Olin Q3 Results
Q3: 10-29-18 Earnings Summary
– Net income of $195.1 million and adjusted EBITDA of $398.3 million
– Revised full year 2018 adjusted EBITDA forecast to $1.26 billion
PR NewswireCLAYTON, Mo., Oct. 29, 2018 /PRNewswire/ — Olin Corporation (OLN) announced financial results for the third quarter ended September 30, 2018.
Third quarter 2018 reported net income was $195.1 million, or $1.16 per diluted share, which compares to third quarter 2017 net income of $52.7 million, or $0.31 per diluted share. Third quarter 2018 adjusted EBITDA of $398.3 million excludes restructuring charges of $3.3 million, information technology integration and other costs of $9.6 million, and $88.5 million of insurance recoveries for environmental costs incurred and expensed in prior periods, net of related legal costs incurred in 2018. Third quarter 2017 adjusted EBITDA was $265.5 million. Sales in the third quarter 2018 were $1,872.4 million compared to $1,554.9 million in the third quarter 2017.
John E. Fischer, Chairman, President and Chief Executive Officer, said, “During the third quarter, Olin achieved the highest adjusted EBITDA level since the acquisition of the DowDuPont Chlorine Products businesses. Olin benefited from strong operating performances by both the Chlor Alkali Products and Vinyls and Epoxy businesses as well as improved chlorine, ethylene dichloride, and other chlorine-derivatives pricing. We also made significant progress on our de-leveraging initiatives, repaying $170 million during the third quarter, thereby reducing debt by $250 million during the first nine months of 2018.
“Fourth quarter 2018 adjusted EBITDA is forecast to decline from the third quarter levels reflecting:
- Seasonally weaker demand for chlorine derivatives, epoxy resins, and commercial ammunition;
- Higher ethylene costs, due to increased ethane pricing; and
- Lower caustic soda prices.
We now believe full year 2018 adjusted EBITDA will be approximately $1.26 billion with upside opportunities and downside risks of approximately 2%. This reflects higher than previously anticipated ethylene costs, resulting from increased ethane prices, of approximately $25 million, lower expected caustic soda pricing of approximately $45 million, and lower Winchester results due to decreased commercial ammunition demand of approximately $15 million. ”
“Going forward, we remain confident about the outlook for our chemicals businesses and believe Olin is uniquely positioned in these markets,” said Fischer.
Despite near-term declines in caustic soda prices, Olin continues to believe that the long-term supply and demand fundamentals for caustic soda remain positive. Long-term caustic soda demand growth from alumina, pulp and paper and inorganic chemicals is forecast to exceed long-term chlorine growth from PVC, water treatment, urethanes and refrigerants. The combination of steady global demand growth, chlor alkali capacity reductions in North America, Europe and China over the last two years, and minimal capacity additions support a favorable caustic soda outlook. Olin expects continued improvement in caustic soda pricing during the next several years.
Epoxy sales for the third quarter 2018 were $647.3 million compared to $489.9 million in the third quarter 2017. The increase in Epoxy sales was due to higher product prices and volumes. The third quarter 2018 segment income was $31.1 million compared to a segment loss of $1.7 million in the third quarter 2017. The increase in the Epoxy segment earnings was principally due to higher product prices, partially offset by higher raw material costs, primarily benzene and propylene. The third quarter 2017 Epoxy segment earnings were affected by $18.7 million of additional costs and unabsorbed fixed manufacturing costs associated with Hurricane Harvey. Epoxy third quarter 2018 results included depreciation and amortization expense of $25.2 million compared to $24.4 million in the third quarter 2017.