Winchester Posts Record Quarterly Sales and Earnings
CLAYTON, MO -- (Marketwire) -- 07/27/09 -- Olin Corporation (NYSE: OLN) announced today
that its second quarter 2009 net income was $27.8 million, or $0.36 per
diluted share, which compares to $35.5 million, or $0.47 per diluted share
in the second quarter of 2008. Sales in the second quarter of 2009 were
$383.0 million, compared to $428.3 million in the second quarter of 2008.
Joseph D. Rupp, Chairman, President, and Chief Executive Officer, said,
"Winchester achieved the highest level of quarterly sales and earnings in
its history, reflecting the continuation of the stronger than normal demand
that began in the fourth quarter of 2008. Earnings doubled in the second
quarter of 2009 compared to the second quarter of 2008 driven by
Winchester's commercial sales which increased 33% year-over-year. Chlor
Alkali earnings declined 32% in the second quarter of 2009 compared to the
second quarter of 2008. This decline reflects lower shipment volumes of
both chlorine and caustic soda, which declined 32% year-over-year. ECU
netbacks in the second quarter of 2009 declined slightly compared to the
second quarter of 2008. The second quarter 2009 Chlor Alkali operating rate
was 70% compared to an operating rate of 89% last year.
"Third quarter 2009 earnings per share are forecast to be in the $0.20 per
diluted share range. This forecast includes an anticipated $44 million
pretax recovery of environmental costs incurred and expensed in prior
periods. The combination of the precipitous decline in caustic soda
pricing and the continuation of weak demand will likely result in a third
quarter segment loss in the Chlor Alkali business. ECU netbacks are
expected to decline approximately 40% in the third quarter of 2009 compared
to the second. Winchester expects continued strong demand in the third
quarter of 2009 with earnings comparable to the second quarter, which are
well above historic 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 second quarter of 2009 were $242.4
million compared to $312.2 million in the second quarter of 2008. The
second quarter 2009 sales reflect a 32% decline in chlorine and caustic
soda volumes, while volumes for bleach increased 13% compared to second
quarter 2008 levels. ECU netbacks in the second quarter of 2009 declined
by 1% compared to the second quarter of 2008. Freight costs, which are
included in the ECU netbacks, increased 9% in the second quarter of 2009
compared to the second quarter of 2008. Second quarter 2009 Chlor Alkali
segment income was $47.6 million compared to $70.5 million in the second
quarter of 2008, due to lower volumes, partially offset by lower costs.
WINCHESTER
Winchester second quarter 2009 sales were $140.6 million compared to $116.1
million in the second quarter of 2008, an increase of 21%. The increase
reflects higher sales volumes. Commercial and domestic military sales
increased during the quarter, which more than offset declines in industrial
sales. Law enforcement sales were comparable year-over-year. Winchester's
second quarter 2009 segment income was $19.1 million compared to $9.5
million in the second quarter of 2008. The increase in segment income
reflects the higher sales volumes, favorable pricing, and lower operating
costs.
CORPORATE AND OTHER COSTS
Pension income included in the second quarter 2009 Corporate and Other
segment was $5.7 million, compared to $3.6 million in the second quarter of
2008. Second quarter 2008 pension income included a curtailment charge of
$0.8 million.
Second quarter charges to income for environmental investigatory and
remedial activities were $7.2 million in 2009, compared to $9.7 million in
the second 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 second quarter of 2009
increased by $1.9 million from the second quarter of 2008 due to higher
legal and legal-related expenses, partially offset by lower incentive
compensation costs. The legal and legal-related expenses are primarily
associated with legacy environmental matters, including recovery actions
for environmental costs previously incurred and expensed. Second quarter
2009 management incentive compensation costs were lower by $2.8 million,
primarily resulting from stock-based mark-to-market adjustments.
CASH FLOW
Cash and cash equivalents increased from $168.6 million at March 31, 2009
to $192.2 million at June 30, 2009. The second quarter 2009 positive cash
flow includes a $4 million reduction in working capital partially offset by
capital spending which exceeded depreciation. Capital spending during the
quarter was $37.8 million, which primarily reflects the St. Gabriel, LA
conversion and expansion project. Third and fourth quarter 2009 capital
spending is expected to decline from the second quarter 2009 levels.
DIVIDEND
On July 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 September 10,
2009 to shareholders of record at the close of business on August 10, 2009.
This is the 331st consecutive quarterly dividend to be paid by the Company.
CONFERENCE CALL INFORMATION
The Company's second quarter earnings conference call with securities
analysts is scheduled for 10:00 A.M. Eastern Time, Tuesday, July 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 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. 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,
including proposed legislation that would phase out the use of mercury in
the manufacture of chlorine, caustic soda, and related products;
-- 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 - 13
Olin Corporation
Consolidated Statements of Income (a)
Three Months Six Months
(In millions, except per Ended June 30, Ended June 30,
share amounts) 2009 2008 2009 2008
--------- --------- --------- ---------
Sales $ 383.0 $ 428.3 $ 783.6 $ 827.4
Operating Expenses:
Cost of Goods Sold 312.0 347.2 618.2 661.2
Selling and Administration 36.1 35.6 75.3 68.9
Other Operating Income (b) 0.2 0.4 5.7 1.0
--------- --------- --------- ---------
Operating Income 35.1 45.9 95.8 98.3
Earnings of Non-consolidated
Affiliates 11.0 11.0 25.8 19.1
Interest Expense (c) 1.7 3.7 3.3 8.2
Interest Income 0.3 1.4 0.8 4.2
Other Income 0.1 0.2 0.1 0.3
--------- --------- --------- ---------
Income before Taxes 44.8 54.8 119.2 113.7
Income Tax Provision 17.0 19.3 44.7 40.9
--------- --------- --------- ---------
Net Income $ 27.8 $ 35.5 $ 74.5 $ 72.8
========= ========= ========= =========
Net Income Per Common Share:
Basic $ 0.36 $ 0.47 $ 0.96 $ 0.97
Diluted $ 0.36 $ 0.47 $ 0.96 $ 0.97
========= ========= ========= =========
Dividends Per Common Share $ 0.20 $ 0.20 $ 0.40 $ 0.40
========= ========= ========= =========
Average Common Shares
Outstanding - Basic 78.1 75.0 77.8 74.8
========= ========= ========= =========
Average Common Shares
Outstanding - Diluted 78.1 75.4 77.8 75.2
========= ========= ========= =========
(a) Unaudited.
(b) Other operating income for the six months ended June 30, 2009 included
a $3.7 million gain on the sale of land and $0.9 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 $3.0 million
and $0.7 million for the three months ended June 30, 2009 and 2008,
respectively, and $5.5 million and $1.1 million for the six months
ended June 30, 2009 and 2008, respectively.
Olin Corporation
Segment Information (a)
(In millions)
Three Months Six Months
Ended June 30, Ended June 30,
2009 2008 2009 2008
-------- -------- -------- --------
Sales:
Chlor Alkali Products $ 242.4 $ 312.2 $ 510.1 $ 600.5
Winchester 140.6 116.1 273.5 226.9
-------- -------- -------- --------
Total Sales $ 383.0 $ 428.3 $ 783.6 $ 827.4
-------- -------- -------- --------
Income before Taxes:
Chlor Alkali Products (b) $ 47.6 $ 70.5 $ 116.3 $ 137.5
Winchester 19.1 9.5 36.1 19.5
Corporate/Other:
Pension Income (c) 5.7 3.6 10.5 8.1
Environmental Provision (7.2) (9.7) (12.0) (14.8)
Other Corporate and
Unallocated Costs (19.3) (17.4) (35.0) (33.9)
Other Operating Income (d) 0.2 0.4 5.7 1.0
Interest Expense (e) (1.7) (3.7) (3.3) (8.2)
Interest Income 0.3 1.4 0.8 4.2
Other Income 0.1 0.2 0.1 0.3
-------- -------- -------- --------
Income before Taxes $ 44.8 $ 54.8 $ 119.2 $ 113.7
======== ======== ======== ========
(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 $11.0 million for the three months
ended June 30, 2009 and 2008 and $25.8 million and $19.1 million for
the six months ended June 30, 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. Pension income for the three and six months ended June 30,
2008 included a curtailment charge of $0.8 million resulting from the
conversion of our McIntosh, AL chlor alkali hourly workforce from a
defined benefit pension plan to a defined contribution pension plan.
(d) Other operating income for the six months ended June 30, 2009 included
a $3.7 million gain on the sale of land and $0.9 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 $3.0 million
and $0.7 million for the three months ended June 30, 2009 and 2008,
respectively, and $5.5 million and $1.1 million for the six months
ended June 30, 2009 and 2008, respectively.
Olin Corporation
Consolidated Balance Sheets (a)
(In millions, except per share data)
June 30, December 31, June 30,
2009 2008 2008
--------- --------- ---------
Assets:
Cash & Cash Equivalents $ 192.2 $ 246.5 $ 186.4
Short-Term Investments - - 20.5
Accounts Receivable, Net 212.5 213.0 251.0
Inventories 162.7 131.4 150.8
Current Deferred Income Taxes 68.5 68.5 69.8
Other Current Assets 10.3 10.9 16.2
--------- --------- ---------
Total Current Assets 646.2 670.3 694.7
Property, Plant and Equipment
(Less Accumulated Depreciation of
$975.8, $956.0 and $938.9) 683.5 629.9 541.4
Prepaid Pension Costs - - 154.1
Deferred Income Taxes 0.5 46.8 -
Other Assets 77.4 70.8 69.2
Goodwill 301.9 301.9 301.9
--------- --------- ---------
Total Assets $ 1,709.5 $ 1,719.7 $ 1,761.3
========= ========= =========
Liabilities and Shareholders' Equity:
Accounts Payable $ 115.6 $ 145.6 $ 159.3
Income Taxes Payable - 0.6 -
Accrued Liabilities 197.0 253.6 218.6
--------- --------- ---------
Total Current Liabilities 312.6 399.8 377.9
Long-Term Debt 251.4 252.4 248.7
Accrued Pension Liability 35.0 51.5 50.1
Deferred Income Taxes 7.1 6.5 22.4
Other Liabilities 311.2 304.5 338.0
--------- --------- ---------
Total Liabilities 917.3 1,014.7 1,037.1
--------- --------- ---------
Commitments and Contingencies
Shareholders' Equity:
Common Stock, Par Value $1 Per
Share, Authorized 120.0 Shares:
Issued and Outstanding 78.2
Shares (77.3 and 75.4 in 2008) 78.2 77.3 75.4
Additional Paid-In Capital 814.5 801.6 761.6
Accumulated Other Comprehensive
Loss (239.4) (269.4) (154.1)
Retained Earnings 138.9 95.5 41.3
--------- --------- ---------
Total Shareholders' Equity 792.2 705.0 724.2
--------- --------- ---------
Total Liabilities and Shareholders'
Equity $ 1,709.5 $ 1,719.7 $ 1,761.3
========= ========= =========
(a) Unaudited.
Olin Corporation
Consolidated Statements of Cash Flows (a)
(In millions)
Six Months Ended June 30, 2009 2008
--------- ---------
Operating Activities:
Net Income $ 74.5 $ 72.8
Earnings of Non-consolidated Affiliates (25.8) (19.1)
Gains on Disposition of Property, Plant and
Equipment (4.6) -
Stock-Based Compensation 2.8 3.0
Depreciation and Amortization 33.4 34.9
Deferred Income Taxes 36.4 (3.4)
Qualified Pension Plan Contributions (1.5) -
Qualified Pension Plan Income (10.9) (7.1)
Common Stock Issued Under Employee Benefit Plans 1.2 1.7
Changes in:
Receivables 0.5 (49.0)
Inventories (31.3) (44.1)
Other Current Assets 0.6 (1.5)
Accounts Payable and Accrued Liabilities (47.0) (38.2)
Income Taxes Payable (7.5) (0.6)
Other Assets 1.9 1.5
Other Noncurrent Liabilities 8.8 9.9
Other Operating Activities (0.7) (0.3)
--------- ---------
Net Operating Activities 30.8 (39.5)
--------- ---------
Investing Activities:
Capital Expenditures (87.6) (62.4)
Proceeds from Disposition of Property, Plant and
Equipment 5.7 0.3
Distributions from Affiliated Companies, Net 14.1 4.9
Other Investing Activities 2.5 1.2
--------- ---------
Net Investing Activities (65.3) (56.0)
--------- ---------
Financing Activities:
Long-Term Debt:
Borrowings 1.5 -
Repayments - (9.8)
Issuance of Common Stock 9.8 4.8
Stock Options Exercised - 9.3
Excess Tax Benefits from Stock Options Exercised - 1.5
Dividends Paid (31.1) (29.9)
--------- ---------
Net Financing Activities (19.8) (24.1)
--------- ---------
Net Decrease in Cash and Cash Equivalents (54.3) (119.6)
Cash and Cash Equivalents, Beginning of Year 246.5 306.0
--------- ---------
Cash and Cash Equivalents, End of Period $ 192.2 $ 186.4
========= =========
(a) Unaudited.
Investor Contact:
Larry P. Kromidas
(618) 258-3206
Email: Email Contact
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