Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)



☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-1070

Olin Corporation

(Exact name of registrant as specified in its charter)



Virginia	13-1872319
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)



190 Carondelet Plaza,	Suite 1530,	Clayton,	MO	63105
(Address of principal executive offices)				(Zip Code)

(314) 480-1400

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Exchange Act:



Title of each class:	Trading symbol:	Name of each exchange on which registered:
Common Stock, $1.00 par value per share	OLN	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of September 30, 2020, 157,862,051 shares of the registrant’s common stock were outstanding.

Table of Contents



TABLE OF CONTENTS FOR FORM 10-Q		Page
Part I — Financial Information		3
Item 1.	Financial Statements	3
	Condensed Balance Sheets	3
	Condensed Statements of Operations	4
	Condensed Statements of Comprehensive Income (Loss)	5
	Condensed Statements of Shareholders’ Equity	6
	Condensed Statements of Cash Flows	8
	Notes to Condensed Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
	Business Background	30
	Executive Summary	31
	Consolidated Results of Operations	33
	Segment Results	36
	Outlook	39
	Environmental Matters	40
	Legal Matters and Contingencies	41
	Liquidity, Investment Activity and Other Financial Data	42
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	48
Item 4.	Controls and Procedures	49
	Cautionary Statement Regarding Forward-Looking Statements	50
Part II — Other Information		52
Item 1.	Legal Proceedings	52
Item 1A.	Risk Factors	52
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	52
Item 3.	Defaults Upon Senior Securities	52
Item 4.	Mine Safety Disclosures	53
Item 5.	Other Information	53
Item 6.	Exhibits	53
SIGNATURES		54

Table of Contents

Part I — Financial Information

Item 1. Financial Statements.

OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES

Condensed Balance Sheets

(In millions, except per share data)

(Unaudited)



	September 30, 2020			December 31, 2019			September 30, 2019
Assets
Current assets:
Cash and cash equivalents	$	282.7		$	220.9		$	177.4
Receivables, net	714.9			760.4			849.9
Income taxes receivable	22.0			13.9			17.5
Inventories, net	608.4			695.7			700.7
Other current assets	44.5			23.1			24.1
Total current assets	1,672.5			1,714.0			1,769.6
Property, plant and equipment (less accumulated depreciation of $3,602.4, $3,268.1 and $3,112.4)	3,179.8			3,323.8			3,367.0
Operating lease assets, net	376.0			377.8			314.6
Deferred income taxes	36.3			35.3			30.3
Other assets	1,177.0			1,169.1			1,170.1
Intangible assets, net	404.9			448.1			461.9
Goodwill	1,420.1			2,119.7			2,119.1
Total assets	$	8,266.6		$	9,187.8		$	9,232.6
Liabilities and Shareholders’ Equity
Current liabilities:
Current installments of long-term debt	$	1.2		$	2.1		$	1.1
Accounts payable	614.7			651.9			647.7
Income taxes payable	14.2			19.8			9.8
Current operating lease liabilities	76.2			79.3			71.2
Accrued liabilities	335.8			329.1			347.4
Total current liabilities	1,042.1			1,082.2			1,077.2
Long-term debt	3,959.5			3,338.7			3,339.0
Operating lease liabilities	305.0			303.4			248.2
Accrued pension liability	766.5			797.7			622.4
Deferred income taxes	410.9			454.5			515.5
Other liabilities	313.5			793.8			765.6
Total liabilities	6,797.5			6,770.3			6,567.9
Commitments and contingencies
Shareholders’ equity:
Common stock, $1.00 par value per share: authorized, 240.0 shares; issued and outstanding, 157.9, 157.7 and 159.7 shares	157.9			157.7			159.7
Additional paid-in capital	2,129.9			2,122.1			2,128.6
Accumulated other comprehensive loss	(728.2		)	(803.4		)	(672.7		)
Retained earnings (accumulated deficit)	(90.5		)	941.1			1,049.1
Total shareholders’ equity	1,469.1			2,417.5			2,664.7
Total liabilities and shareholders’ equity	$	8,266.6		$	9,187.8		$	9,232.6

The accompanying notes to condensed financial statements are an integral part of the condensed financial statements.

Table of Contents

OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES

Condensed Statements of Operations

(In millions, except per share data)

(Unaudited)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Sales	$	1,437.6		$	1,576.6		$	4,103.9		$	4,722.9
Operating expenses:
Cost of goods sold	1,307.4			1,357.6			3,917.3			4,168.6
Selling and administration	112.7			110.8			309.1			314.8
Restructuring charges	1.3			4.9			4.7			12.7
Goodwill impairment	699.8			—			699.8			—
Other operating (expense) income	(0.2		)	0.1			(0.1		)	0.3
Operating (loss) income	(683.8		)	103.4			(827.1		)	227.1
Interest expense	74.6			63.9			207.1			179.2
Interest income	0.1			0.2			0.4			0.7
Non-operating pension income	4.9			4.1			14.4			12.2
Other income	—			—			—			11.2
Income (loss) before taxes	(753.4		)	43.8			(1,019.4		)	72.0
Income tax (benefit) provision	(16.6		)	(0.4		)	(82.5		)	6.1
Net (loss) income	$	(736.8	)	$	44.2		$	(936.9	)	$	65.9
Net (loss) income per common share:
Basic	$	(4.67	)	$	0.27		$	(5.94	)	$	0.40
Diluted	$	(4.67	)	$	0.27		$	(5.94	)	$	0.40
Average common shares outstanding:
Basic	157.9			161.9			157.8			163.7
Diluted	157.9			162.8			157.8			164.5

The accompanying notes to condensed financial statements are an integral part of the condensed financial statements.

Table of Contents

OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES

Condensed Statements of Comprehensive Income (Loss)

(In millions)

(Unaudited)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Net (loss) income	$	(736.8	)	$	44.2		$	(936.9	)	$	65.9
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments, net	17.0			(15.7		)	16.2			(20.7		)
Unrealized gains (losses) on derivative contracts, net	19.8			(2.5		)	31.9			(17.9		)
Amortization of prior service costs and actuarial losses, net	8.9			5.9			27.1			16.9
Total other comprehensive income (loss), net of tax	45.7			(12.3		)	75.2			(21.7		)
Comprehensive (loss) income	$	(691.1	)	$	31.9		$	(861.7	)	$	44.2

The accompanying notes to condensed financial statements are an integral part of the condensed financial statements.

Table of Contents

OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES

Condensed Statements of Shareholders’ Equity

(In millions, except per share data)

(Unaudited)



	Nine Months Ended September 30, 2020
	Common Stock			Additional Paid-In Capital			Accumulated Other Comprehensive Loss			Retained Earnings (Accumulated Deficit)			Total Shareholders’ Equity
	Shares Issued	Par Value		Additional Paid-In Capital			Accumulated Other Comprehensive Loss			Retained Earnings (Accumulated Deficit)			Total Shareholders’ Equity
Balance at January 1, 2020	157.7	$	157.7	$	2,122.1		$	(803.4	)	$	941.1		$	2,417.5
Net loss	—	—		—			—			(80.0		)	(80.0		)
Other comprehensive loss	—	—		—			(17.7		)	—			(17.7		)
Dividends paid:
Common stock ($0.20 per share)	—	—		—			—			(31.5		)	(31.5		)
Common stock issued for:
Stock options exercised	—	—		0.5			—			—			0.5
Other transactions	0.1	0.1		2.8			—			—			2.9
Stock-based compensation	—	—		(2.6		)	—			—			(2.6		)
Balance at March 31, 2020	157.8	157.8		2,122.8			(821.1		)	829.6			2,289.1
Net loss	—	—		—			—			(120.1		)	(120.1		)
Other comprehensive income	—	—		—			47.2			—			47.2
Dividends paid:
Common stock ($0.20 per share)	—	—		—			—			(31.6		)	(31.6		)
Common stock issued for:
Other transactions	0.1	0.1		0.3			—			—			0.4
Stock-based compensation	—	—		3.9			—			—			3.9
Balance at June 30, 2020	157.9	157.9		2,127.0			(773.9		)	677.9			2,188.9
Net loss	—	—		—			—			(736.8		)	(736.8		)
Other comprehensive income	—	—		—			45.7			—			45.7
Dividends paid:
Common stock ($0.20 per share)	—	—		—			—			(31.6		)	(31.6		)
Stock-based compensation	—	—		2.9			—			—			2.9
Balance at September 30, 2020	157.9	$	157.9	$	2,129.9		$	(728.2	)	$	(90.5	)	$	1,469.1

The accompanying notes to condensed financial statements are an integral part of the condensed financial statements.

Table of Contents

OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES

Condensed Statements of Shareholders’ Equity

(In millions, except per share data)

(Unaudited)



	Nine Months Ended September 30, 2019
	Common Stock					Additional Paid-In Capital			Accumulated Other Comprehensive Loss			Retained Earnings			Total Shareholders’ Equity
	Shares Issued		Par Value			Additional Paid-In Capital			Accumulated Other Comprehensive Loss			Retained Earnings			Total Shareholders’ Equity
Balance at January 1, 2019	165.3		$	165.3		$	2,247.4		$	(651.0	)	$	1,070.5		$	2,832.2
Lease accounting adoption adjustment	—		—			—			—			11.2			11.2
Net income	—		—			—			—			41.7			41.7
Other comprehensive loss	—		—			—			(5.9		)	—			(5.9		)
Dividends paid:
Common stock ($0.20 per share)	—		—			—			—			(33.0		)	(33.0		)
Common stock repurchased and retired	(0.6	)	(0.6		)	(12.6		)	—			—			(13.2		)
Common stock issued for:
Stock options exercised	0.1		0.1			1.3			—			—			1.4
Other transactions	0.1		0.1			0.3			—			—			0.4
Stock-based compensation	—		—			2.8			—			—			2.8
Balance at March 31, 2019	164.9		164.9			2,239.2			(656.9		)	1,090.4			2,837.6
Net loss	—		—			—			—			(20.0		)	(20.0		)
Other comprehensive loss	—		—			—			(3.5		)	—			(3.5		)
Dividends paid:
Common stock ($0.20 per share)	—		—			—			—			(32.7		)	(32.7		)
Common stock repurchased and retired	(0.6	)	(0.6		)	(12.9		)	—			—			(13.5		)
Common stock issued for:
Stock options exercised	—		—			0.1			—			—			0.1
Other transactions	—		—			0.9			—			—			0.9
Stock-based compensation	—		—			1.9			—			—			1.9
Balance at June 30, 2019	164.3		164.3			2,229.2			(660.4		)	1,037.7			2,770.8
Net income	—		—			—			—			44.2			44.2
Other comprehensive loss	—		—			—			(12.3		)	—			(12.3		)
Dividends paid:
Common stock ($0.20 per share)	—		—			—			—			(32.8		)	(32.8		)
Common stock repurchased and retired	(4.8	)	(4.8		)	(104.1		)	—			—			(108.9		)
Common stock issued for:
Other transactions	0.2		0.2			1.6			—			—			1.8
Stock-based compensation	—		—			1.9			—			—			1.9
Balance at September 30, 2019	159.7		$	159.7		$	2,128.6		$	(672.7	)	$	1,049.1		$	2,664.7

The accompanying notes to condensed financial statements are an integral part of the condensed financial statements.

Table of Contents

OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES

Condensed Statements of Cash Flows

(In millions)

(Unaudited)



	Nine Months Ended September 30,
	2020			2019
Operating Activities
Net (loss) income	$	(936.9	)	$	65.9
Adjustments to reconcile net (loss) income to net cash and cash equivalents provided by (used for) operating activities:
Goodwill impairment	699.8			—
Gain on disposition of non-consolidated affiliate	—			(11.2		)
Stock-based compensation	7.1			8.9
Depreciation and amortization	425.1			460.3
Deferred income taxes	(61.6		)	(11.0		)
Qualified pension plan contributions	(1.3		)	(13.2		)
Qualified pension plan income	(8.7		)	(6.9		)
Change in:
Receivables	57.0			(77.4		)
Income taxes receivable/payable	(14.0		)	(24.1		)
Inventories	90.5			2.5
Other current assets	(7.2		)	4.9
Accounts payable and accrued liabilities	52.9			14.2
Other assets	(4.1		)	(4.8		)
Other noncurrent liabilities	0.9			12.9
Other operating activities	5.8			(4.4		)
Net operating activities	305.3			416.6
Investing Activities
Capital expenditures	(223.3		)	(271.8		)
Payments under ethylene long-term supply contracts	(461.0		)	—
Payments under other long-term supply contracts	(75.8		)	—
Proceeds from disposition of non-consolidated affiliate	—			20.0
Net investing activities	(760.1		)	(251.8		)
Financing Activities
Long-term debt:
Borrowings	1,212.5			825.0
Repayments	(591.8		)	(744.1		)
Common stock repurchased and retired	—			(135.6		)
Stock options exercised	0.5			1.5
Dividends paid	(94.7		)	(98.5		)
Debt issuance costs	(9.9		)	(14.4		)
Net financing activities	516.6			(166.1		)
Effect of exchange rate changes on cash and cash equivalents	—			(0.1		)
Net increase (decrease) in cash and cash equivalents	61.8			(1.4		)
Cash and cash equivalents, beginning of year	220.9			178.8
Cash and cash equivalents, end of period	$	282.7		$	177.4
Cash paid for interest and income taxes:
Interest, net	$	179.3		$	135.2
Income taxes, net of refunds	$	(2.5	)	$	47.6
Non-cash investing activities:
Decrease (increase) in capital expenditures included in accounts payable and accrued liabilities	$	46.2		$	(4.6	)

The accompanying notes to condensed financial statements are an integral part of the condensed financial statements.

Table of Contents

OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES

Notes to Condensed Financial Statements

(Unaudited)

NOTE 1. DESCRIPTION OF BUSINESS

Olin Corporation (Olin) is a Virginia corporation, incorporated in 1892, having its principal executive offices in Clayton, MO. We are a manufacturer concentrated in three business segments: Chlor Alkali Products and Vinyls, Epoxy and Winchester. The Chlor Alkali Products and Vinyls segment manufactures and sells chlorine and caustic soda, ethylene dichloride (EDC) and vinyl chloride monomer, methyl chloride, methylene chloride, chloroform, carbon tetrachloride, perchloroethylene, trichloroethylene and vinylidene chloride, hydrochloric acid, hydrogen, bleach products and potassium hydroxide. The Epoxy segment produces and sells a full range of epoxy materials, including allyl chloride, epichlorohydrin, liquid epoxy resins, solid epoxy resins and downstream products such as differentiated epoxy resins and additives. The Winchester segment produces and sells sporting ammunition, reloading components, small caliber military ammunition and components, and industrial cartridges.

We have prepared the condensed financial statements included herein, without audit, pursuant to the rules and regulations of the United States (U.S.) Securities and Exchange Commission (SEC). The preparation of the financial statements requires estimates and assumptions that affect amounts reported and disclosed in the financial statements and related notes. In our opinion, these financial statements reflect all adjustments (consisting only of normal accruals), which are necessary to present fairly the results for interim periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations; however, we believe that the disclosures are appropriate. We recommend that you read these condensed financial statements in conjunction with the financial statements, accounting policies and the notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2019. Certain reclassifications were made to prior year amounts to conform to the 2020 presentation.

NOTE 2. RESTRUCTURING CHARGES

On December 11, 2019, we announced that we had made the decision to permanently close a chlor alkali plant with a capacity of 230,000 tons and our vinylidene chloride (VDC) production facility, both in Freeport, TX. The VDC facility was closed during fourth quarter 2020. The related chlor alkali plant closure is expected to be completed in second quarter 2021. For the three and nine months ended September 30, 2020, we recorded pretax restructuring charges of $0.3 million and $0.8 million, respectively, for facility exit costs related to these actions. We expect to incur additional restructuring charges through 2024 of approximately $50 million related to these actions.

On December 10, 2018, we announced that we had made the decision to permanently close the ammunition assembly operations at our Winchester facility in Geelong, Australia. Subsequent to the facility’s closure, product for customers in the region will be sourced from Winchester manufacturing facilities located in the United States. For the three and nine months ended September 30, 2019, we recorded pretax restructuring charges of $0.1 million and $0.4 million, respectively, for facility exit costs and lease and other contract termination costs related to this action. For the nine months ended September 30, 2019, we recorded additional pretax restructuring charges of $1.4 million for employee severance and related benefit costs related to our Winchester operations.

On March 21, 2016, we announced that we had made the decision to close a combined total of 433,000 tons of chlor alkali capacity across three separate locations. Associated with this action, we have permanently closed our Henderson, NV chlor alkali plant with 153,000 tons of capacity and have reconfigured the site to manufacture bleach and distribute caustic soda and hydrochloric acid. Also, the capacity of our Niagara Falls, NY chlor alkali plant has been reduced from 300,000 tons to 240,000 tons and the chlor alkali capacity at our Freeport, TX facility was reduced by 220,000 tons. This 220,000 ton reduction was entirely from diaphragm cell capacity. For the three months ended September 30, 2020 and 2019, we recorded pretax restructuring charges of $1.0 million and $4.8 million, respectively, for facility exit costs, employee severance and related benefit costs and lease and other contract termination costs related to these actions. For the nine months ended September 30, 2020 and 2019, we recorded pretax restructuring charges of $3.9 million and $10.9 million, respectively, for facility exit costs, employee severance and related benefit costs and lease and other contract termination costs related to these actions. We expect to incur additional restructuring charges through 2021 of approximately $4 million related to these capacity reductions.

Table of Contents

The following table summarizes the 2020 and 2019 activities by major component of these restructuring actions and the remaining balances of accrued restructuring costs as of September 30, 2020 and 2019:



	Employee severance and related benefit costs			Lease and other contract termination costs			Facility exit costs			Total
	($ in millions)
Balance at January 1, 2019	$	1.5		$	6.0		$	0.7		$	8.2
Restructuring charges:
First quarter	1.4			0.1			2.5			4.0
Second quarter	0.4			0.2			3.2			3.8
Third quarter	0.3			0.1			4.5			4.9
Amounts utilized	(3.4		)	(1.5		)	(10.8		)	(15.7		)
Balance at September 30, 2019	$	0.2		$	4.9		$	0.1		$	5.2
Balance at January 1, 2020	$	—		$	3.1		$	—		$	3.1
Restructuring charges:
First quarter	0.1			0.1			1.5			1.7
Second quarter	—			—			1.7			1.7
Third quarter	—			0.3			1.0			1.3
Amounts utilized	(0.1		)	(1.0		)	(4.2		)	(5.3		)
Balance at September 30, 2020	$	—		$	2.5		$	—		$	2.5

The following table summarizes the cumulative restructuring charges of these restructuring actions by major component through September 30, 2020:

Chlor Alkali Products and Vinyls

Winchester

Total

Freeport

Capacity Reductions

($ in millions)

Write-off of equipment and facility

58.9