Olin Announces Third Quarter Earnings

 

 

CLAYTON, MISSOURI–Olin Corporation (NYSE:OLN) announces achieved record operating income in the third quarter of 2008 of $87.0 million, which increased 130% from the third quarter 2007 level of $37.8 million. Income from continuing operations in the third quarter of 2008 was $37.7 million, or $0.49 per diluted share, compared with net income from continuing operations of $32.7 million, or $0.44 per diluted share, in the third quarter of 2007. Third quarter 2008 income from continuing operations included the previously announced $26.6 million impairment charge on corporate debt securities. Third quarter 2007 earnings include one month of results from the Pioneer operations which were acquired August 31, 2007. Sales during the third quarter of 2008 were $502.9 million compared to $350.3 million in the third quarter of 2007.

Joseph D. Rupp, Chairman, President, and Chief Executive Officer said, “We experienced record performance in our Chlor Alkali business during the third quarter, despite the impact of two hurricanes, and continued strong performance from our Winchester business. Chlor Alkali segment earnings were $103.6 million, reflecting higher ECU netbacks. Overall volumes in the quarter were negatively impacted by approximately 3% due to hurricane-related outages at our St. Gabriel, Louisiana facility and our SunBelt joint venture. We expect continued improvement in ECU netbacks in the fourth quarter. Winchester’s segment earnings were in line with the third quarter of 2007 as improved pricing offset higher costs and lower volumes. Third quarter 2008 earnings were also positively impacted by favorable tax adjustments resulting from the finalization of our 2007 tax returns and lower stock-based compensation expense.”

In the fourth quarter of 2008 we anticipate earnings per share in the $0.65 per diluted share range. In Chlor Alkali the improvement in ECU netbacks is expected to offset seasonally weaker volumes. Winchester expects approximately breakeven results in the seasonally weak fourth quarter.

SEGMENT REPORTING

We define segment results as income (loss) before interest expense, interest income, other income, and income taxes and include the results of non-consolidated affiliates in segment results consistent with management’s monitoring of the operating segments.

WINCHESTER

Winchester third quarter 2008 sales were $140.8 million, compared to $129.0 million in the third quarter of 2007. The combination of higher selling prices and increased law enforcement and government, including military, sales volumes were partially offset by lower sales volumes to commercial customers.

Winchester segment income for the third quarter was $9.8 million, compared to $10.0 million in the third quarter of 2007. The favorable impact of higher selling prices was more than offset by higher raw material costs, including copper, lead, and steel, and higher manufacturing costs.

COMPANY DESCRIPTION

Olin Corporation is a manufacturer concentrated in two business segments: Chlor Alkali Products and Winchester. Chlor Alkali Products manufactures chlorine and caustic soda, sodium hydrosulfite, hydrochloric acid, hydrogen, potassium hydroxide and bleach products. Winchester products include sporting ammunition, reloading components, small caliber military ammunition and components, and industrial cartridges.

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. 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,” 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, 2007 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, housing, vinyls, 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;

* 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;

* costs and other expenditures in excess of those projected for environmental investigation and remediation or other legal proceedings;

* unexpected litigation outcomes;

* 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;

* the occurrence of unexpected manufacturing interruptions and outages, including those occurring as a result of labor disruptions and production hazards;

* new regulations or public policy changes regarding the transportation of hazardous chemicals and the security of chemical manufacturing facilities;

* higher-than-expected raw material, energy, transportation, and/or logistics costs;

* an increase in our indebtedness or higher-than-expected interest rates, affecting our ability to generate sufficient cash flow for debt service; and

* adverse conditions in the credit market, limiting or preventing our ability to borrow.

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.

Media Contact:
Larry P. Kromidas, Olin Corporation (618) 258-3206