Winchester Posts Record Quarterly Earnings
CLAYTON, MO -- (Marketwire) -- 04/27/09 -- Olin Corporation (NYSE: OLN) announced today
that its first quarter 2009 net income was $46.7 million, or $0.60 per
diluted share, which compares to $37.3 million, or $0.50 per diluted share
in the first quarter of 2008. Sales in the first quarter of 2009 were
$400.6 million, compared to $399.1 million in the first quarter of 2008.
Joseph D. Rupp, Chairman, President, and Chief Executive Officer, said,
"Winchester achieved the highest level of quarterly earnings in its
history, reflecting the continuation of the stronger than normal demand
that began in the fourth quarter of 2008. While Chlor Alkali realized a
continuation of the weak demand that we experienced late in the fourth
quarter, the business also achieved record pricing in the first quarter of
2009. The first quarter 2009 Chlor Alkali operating rate was 65%, which
was slightly below fourth quarter 2008 levels. The Chlor Alkali first
quarter 2009 earnings were unfavorably impacted by maintenance and logistic
costs associated with a planned outage during the quarter at our largest
manufacturing site in McIntosh, Alabama and the outage at our Henderson,
Nevada site, which ended in February. These costs reduced first quarter
Chlor Alkali pre-tax earnings by approximately $4.2 million. In addition,
we did not operate our St. Gabriel, LA facility during the quarter. In the
first quarter of 2009, we realized a $5.0 million pretax gain associated
with the sale of land and other asset disposals. Our first quarter results
also included a $4.9 million increase in the allowance for doubtful
accounts related to deterioration in customer credit.
"Earnings in the second quarter of 2009 are projected to be in the $0.30 to
$0.40 per diluted share range. This forecast reflects the combination of
continued weak demand and lower ECU pricing in Chlor Alkali. We expect ECU
pricing in the second quarter to decline from the first quarter of 2009,
but be higher than the second quarter of 2008. We do expect Chlor Alkali
volumes, including bleach, to improve in the second quarter of 2009
compared to the first quarter. Winchester's second quarter 2009 earnings
are expected to decline from first quarter levels, but are expected to be
well above historic second quarter levels."
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.
CHLOR ALKALI PRODUCTS
Chlor Alkali product sales for the first quarter of 2009 were $267.7
million compared to $288.3 million in the first quarter of 2008. The first
quarter 2009 sales reflect a 32% increase in ECU netbacks offset by a 29%
decline in chlorine and caustic soda volumes. Volumes for hydrochloric
acid and bleach increased slightly compared to first quarter 2008 levels.
Freight costs included in the ECU netbacks increased 10% in the first
quarter of 2009 compared to the first quarter of 2008. First quarter 2009
Chlor Alkali segment income was $68.7 million compared to $67.0 million in
the first quarter of 2008, as higher ECU prices were offset by lower
volumes and increased maintenance and logistics costs.
WINCHESTER
Winchester first quarter 2009 sales were $132.9 million compared to $110.8
million in the first quarter of 2008. The increase reflects higher sales
volumes. Commercial, law enforcement, and domestic military sales all
increased during the quarter which more than offset a decline in industrial
sales. Winchester's first quarter 2009 segment income was $17.0 million
compared to $10.0 million in the first quarter of 2008. The increase in
segment income reflects the higher sales volumes and favorable pricing.
CORPORATE AND OTHER COSTS
Pension income included in the first quarter 2009 Corporate and Other
segment was $4.8 million, compared to income of $4.5 million in the first
quarter of 2008.
First quarter charges to income for environmental investigatory and
remedial activities were $4.8 million in 2009, compared to $5.1 million in
the first quarter of 2008. These charges relate primarily to remedial and
investigatory activities associated with former waste sites and past
operations.
Other corporate and unallocated costs in the first quarter of 2009
decreased from the first quarter of 2008 due to lower incentive
compensation costs, offset in part by higher legal and legal related
expenses. First quarter 2009 incentive compensation costs included a $1.2
million reduction due to stock based mark-to-market adjustments. The legal
and legal related expenses are primarily associated with legacy
environmental matters and legal settlements.
OTHER OPERATING INCOME
Other operating income during the first quarter of 2009 was $5.5 million,
compared to $0.6 million in the first quarter of 2008. First quarter 2009
other operating income included a gain on the sale of land and a gain on
the disposal of assets associated with the ongoing St. Gabriel, LA
conversion and expansion project.
DIVIDEND
On April 23, 2009, Olin's Board of directors declared a dividend of $0.20
on each share of Olin common stock. The dividend is payable on June 10,
2009 to shareholders of record at the close of business on May 11, 2009.
This is the 330th consecutive quarterly dividend to be paid by the Company.
CONFERENCE CALL INFORMATION
The Company's first quarter earnings conference call with securities
analysts is scheduled for 10:00 A.M. Eastern Time, Tuesday, April 28. The
call will feature remarks by Joseph D. Rupp, Olin's Chairman, President and
Chief Executive Officer; and John E. Fischer, Olin's Vice President and
Chief Financial Officer. Anyone wishing to listen to the call may do so
via the Internet by following the instructions posted under the Conference
Call icon on Olin's website, www.olin.com. Listeners should log on to the
website at least 5 minutes before the call. The call will also be audio
archived on the Olin website for future replay. A text of the prepared
remarks from the conference call will be available on the website in the
Investor section.
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.
Click here for more information.
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, 2008, 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;
-- changes in legislation or government regulations or policies;
-- 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;
-- unexpected litigation outcomes;
-- new regulations or public policy changes regarding the transportation
of hazardous chemicals and the security of chemical manufacturing
facilities;
-- the occurrence of unexpected manufacturing interruptions and outages,
including those occurring as a result of labor disruptions and production
hazards;
-- higher-than-expected raw material and 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 and capital markets, limiting or
preventing our ability to borrow or raise capital.
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.
2009 - 10
Olin Corporation
Consolidated Statements of Income (a)
Three Months
Ended March 31,
(In millions, except per share amounts) 2009 2008
------- -------
Sales $ 400.6 $ 399.1
Operating Expenses:
Cost of Goods Sold 306.2 314.0
Selling and Administration 39.2 33.3
Other Operating Income (b) 5.5 0.6
------- -------
Operating Income 60.7 52.4
Earnings of Non-consolidated Affiliates 14.8 8.1
Interest Expense (c) 1.6 4.5
Interest Income 0.5 2.8
Other Income - 0.1
------- -------
Income before Taxes 74.4 58.9
Income Tax Provision 27.7 21.6
------- -------
Net Income $ 46.7 $ 37.3
======= =======
Net Income Per Common Share:
Basic $ 0.60 $ 0.50
Diluted $ 0.60 $ 0.50
======= =======
Dividends Per Common Share $ 0.20 $ 0.20
======= =======
Average Common Shares Outstanding - Basic 77.5 74.6
======= =======
Average Common Shares Outstanding - Diluted 77.6 75.0
======= =======
(a) Unaudited.
(b) Other operating income for the three months ended March 31, 2009
included a $3.7 million gain on the sale of land and $1.3 million of
gains on the disposal of assets primarily associated with the ongoing
St. Gabriel, LA conversion and expansion project.
(c) Interest expense was reduced by capitalized interest of $2.5 million
and $0.4 million for the three months ended March 31, 2009 and 2008,
respectively.
Olin Corporation
Segment Information (a)
(In millions)
Three Months
Ended March 31,
2009 2008
------- -------
Sales:
Chlor Alkali Products $ 267.7 $ 288.3
Winchester 132.9 110.8
------- -------
Total Sales $ 400.6 $ 399.1
------- -------
Income before Taxes:
Chlor Alkali Products (b) $ 68.7 $ 67.0
Winchester 17.0 10.0
Corporate/Other:
Pension Income (c) 4.8 4.5
Environmental Provision (4.8) (5.1)
Other Corporate and Unallocated Costs (15.7) (16.5)
Other Operating Income (d) 5.5 0.6
Interest Expense (e) (1.6) (4.5)
Interest Income 0.5 2.8
Other Income - 0.1
------- -------
Income before Taxes $ 74.4 $ 58.9
======= =======
(a) Unaudited.
(b) Earnings of non-consolidated affiliates are included in the Chlor
Alkali Products segment results consistent with management's monitoring
of the operating segments. The earnings from non-consolidated
affiliates were $14.8 million and $8.1 million for the three months
ended March 31, 2009 and 2008, respectively.
(c) 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.
(d) Other operating income for the three months ended March 31, 2009
included a $3.7 million gain on the sale of land and $1.3 million of
gains on the disposal of assets primarily associated with the ongoing
St. Gabriel, LA conversion and expansion project.
(e) Interest expense was reduced by capitalized interest of $2.5 million
and $0.4 million for the three months ended March 31, 2009 and 2008,
respectively.
Olin Corporation
Consolidated Balance Sheets (a)
(In millions, except per share data)
March 31, December 31, March 31,
2009 2008 2008
------------ ------------ ------------
Assets:
Cash & Cash Equivalents $ 168.6 $ 246.5 $ 249.9
Short-Term Investments - - 26.1
Accounts Receivable, Net 216.4 213.0 229.7
Inventories 166.5 131.4 130.2
Current Deferred Income Taxes 62.8 68.5 64.2
Other Current Assets 11.5 10.9 22.7
------------ ------------ ------------
Total Current Assets 625.8 670.3 722.8
Property, Plant and Equipment
(Less Accumulated
Depreciation of $970.6,
$956.0 and $929.4) 659.4 629.9 518.2
Prepaid Pension Costs - - 147.8
Deferred Income Taxes 23.5 46.8 -
Other Assets 83.3 70.8 71.3
Goodwill 301.9 301.9 301.9
------------ ------------ ------------
Total Assets $ 1,693.9 $ 1,719.7 $ 1,762.0
============ ============ ============
Liabilities and Shareholders' Equity:
Accounts Payable $ 124.2 $ 145.6 $ 167.9
Income Taxes Payable - 0.6 7.4
Accrued Liabilities 202.6 253.6 222.5
------------ ------------ ------------
Total Current Liabilities 326.8 399.8 397.8
Long-Term Debt 253.4 252.4 252.7
Accrued Pension Liability 43.3 51.5 50.9
Deferred Income Taxes 6.0 6.5 29.0
Other Liabilities 304.3 304.5 332.7
------------ ------------ ------------
Total Liabilities 933.8 1,014.7 1,063.1
------------ ------------ ------------
Commitments and Contingencies
Shareholders' Equity:
Common Stock, Par Value $1
Per Share, Authorized
120.0 Shares:
Issued and Outstanding
77.9 Shares (77.3 and
74.7 in 2008) 77.9 77.3 74.7
Additional Paid-In Capital 809.3 801.6 747.8
Accumulated Other
Comprehensive Loss (253.8) (269.4) (144.4)
Retained Earnings 126.7 95.5 20.8
------------ ------------ ------------
Total Shareholders' Equity 760.1 705.0 698.9
------------ ------------ ------------
Total Liabilities and
Shareholders' Equity $ 1,693.9 $ 1,719.7 $ 1,762.0
============ ============ ============
(a) Unaudited.
Olin Corporation
Consolidated Statements of Cash Flows (a)
(In millions)
Three Months Ended March 31, 2009 2008
------- -------
Operating Activities:
Net Income $ 46.7 $ 37.3
Earnings of Non-consolidated Affiliates (14.8) (8.1)
Gains on Disposition of Property, Plant and Equipment (5.0) (0.2)
Stock-Based Compensation 1.1 1.6
Depreciation and Amortization 16.6 17.3
Deferred Income Taxes 21.2 2.5
Qualified Pension Plan Contribution (1.0) -
Qualified Pension Plan Income (5.0) (4.0)
Common Stock Issued Under Employee Benefit Plans 0.6 1.2
Changes in:
Receivables (3.4) (27.7)
Inventories (35.1) (23.5)
Other Current Assets (0.6) (8.0)
Accounts Payable and Accrued Liabilities (46.3) (9.8)
Income Taxes Payable (3.3) 6.8
Other Assets - 0.7
Other Noncurrent Liabilities 0.8 4.3
Other Operating Activities 0.2 -
------- -------
Net Operating Activities (27.3) (9.6)
------- -------
Investing Activities:
Capital Expenditures (49.8) (23.1)
Proceeds from Disposition of Property, Plant and
Equipment 5.5 0.2
Distributions from (Advances to) Affiliated Companies, Net 1.4 (3.1)
Other Investing Activities (0.3) 1.1
------- -------
Net Investing Activities (43.2) (24.9)
------- -------
Financing Activities:
Long-Term Debt:
Borrowings 1.5 -
Repayments - (9.8)
Issuance of Common Stock 6.6 2.9
Stock Options Exercised - 0.1
Excess Tax Benefits from Stock Options Exercised - 0.1
Dividends Paid (15.5) (14.9)
------- -------
Net Financing Activities (7.4) (21.6)
------- -------
Net Decrease in Cash and Cash Equivalents (77.9) (56.1)
Cash and Cash Equivalents, Beginning of Year 246.5 306.0
------- -------
Cash and Cash Equivalents, End of Period $ 168.6 $ 249.9
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(a) Unaudited.
Investor Contact:
Larry P. Kromidas
(618) 258-3206
Email: Email Contact
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