Sign in

You're signed outSign in or to get full access.

OC

OLIN Corp (OLN)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered sales of $1.67B and adjusted EBITDA of $193.4M; diluted EPS was $0.09 as operating income fell to $47.3M amid weak Epoxy and commercial Winchester, partially offset by stronger CAPV pricing and volumes .
  • Management guided Q1 2025 adjusted EBITDA to $150–$170M and flagged sequentially lower CAPV volumes, continued EDC pricing pressure, and slightly lower Winchester results due to ongoing retail destocking; ECU values expected roughly flat sequentially .
  • Strategic moves: pilot entry into U.S. PVC resin via EDC tolling beginning Q1 2025 (to upgrade EDC value and expand chlorine optionality) and definitive agreement to acquire AMMO, Inc.’s assets ($75M purchase; $40M synergy target; $15–$20M first-year EBITDA accretion) .
  • Liquidity remains solid with ~$1.2B available; net debt ended Q4 at $2.67B and net debt/adjusted EBITDA at 3.1x; ~1.0M shares repurchased in Q4 and 5.9M in 2024 for $300.3M .
  • Consensus estimates from S&P Global were unavailable at the time of request due to access limits; expect estimate revisions to reflect PVC pilot ramp, Epoxy anti-dumping tailwinds, and Winchester’s near-term headwinds (see Estimates Context).

What Went Well and What Went Wrong

What Went Well

  • CAPV sales and segment earnings improved YoY; sales rose to $953.7M and segment earnings to $75.2M on higher pricing and lower raw material and operating costs, despite $16.9M Hurricane Beryl costs .
  • Q4 adjusted EBITDA of $193.4M landed above the mid-December “closer to $170M” indication due to a ~$10M tailwind from lower share price and ~$8M lower-than-expected Hurricane Beryl spend; management emphasized disciplined operating rates and value-first strategy .
  • Winchester’s military demand (domestic and international) remained strong; commercial headwinds were partially offset by military project revenue and White Flyer clay targets strength .

What Went Wrong

  • Epoxy remained weak with Q4 sales falling to $282.2M and a segment loss of ($27.4)M on lower volumes and pricing; subsidized Asian resin imports continued to challenge U.S. and Europe .
  • Winchester segment earnings declined to $42.0M from $65.4M YoY due to lower commercial shipments and pricing and higher propellant costs, with retailers destocking and softer consumer demand .
  • Gross margin compressed as operating income fell to $47.3M versus $99.0M in Q4 2023; management guided Q1 2025 adjusted EBITDA below Q4 on lower CAPV volumes, EDC headwinds, and Winchester destocking persistence .

Financial Results

Consolidated Performance vs Prior Year and Prior Quarter (GAAP and Non-GAAP)

MetricQ4 2023Q3 2024Q4 2024
Revenue ($USD Millions)$1,614.6 $1,589.5 $1,671.3
Gross Profit ($USD Millions)$183.7 (calc: 1,614.6−1,430.9) $134.5 (calc: 1,589.5−1,455.0) $157.9 (calc: 1,671.3−1,513.4)
Gross Margin (%)11.4% (calc) 8.5% (calc) 9.5% (calc)
Operating Income ($USD Millions)$99.0 $15.5 $47.3
Adjusted EBITDA ($USD Millions)$210.1 $160.3 $193.4
Net Income Attributable ($USD Millions)$52.9 ($24.9) $10.7
Diluted EPS ($USD)$0.43 ($0.21) $0.09

Segment Breakdown

SegmentQ4 2023 Sales ($M)Q3 2024 Sales ($M)Q4 2024 Sales ($M)Q4 2023 Segment IBT ($M)Q3 2024 Segment IBT ($M)Q4 2024 Segment IBT ($M)
Chlor Alkali Products & Vinyls$906.1 $871.6 $953.7 $65.9 $45.3 $75.2
Epoxy$313.1 $285.1 $282.2 ($23.1) ($42.8) ($27.4)
Winchester$395.4 $432.8 $435.4 $65.4 $53.4 $42.0

Balance Sheet & Cash KPIs

KPIQ4 2023Q3 2024Q4 2024
Cash & Equivalents ($M)$170.3 $225.9 $175.6
Net Debt ($M)$2,499.8 $2,663.6 $2,666.6
Net Debt / Adjusted EBITDA (x)1.9 3.0 3.1
Available Liquidity ($B)—~$1.0B ~$1.2B
Share Repurchases—~1.0M shares; $45.4M in Q3 ~1.0M shares; $43.5M in Q4; 5.9M shares; $300.3M in 2024

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EBITDA ($M)Q4 2024$170–$200M (Oct guide) Actual: $193.4 Met; within range
Adjusted EBITDA ($M)Q1 2025N/A$150–$170M New guide (lower vs Q4)
CAPV VolumesQ1 2025N/ASequentially lower volumes; ECU values ~flat QoQ New qualitative guide
EDC PricingQ1 2025N/AContinued pricing pressure New qualitative guide
Winchester SegmentQ1 2025N/ASlightly lower vs Q4 (retail destocking; softer consumer demand) New qualitative guide
PVC Pilot via EDC TollingQ1 2025 startAnnounced Dec Investor Day First sales in Q1 2025 Implementation underway
Capital Expenditures ($M)FY 2025N/A$225–$250M (optimize core; $250M+ structural cost reductions by 2028) New
Cash TaxesH1 2025N/A~$80M deferred international tax payment to be paid; above normalized 25–30% rate New
Debt Maturities PlanMid-2025N/A~$100–$110M due; to be paid via revolver (debt-neutral) Clarified
Shareholder ReturnsFY 2025N/AContinue dividends; excess cash flow for buybacks after priorities Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3)Current Period (Q4)Trend
Chlor Alkali demand/pricingQ2: Seasonal improvement; still lower caustic pricing YoY . Q3: Caustic slowly improving; seasonal Q4 demand lower; hurricane headwinds [$135M FY impact] ECU values ~flat QoQ; lower Q1 volumes due to turnaround, customer weather impacts, and discipline Stabilizing values; near-term volumes lower; pricing floor emerging
EDC & PVC strategyQ2: Freeport disruptions from Beryl; VCM restart pending . Q3: Expect Q4 Beryl residual ~$25M Enter U.S. PVC resin via EDC tolling; first shipments received; first sales in Q1 2025 Strategic optionality expanding; EDC headwinds continue
Epoxy market and tradeQ2: Sequential margin improvement; restructuring benefits . Q3: Epoxy weak; Beryl added $32.7M headwind Weak demand; subsidized Asian imports; expect U.S./EU antidumping decisions H1; pricing momentum modest Potential policy tailwind H1; gradual improvement from trough
Winchester demandQ2: Higher military; commercial softer; propellant costs up . Q3: Retail destocking; Q4 seasonally weakest Military strong; commercial destocking persists; Q1 slightly lower; AMMO assets acquisition for specialty calibers Near-term headwinds; medium-term mix/efficiency tailwinds
Capital allocationQ2/Q3: Ongoing buybacks; investment-grade balance sheet 2024 buybacks ~5% shares; target net debt flat by YE 2025 after taxes/capex; prioritize shareholder returns Discipline maintained
Natural gas hedging—Rolling 4-quarter hedge; Q1 gas/power costs flattish vs Q4 Cost stability supportive

Management Commentary

  • “We will stay focused on optimizing our core businesses through our value-first commercial approach… We remain confident in our ability to generate higher trough-level earnings and cash flow despite the difficult environment.”
  • “We expect our first quarter 2025 adjusted EBITDA to be in the range of $150 million to $170 million… we will continue Olin’s disciplined capital allocation strategy to prioritize share repurchases.”
  • “We announced our intention to enter the U.S. PVC market via a tolling partnership… This has key strategic benefits, including upgrading a portion of our significant EDC capacity and unlocking incremental caustic soda volume.”
  • “Winchester entered into a definitive agreement to acquire AMMO, Inc.’s small caliber ammunition manufacturing assets… fully realized synergy benefit of $40 million within 3 years; <2x multiple once integrated.”
  • “We laid out our value creation strategy… achieve >$250M cost reductions by 2028; $20–$30M savings in 2025.”

Q&A Highlights

  • Q4 EBITDA beat vs the mid-December indication was driven by ~$10M from lower share price (mark-to-market comp) and ~$8M lower Hurricane Beryl spending than expected .
  • CAPV Q1 volumes lower given turnaround timing and customer weather issues (Enzo), but ECU values expected flat; caustic demand remains firm across pulp/paper and alumina export markets .
  • Epoxy trade actions: expect U.S. final and EU provisional anti-dumping decisions H1; anticipate pricing support and potential rationalization of uncompetitive Asian capacity .
  • Winchester: pricing actions continue to pass through higher input costs; commercial retail inventories to normalize in H2 2025; military demand to strengthen as Lake City project progresses .
  • Capital/cash: ~$80M deferred international tax payment in H1; ~ $100–$110M debt due handled by revolver; net debt targeted flat by YE 2025 .

Guidance Changes

(see detailed table above)

Estimates Context

  • Wall Street consensus (S&P Global) EPS and revenue for Q4 2024 were unavailable at the time of this request due to data access limits. As a result, explicit beat/miss vs consensus cannot be determined in this report. Expect sell-side models to incorporate: Q1 EBITDA guide ($150–$170M), PVC tolling pilot ramp, Epoxy potential anti-dumping tailwinds, Winchester near-term commercial headwinds, and 2025 capex and cash tax implications .
  • Note: Where estimates are not shown, it is due to S&P Global data availability constraints at request time.

Key Takeaways for Investors

  • CAPV resilience continues to underpin the trough: pricing/value discipline and anticipated ECU stability offset near-term volume softness; PVC tolling enhances chlorine optionality and upgrades EDC economics .
  • Epoxy remains a drag, but trade remedies in H1 and feedstock differentials versus Asia could provide pricing support and drive capacity rationalization tailwinds over the medium term .
  • Winchester’s near-term commercial headwinds should ease into H2 2025; AMMO asset acquisition improves specialty caliber mix, efficiency, and synergy capture ($40M target within 3 years) .
  • Cash discipline intact: $1.2B liquidity, revolving capacity to handle 2025 maturities, and prioritized buybacks; be mindful of H1 cash tax ($80M) and capex ramp ($225–$250M) that temporarily lift net debt before year-end normalization .
  • Trading setup: Near-term catalysts include Q1 print vs $150–$170M EBITDA guide, initial PVC sales execution, Epoxy anti-dumping decisions, and Winchester acquisition close; watch caustic export pricing floor and EDC pressure as key variables for CAPV .
  • Medium-term thesis: Structural cost reduction (> $250M by 2028), chlorine value chains (PVC/bleach initiatives), and Winchester bolt-ons support margin recovery and higher trough earnings as cycle normalizes .