciation and amortization expense. Sales in the third quarter 2016 were $1,452.7 million.
John E. Fischer, President and Chief Executive Officer, said, "Third quarter results showed
sequential improvement across all three segments from the second quarter. Despite higher natural gas and purchased ethylene
costs in the third quarter, Chlor Alkali Products and Vinyls segment earnings improved as a result of higher caustic soda prices
and higher volumes. We expect that the positive pricing trends in caustic soda will continue for the foreseeable future
given improved caustic soda industry fundamentals. As a point of reference, if Olin's forecasted fourth quarter 2016
caustic soda price remains constant through 2017, the year-over-year improvement on a full year basis in adjusted EBITDA would be
approximately $100 million.
"The Epoxy business remains on track with its long-term plan, as demonstrated by stronger segment earnings and volumes in the
third quarter. Prices improved in the third quarter compared to the second quarter but were offset by higher raw materials
costs. Winchester third quarter 2016 segment earnings increased sequentially and year-over-year driven by increased sales
to all customer categories. Winchester continues to expect segment earnings for the full year 2016 that exceed 2015
levels. Finally, we expect $60 million of cost and operational synergy savings this year with
additional savings to be realized over the next four to six quarters."
In the fourth quarter of 2016, Olin anticipates net income (loss) in the range of a $10 million
net loss to $10 million net income, or $(0.05) to $0.05 per diluted
share, and adjusted EBITDA to be in the $190 million to $220 million range.
- Chlor Alkali Products and Vinyls segment earnings are expected to be slightly lower than third quarter earnings, reflecting
higher caustic soda pricing offset by normal seasonally lower volumes and higher natural gas and purchased ethylene
costs. Fourth quarter caustic soda pricing is expected to improve 7% to 10% sequentially from the third quarter;
- Epoxy segment earnings are expected to be similar sequentially as price increases and lower expenses for maintenance
outages offset higher raw materials costs and seasonally weaker volumes;
- Normal seasonally weaker Winchester earnings are expected to decline compared to the third quarter; however, year-over-year
fourth quarter results are expected to improve from 2015;
- Corporate and Other costs are expected to increase compared to the third quarter due to higher environmental costs and
lower pension income;
- Pretax restructuring costs and acquisition-related integration costs are forecast to total approximately $20 million;
- Acquisition step-up depreciation and amortization expense is forecast to be approximately $40
million; and
- Net income forecast includes approximately $0.24 per diluted share of expected restructuring
costs, acquisition-related integration costs and acquisition step-up depreciation and amortization expense.
As a result, Olin expects full year 2016 adjusted EBITDA to be in the range of $810 million to $840
million. The reduction in the full year adjusted EBITDA range from the previous guidance reflects the combined
impact of higher natural gas and purchased ethylene costs on the third and fourth quarters and lower than expected third and
fourth quarter Epoxy segment earnings.
SEGMENT REPORTING
Olin defines segment earnings as income (loss) before interest expense, interest income, other operating income (expense) and
income taxes and include the earnings of non-consolidated affiliates in segment results consistent with management's monitoring
of the operating segments.
Beginning in the fourth quarter of 2015, Olin modified its reportable segments to incorporate the acquisition of Dow's
chlorine products businesses (the Acquired Business). Olin reports in three operating segments: Chlor Alkali Products
and Vinyls, Epoxy and Winchester. The new reporting structure has been retrospectively applied to the financial results for
all periods presented. The former Olin Chlor Alkali Products and Olin Chemical Distribution segments have been included in
the new Chlor Alkali Products and Vinyls segment.
During 2016, Olin is providing sequential segment comparisons. Year-over-year segment comparisons for Chlor Alkali
Products and Vinyls and Epoxy are not meaningful because Olin did not own the Acquired Business until October of 2015.
CHLOR ALKALI PRODUCTS AND VINYLS
Chlor Alkali Products and Vinyls sales for the third quarter 2016 were $779.4 million compared
to $733.0 million in the second quarter 2016. Third quarter 2016 segment earnings of
$53.7 million improved compared to $30.7 million in the second
quarter 2016 primarily due to higher caustic soda pricing, increased caustic soda volumes, and decreased expenses for maintenance
outages. This was partially offset by increased raw materials costs associated with purchased ethylene and natural gas
pricing. Chlor Alkali Products and Vinyls third quarter 2016 results included depreciation and amortization expense of
$106.3 million compared to $103.4 million in second quarter 2016.
EPOXY
Epoxy sales for the third quarter 2016 were $470.1 million compared to $450.0 million in the second quarter 2016. This increase in Epoxy sales is primarily due to higher
volumes and increased prices. Third quarter 2016 segment earnings were $10.3 million compared
to breakeven in the second quarter of 2016. The Epoxy segment earnings improvement is primarily due to an increase in
volumes and a decrease of expenses for maintenance outages partially offset by increased raw materials costs associated with
benzene and propylene pricing. Epoxy third quarter 2016 results included depreciation and amortization expense of
$22.6 million compared to $23.0 million in second quarter 2016.
WINCHESTER
Winchester sales for the third quarter 2016 were $203.2 million compared to $181.0 million in the second quarter 2016. The increase is primarily due to increased shipments to
commercial customers. Third quarter 2016 segment earnings were $36.0 million compared to
$31.2 million in the second quarter 2016. The increase in segment earnings reflects higher
commercial shipments, lower commodity and material costs and lower manufacturing and other costs. Winchester third quarter
2016 results included depreciation and amortization expense of $4.7 million compared to
$4.5 million in second quarter 2016.
CORPORATE AND OTHER COSTS
Pension income included in the third quarter 2016 Corporate and Other segment was $15.4 million
compared to $12.6 million in the second quarter of 2016.
Third quarter 2016 charges to income for environmental investigatory and remedial activities were $0.4
million compared to $2.4 million in the second quarter 2016. These charges relate
primarily to remedial and investigatory activities associated with former waste sites and past operations of the legacy Olin
businesses.
Other corporate and unallocated costs in the third quarter 2016 increased $4.3 million compared
to the second quarter 2016, primarily due to higher legal and litigation costs partially offset by decreased management incentive
compensation costs which includes mark-to-market adjustments on stock-based compensation expense.
DIVIDEND
On October 26, 2016, Olin's Board of Directors declared a dividend of $0.20 on each share of Olin common stock. The dividend is payable on December 9,
2016 to shareholders of record at the close of business on November 10, 2016. This
will be the 360th consecutive quarterly dividend to be paid by the Company.
CONFERENCE CALL INFORMATION
Olin management will host a conference call to discuss third quarter 2016 earnings at 10:00 A.M.
ET on Tuesday, November 1, 2016. The call, along with associated slides, which will be
available one hour prior to the call, will be accessible via webcast through Olin's website, www.olin.com. An archived replay of the webcast will also be available on Olin's
Investor Relations website beginning at 12:00 P.M. ET. A final transcript of the call will be
posted the day following the event.
COMPANY DESCRIPTION
Olin Corporation is a leading vertically-integrated global manufacturer and distributor of chemical products and a leading
U.S. manufacturer of ammunition. The chemical products produced include chlorine and caustic soda, vinyls, epoxies,
chlorinated organics, bleach and hydrochloric acid. Winchester's principal manufacturing facilities produce and distribute
sporting ammunition, law enforcement ammunition, reloading components, small caliber military ammunition and components, and
industrial cartridges.
Visit www.olin.com for more information on Olin.
FORWARD-LOOKING
STATEMENTS
This communication includes forward-looking statements. These statements relate to analyses and other information that
are based on management's beliefs, certain assumptions made by management, forecasts of future results, and current expectations,
estimates and projections about the markets and economy in which we and our various segments operate. These statements may
include statements regarding the recent acquisition of the Acquired Business from The Dow Chemical Company (TDCC), the expected
benefits and synergies of the transaction, and future opportunities for the combined company following the transaction. The
statements contained in this communication that are not statements of historical fact may include forward-looking statements that
involve a number of risks and uncertainties.
We have used the words "anticipate," "intend," "may," "expect," "believe," "should," "plan," "project," "estimate,"
"forecast," "optimistic," and variations of such words and similar expressions in this communication to identify such
forward-looking statements. These statements are not guarantees of future performance and involve certain risks,
uncertainties and assumptions, which are difficult to predict and many of which are beyond our control. Therefore, actual
outcomes and results may differ materially from those matters expressed or implied in such forward-looking statements. We
undertake no obligation to update publicly any forward-looking statements, whether as a result of future events, new information
or otherwise. Relative to the dividend, the payment of cash dividends is subject to the discretion of our board of
directors and will be determined in light of then-current conditions, including our earnings, our operations, our financial
conditions, our capital requirements and other factors deemed relevant by our board of directors. In the future, our board
of directors may change our dividend policy, including the frequency or amount of any dividend, in light of then-existing
conditions.
The risks, uncertainties and assumptions involved in our forward-looking statements, many of which are discussed in more
detail in our filings with the SEC, including without limitation the "Risk Factors" section of our Annual Report on Form 10-K for
the year ended December 31, 2015, include, but are not limited to, the following:
- sensitivity to economic, business and market conditions in the United States and overseas,
including economic instability or a downturn in the sectors served by us, such as ammunition, vinyls, urethanes, and pulp and
paper, and the migration by United States customers to low-cost foreign locations;
- the cyclical nature of our operating results, particularly declines in average selling prices in the chlor alkali industry
and the supply/demand balance for our products, including the impact of excess industry capacity or an imbalance in demand for
our chlor alkali products;
- our substantial amount of indebtedness and significant debt service obligations;
- weak industry conditions could affect our ability to comply with the financial maintenance covenants in our senior credit
facilities;
- the integration of the Acquired Business being more difficult, time-consuming or costly than expected;
- higher-than-expected raw material and energy, transportation, and/or logistics costs;
- our reliance on a limited number of suppliers for specified feedstock and services and our reliance on third-party
transportation;
- economic and industry downturns that result in diminished product demand and excess manufacturing capacity in any of our
segments and that, in many cases, result in lower selling prices and profits;
- new regulations or public policy changes regarding the transportation of hazardous chemicals and the security of chemical
manufacturing facilities;
- changes in legislation or government regulations or policies;
- failure to control costs or to achieve targeted cost reductions;
- adverse conditions in the credit and capital markets, limiting or preventing our ability to borrow or raise capital;
- costs and other expenditures in excess of those projected for environmental investigation and remediation or other legal
proceedings;
- unexpected litigation outcomes;
- complications resulting from our multiple enterprise resource planning (ERP) systems;
- the failure or an interruption of our information technology systems;
- the occurrence of unexpected manufacturing interruptions and outages, including those occurring as a result of labor
disruptions and production hazards;
- the effects of any declines in global equity markets on asset values and any declines in interest rates used to value the
liabilities in our pension plan;
- future funding obligations to our qualified defined benefit pension plan attributable to assumed pension liabilities;
- fluctuations in foreign currency exchange rates;
- failure to attract, retain and motivate key employees;
- our ability to provide the same types and levels of benefits, services and resources to the Acquired Business that
historically have been provided by TDCC at the same cost;
- differences between the historical financial information of Olin and the Acquired Business and our future operating
performance;
- the effect of any changes resulting from the transaction with TDCC in customer, supplier and other business relationships;
and
- the effects of restrictions imposed on our business following the transaction with TDCC in order to avoid significant
tax-related liabilities.
All of our forward-looking statements should be considered in light of these factors. In addition, other risks and
uncertainties not presently known to us or that we consider immaterial could affect the accuracy of our forward-looking
statements.
2016-20
|
Olin Corporation
|
|
|
|
|
|
|
Consolidated Statements of Operations(a)
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months
Ended
|
|
|
September 30,
|
|
June 30,
|
|
September 30,
|
|
(In millions, except per share amounts)
|
2016
|
|
2016
|
|
2016
|
|
|
|
|
|
|
|
|
Sales
|
$
|
1,452.7
|
|
$
|
1,364.0
|
|
$
|
4,164.9
|
|
Operating Expenses:
|
|
|
|
|
|
|
Cost of Goods Sold
|
1,284.4
|
|
1,236.9
|
|
3,696.7
|
|
Selling and Administration
|
82.0
|
|
79.3
|
|
249.4
|
|
Restructuring Charges (b)
|
5.2
|
|
8.2
|
|
106.2
|
|
Acquisition-related Costs (c)
|
13.1
|
|
16.3
|
|
39.6
|
|
Other Operating (Expense) Income (d)
|
(0.2)
|
|
(0.2)
|
|
10.5
|
|
Operating Income
|
67.8
|
|
23.1
|
|
83.5
|
|
Earnings of Non-consolidated Affiliates
|
0.5
|
|
0.4
|
|
1.1
|
|
Interest Expense
|
47.5
|
|
47.6
|
|
143.6
|
|
Interest Income
|
0.5
|
|
0.5
|
|
1.3
|
|
Income (Loss) before Taxes
|
21.3
|
|
(23.6)
|
|
(57.7)
|
|
Income Tax Provision (Benefit)
|
3.8
|
|
(22.6)
|
|
(36.3)
|
|
Net Income (Loss)
|
$
|
17.5
|
|
$
|
(1.0)
|
|
$
|
(21.4)
|
|
Net Income (Loss) Per Common Share:
|
|
|
|
|
|
|
Basic
|
$
|
0.11
|
|
$
|
(0.01)
|
|
$
|
(0.13)
|
|
Diluted
|
$
|
0.11
|
|
$
|
(0.01)
|
|
$
|
(0.13)
|
|
Dividends Per Common Share
|
$
|
0.20
|
|
$
|
0.20
|
|
$
|
0.60
|
|
Average Common Shares Outstanding - Basic
|
|
165.2
|
|
165.2
|
|
165.2
|
|
Average Common Shares Outstanding - Diluted
|
166.5
|
|
165.2
|
|
165.2
|
|
|
|
|
|
|
|
|
(a)
|
Unaudited.
|
|
|
|
(b)
|
Restructuring charges for the three months ended September 30, 2016 and
June 30, 2016 and for the nine months ended September 30, 2016 were primarily associated with the closure of 433,000 tons
of chlor alkali capacity across three separate Olin locations, of which $76.6 million was non-cash impairment charges for
equipment and facilities for the nine months ended September 30, 2016.
|
|
(c)
|
Acquisition-related costs for the three months ended September 30, 2016
and June 30, 2016 and for the nine months ended September 30, 2016 were associated with our acquisition of the Acquired
Business.
|
|
(d)
|
Other operating (expense) income for the nine months ended September 30,
2016 included an $11.0 million insurance recovery for property damage and business interruption related to a 2008
Henderson, NV chlor alkali facility incident.
|
|
|
Olin Corporation
|
|
|
|
|
|
|
Segment Information(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months
Ended
|
|
|
September 30,
|
|
June 30,
|
|
September 30,
|
|
(In millions)
|
2016
|
|
2016
|
|
2016
|
|
Sales:
|
|
|
|
|
|
|
Chlor Alkali Products and Vinyls
|
$
|
779.4
|
|
$
|
733.0
|
|
$
|
2,216.7
|
|
Epoxy
|
470.1
|
|
450.0
|
|
1,380.3
|
|
Winchester
|
203.2
|
|
181.0
|
|
567.9
|
|
Total Sales
|
$
|
1,452.7
|
|
$
|
1,364.0
|
|
$
|
4,164.9
|
|
Income (Loss) before Taxes:
|
|
|
|
|
|
|
Chlor Alkali Products and Vinyls
|
$
|
53.7
|
|
$
|
30.7
|
|
$
|
152.5
|
|
Epoxy
|
10.3
|
|
-
|
|
18.5
|
|
Winchester
|
36.0
|
|
31.2
|
|
95.9
|
|
Corporate/Other:
|
|
|
|
|
|
|
Pension Income (b)
|
15.4
|
|
12.6
|
|
40.2
|
|
Environmental Expense
|
(0.4)
|
|
(2.4)
|
|
(5.5)
|
|
Other Corporate and Unallocated
Costs
|
(28.2)
|
|
(23.9)
|
|
(81.7)
|
|
Restructuring Charges (c)
|
(5.2)
|
|
(8.2)
|
|
(106.2)
|
|
Acquisition-related Costs (d)
|
(13.1)
|
|
(16.3)
|
|
(39.6)
|
|
Other Operating (Expense) Income (e)
|
(0.2)
|
|
(0.2)
|
|
10.5
|
|
Interest Expense
|
(47.5)
|
|
(47.6)
|
|
(143.6)
|
|
Interest Income
|
0.5
|
|
0.5
|
|
1.3
|
|
Income (Loss) before Taxes
|
$
|
21.3
|
|
$
|
(23.6)
|
|
$
|
(57.7)
|
|
(a)
|
Unaudited.
|
|
(b)
|
The service cost and the amortization of prior service cost components
of pension expense related to the employees of the operating segments are allocated to the operating segments based on
their respective estimated census data. All other components of pension costs are included in Corporate/Other and
include items such as the expected return on plan assets, interest cost and recognized actuarial gains and
losses.
|
|
(c)
|
Restructuring charges for the three months ended September 30, 2016 and
June 30, 2016 and for the nine months ended September 30, 2016 were primarily associated with the closure of 433,000 tons
of chlor alkali capacity across three separate Olin locations, of which $76.6 million was non-cash impairment charges for
equipment and facilities for the nine months ended September 30, 2016.
|
|
(d)
|
Acquisition-related costs for the three months ended September 30, 2016
and June 30, 2016 and for the nine months ended September 30, 2016 were associated with our acquisition of the Acquired
Business.
|
|
(e)
|
Other operating (expense) income for the nine months ended September 30,
2016 included an $11.0 million insurance recovery for property damage and business interruption related to a 2008
Henderson, NV chlor alkali facility incident.
|
|
Olin Corporation
|
|
|
|
|
Consolidated Balance Sheets (a)
|
|
|
|
|
|
|
|
|
September 30,
|
|
December 31,
|
|
(In millions, except per share data)
|
2016
|
|
2015
|
|
|
|
|
|
Assets:
|
|
|
|
|
Cash & Cash Equivalents
|
$ 127.0
|
|
$ 392.0
|
|
Accounts Receivable, Net
|
744.1
|
|
783.4
|
|
Income Taxes Receivable
|
49.0
|
|
32.9
|
|
Inventories
|
617.0
|
|
685.2
|
|
Other Current Assets
|
16.1
|
|
39.9
|
|
Total Current Assets
|
1,553.2
|
|
1,933.4
|
|
Property, Plant and Equipment
|
|
|
|
|
(Less Accumulated Depreciation of $1,788.6 and
$1,499.4)
|
3,713.9
|
|
3,953.4
|
|
Deferred Income Taxes
|
112.2
|
|
95.9
|
|
Other Assets
|
640.3
|
|
454.6
|
|
Intangibles, Net
|
653.8
|
|
677.5
|
|
Goodwill
|
2,119.4
|
|
2,174.1
|
|
Total Assets
|
$ 8,792.8
|
|
$ 9,288.9
|
|
|
|
|
|
Liabilities and Shareholders' Equity:
|
|
|
|
|
Current Installments of Long-term Debt
|
$ 80.3
|
|
$ 205.0
|
|
Accounts Payable
|
509.7
|
|
608.2
|
|
Income Taxes Payable
|
13.3
|
|
4.9
|
|
Accrued Liabilities
|
291.5
|
|
328.1
|
|
Total Current Liabilities
|
894.8
|
|
1,146.2
|
|
Long-term Debt
|
3,597.5
|
|
3,643.8
|
|
Accrued Pension Liability
|
597.7
|
|
648.9
|
|
Deferred Income Taxes
|
1,036.6
|
|
1,095.2
|
|
Other Liabilities
|
335.5
|
|
336.0
|
|
Total Liabilities
|
6,462.1
|
|
6,870.1
|
|
Commitments and Contingencies
|
|
|
|
|
Shareholders' Equity:
|
|
|
|
|
Common Stock, Par Value $1 Per Share,
Authorized 240.0 Shares (240.0 in 2015):
|
|
|
|
|
Issued and
Outstanding 165.3 Shares (165.1 in 2015)
|
165.3
|
|
165.1
|
|
Additional Paid-in Capital
|
2,242.8
|
|
2,236.4
|
|
Accumulated Other Comprehensive
Loss
|
(466.7)
|
|
(492.5)
|
|
Retained Earnings
|
389.3
|
|
509.8
|
|
Total Shareholders' Equity
|
2,330.7
|
|
2,418.8
|
|
Total Liabilities and Shareholders' Equity
|
$ 8,792.8
|
|
$ 9,288.9
|
|
|
|
|
|
(a) Unaudited.
|
|
|
|
|
Olin Corporation
|
|
|
Consolidated Statements of Cash Flows(a)
|
|
|
|
|
Nine Months Ended
|
|
(In millions)
|
September 30, 2016
|
|
Operating Activities:
|
|
|
Net Loss
|
$
(21.4)
|
|
Earnings of Non-consolidated Affiliates
|
(1.1)
|
|
Losses on Disposition of Property, Plant and Equipment
|
0.6
|
|
Stock-Based Compensation
|
6.1
|
|
Depreciation and Amortization
|
397.4
|
|
Deferred Income Taxes
|
(34.8)
|
|
Write-off of Equipment and Facility Included in Restructuring
Charges
|
76.6
|
|
Qualified Pension Plan Contributions
|
(7.1)
|
|
Qualified Pension Plan Income
|
(27.8)
|
|
Changes in:
|
|
|
Receivables
|
18.2
|
|
Income Taxes
Receivable/Payable
|
(7.8)
|
|
Inventories
|
46.1
|
|
Other Current Assets
|
22.7
|
|
Accounts Payable and Accrued
Liabilities
|
(54.1)
|
|
Other Assets
|
0.5
|
|
Other Noncurrent
Liabilities
|
(7.5)
|
|
Other Operating Activities
|
0.5
|
|
Net Operating Activities
|
407.1
|
|
Investing Activities:
|
|
|
Capital Expenditures
|
(199.4)
|
|
Business Acquired in Purchase Transaction, Net of Cash
Acquired
|
(69.5)
|
|
Payments under Long-term Supply Contract
|
(175.7)
|
|
Proceeds from Sale/Leaseback of Equipment
|
40.4
|
|
Proceeds from Disposition of Property, Plant and Equipment
|
0.4
|
|
Proceeds from Disposition of Affiliated Companies
|
6.6
|
|
Net Investing Activities
|
(397.2)
|
|
Financing Activities:
|
|
|
Long-term Debt Repayments
|
(176.1)
|
|
Stock Options Exercised
|
0.4
|
|
Dividends Paid
|
(99.1)
|
|
Debt Issuance Costs
|
(0.8)
|
|
Net Financing Activities
|
(275.6)
|
|
Net Decrease in Cash and Cash Equivalents
|
(265.7)
|
|
Effect of Exchange Rate Changes on Cash and Cash Equivalents
|
0.7
|
|
Cash and Cash Equivalents, Beginning of Year
|
392.0
|
|
Cash and Cash Equivalents, End of Period
|
$
127.0
|
|
|
|
(a) Unaudited.
|
|
|
Olin Corporation
|
|
Non-GAAP Financial Measures(a)
|
|
|
Olin's definition of Adjusted EBITDA (Earnings before interest, taxes,
depreciation, and amortization) is net income (loss) plus an add-back for depreciation and amortization, interest expense
(income), income tax expense (benefit), other expense (income), restructuring charges, acquisition-related costs and
certain other non-recurring items. Adjusted EBITDA is a non-GAAP financial measure. Management believes that
this measure is meaningful to investors as a supplemental financial measure to assess the financial performance of our
assets without regard to financing methods, capital structures, taxes, or historical cost basis. The use of
non-GAAP financial measures is not intended to replace any measures of performance determined in accordance with GAAP and
Adjusted EBITDA presented may not be comparable to similarly titled measures of other companies. Reconciliation of
forward-looking non-GAAP financial measures to the most directly comparable GAAP financial measures are omitted from this
release because Olin is unable to provide such reconciliations without the use of unreasonable efforts. This
inability results from the inherent difficulty in forecasting generally and quantifying certain projected amounts that
are necessary for such reconciliations. In particular, sufficient information is not available to calculate certain
adjustments required for such reconciliations, including interest expense (income), income tax expense (benefit), other
expense (income), restructuring charges, and acquisition-related costs. Because of our inability to calculate such
adjustments, forward-looking net income guidance is also omitted from this release. We expect these adjustments to
have a potentially significant impact on our future GAAP financial results.
|
|
|
|
Three Months Ended
|
Nine Months
Ended
|
|
|
September 30,
|
June 30,
|
September 30,
|
|
(In millions)
|
2016
|
2016
|
2016
|
|
|
|
|
|
|
Reconciliation of Net Income (Loss) to Adjusted EBITDA:
|
|
|
|
|
Net Income (Loss)
|
$ 17.5
|
$ (1.0)
|
$ (21.4)
|
|
Add Back:
|
|
|
|
|
Interest Expense
|
47.5
|
47.6
|
143.6
|
|
Interest Income
|
(0.5)
|
(0.5)
|
(1.3)
|
|
Income Tax Provision (Benefit)
|
3.8
|
(22.6)
|
(36.3)
|
|
Depreciation and Amortization
|
135.3
|
132.4
|
397.4
|
|
EBITDA
|
203.6
|
155.9
|
482.0
|
|
Add Back:
|
|
|
|
|
Restructuring Charges (b)
|
5.2
|
8.2
|
106.2
|
|
Acquisition-related Costs (c)
|
13.1
|
16.3
|
39.6
|
|
Certain Non-recurring Items (d)
|
-
|
-
|
(11.0)
|
|
Adjusted EBITDA
|
$ 221.9
|
$ 180.4
|
$ 616.8
|
|
|
|
|
|
|
(a)
|
Unaudited.
|
|
|
|
|
(b)
|
Restructuring charges for the three months ended September 30, 2016 and
June 30, 2016 and for the nine months ended September 30, 2016 were primarily associated with the closure of 433,000 tons
of chlor alkali capacity across three separate Olin locations, of which $76.6 million was non-cash impairment charges for
equipment and facilities for the nine months ended September 30, 2016.
|
|
(c)
|
Acquisition-related costs for the three months ended September 30, 2016
and June 30, 2016 and for the nine months ended September 30, 2016 were associated with our acquisition of the Acquired
Business.
|
|
(d)
|
Certain non-recurring items for the nine months ended September 30, 2016
included an $11.0 million insurance recovery for property damage and business interruption related to a 2008 Henderson,
NV chlor alkali facility incident.
|
|
|
Olin Corporation
|
|
|
|
|
Non-GAAP Financial Measures(a)
|
|
|
|
|
|
|
|
|
Olin's definition of adjusted net income (loss) from operations per
share is net income (loss) per share plus a per dilutive share add-back for step-up depreciation and amortization
recorded in conjunction with the Acquired Business, restructuring charges, acquisition-related costs, certain other
non-recurring items and the tax impact of the aforementioned adjustments. Adjusted net income (loss) from
operations per share is a non-GAAP financial measure excluding certain items that we do not consider part of ongoing
operations. Management believes that this supplemental financial measure is meaningful to investors as a financial
performance metric which is useful to investors for comparative purposes. The use of non-GAAP financial measures is not
intended to replace any measures of performance determined in accordance with GAAP and adjusted net income (loss) from
operations per share presented may not be comparable to similarly titled measures of other
companies.
|
|
|
|
|
|
|
|
Three Months Ended
|
Nine Months
Ended
|
|
|
September 30,
|
June 30,
|
September 30,
|
|
|
2016
|
2016
|
2016
|
|
|
|
|
|
|
Reconciliation of Net Income (Loss) Per Share to Adjusted Net Income
from Operations Per Share:
|
|
|
Net Income (Loss) Per Share
|
$
|
0.11
|
$
|
(0.01)
|
$
|
(0.13)
|
|
Add Back:
|
|
|
|
|
Restructuring Charges (b)
|
0.03
|
0.05
|
0.64
|
|
Acquisition-related Costs (c)
|
0.08
|
0.10
|
0.24
|
|
Certain Non-recurring Items (d)
|
-
|
-
|
(0.07)
|
|
Step-Up Depreciation and Amortization (e)
|
0.24
|
0.26
|
0.73
|
|
Income Tax Impact (f)
|
(0.13)
|
(0.16)
|
(0.58)
|
|
Adjusted Net Income from Operations Per Share
|
$
|
0.33
|
$
|
0.24
|
$
|
0.83
|
|
|
|
|
|
|
|
(a)
|
Unaudited.
|
|
(b)
|
Restructuring charges for the three months ended September 30, 2016 and
June 30, 2016 and for the nine months ended September 30, 2016 were primarily associated with the closure of 433,000 tons
of chlor alkali capacity across three separate Olin locations, of which $76.6 million was non-cash impairment charges for
equipment and facilities for the nine months ended September 30, 2016.
|
|
(c)
|
Acquisition-related costs for the three months ended September 30, 2016
and June 30, 2016 and for the nine months ended September 30, 2016 were associated with our acquisition of the Acquired
Business.
|
|
(d)
|
Certain non-recurring items for the nine months ended September 30, 2016
included an $11.0 million insurance recovery for property damage and business interruption related to a 2008 Henderson,
NV chlor alkali facility incident.
|
|
(e)
|
Step-up depreciation and amortization for the three months ended
September 30, 2016 and June 30, 2016 and for the nine months ended September 30, 2016 was associated with the increase to
fair value of property, plant and equipment, acquired intangible assets and long-term supply contracts at the acquisition
date related to the purchase accounting of the Acquired Business.
|
|
(f)
|
The effective tax rate on the pretax adjustments from net income (loss)
per share to adjusted net income from operations per share is approximately 37% for the three months ended September 30,
2016 and June 30, 2016 and for the nine months ended September 30, 2016.
|
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/olin-announces-third-quarter-2016-earnings-300354381.html
SOURCE Olin Corporation