Q2 2022 Olin Corp Earnings Call

Good morning, and welcome to Olin Corporation second quarter 2022 earnings conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key.

Followed by zero.

Following today's brief opening comments, there will be an opportunity to ask questions.

To ask a question you May Press Star then one on your Touchtone phone.

To withdraw your question. Please press Star then two please note. This event is being recorded I would now like to turn the conference over to Steve Keenan Olin's Director of Investor Relations. Please go ahead Steve.

Thank you Andrew.

Good morning, everyone and thank you for joining us today before we begin let me remind you that this discussion along with the associated slides and the question and answer session that follows will include statements regarding estimates or expectations of future performance.

Please note that these are forward looking statements and that actual results could differ materially from those projected.

Some of the factors that could cause actual results to differ from our projections are described without limitations in the risk factors section of our most recent Form 10-K.

And then yesterday's second quarter earnings press release.

A copy of today's transcript and slides will be available on our website in the investors section under past events.

Our earnings press release, and other financial data and information.

Billable under press releases.

With me. This morning are Scott Sutton, CEO , and Todd Slater Olin's CFO .

Scott will begin with some brief remarks, after which we'll be happy to take your questions I'll now turn the call over to Scott.

Yeah, Thanks, Steve and good morning to everybody.

Owen team did a great job delivering the highest quarterly EBITDA in our history and delivery in the fourth quarter in a row, where EBITDA was $700 million plus or minus even though global economic conditions decline.

We did what we said we would do we ran our model of leadership and accelerated our reduction of all that share count without adding to our investment grade balance sheet.

Still many imagine us all the way down and the earnings and free cash flow got or any imminent recession.

I will solely focus my remarks on what that looks like in a recession and then on Y O N as a good investment in any of that.

So, let's go back and revisit the recession EBITDA and free cash flow slide from our first quarter earnings call show in your slide number four.

And on the left hand side of the slide from our 2.8 billion dollar EBITDA 12 month run rate. It is certainly not impossible that the CATV business experiences lower longer term operating rate reductions as we focus on maintaining the value of our products through a recession.

The associated percent drop in CIP, the EBITDA could be like what are our proxy business is experiencing.

The combination of the two business performance reduction, resulting in a $1 billion EBITDA drop.

The right hand side of the slide seems to be more interesting to most oh and followers.

Starting from the 2020, EBITDA result of $636 million.

Three line items that we don't expect to repeat in a recession under the new model are low chlorine pricing selling cash negative EDC and Winchester operating in a significantly smaller demand structure.

All three line items seem to be well accepted.

Fourth upside while line item called other structural change need some clarification there.

Included in that upside line item are the material ones.

Fixed cost reductions for the closure of 865000 EC you tons of core alkali production.

And updated epichlorohydrin positioning.

Maintaining part of the improved apostrophe pricing under our new model of value and improve do you see them contract arrangement and gains from multiple alliances.

In this recession scenario, oh, and still generate $7 per share or more of levered free cash flow.

In fact, we welcome the opportunity to further reduce our share count right through the middle of a recession.

Obviously, we're bullish on OLED.

On slide number five shows why.

We're the leader in every one of our businesses and we run a model that looks around corners. So we can position for the future today. So said differently, we take difficult actions early in the cycle.

Part of that positioning is to temporarily reduced participation in markets with poor future quality indicators are curtailments in our proxy and associated upstream to Freeport in Brazil, as well as in EDC at Freeport continue today.

Part C and D C representing weakness all of course.

Accordingly, we match our market participation to the weak side of the ECS. This is a fundamental change to our positioning from prior periods.

Additionally, we expect our current title epoxy and associated upstream again and start in Germany late in the third quarter in part due to the European energy situations.

Our complete company strategy change from heavy volume to nimble value along with our currently understated equity valuation positions us to buy up to 20% of our outstanding shares at a year, even in a weak economic cycle.

Our new $2 billion share repurchase program reflects our board's confidence in Owens future earnings and cash flow generation with our solid balance sheet and strong cash flow. The company is well positioned to execute on this attractive opportunity to invest.

So that concludes my opening remarks, and Andrew we're now ready to take questions.

We will now begin the question and answer session.

I ask a question you May press Star then one on your Touchtone phone.

If you are using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.

At this time, we will pause momentarily to assemble our roster.

The first question comes from Hassan Ahmed with Alembic Global. Please go ahead.

Good morning, Scott I'm wondering you know very helpful. Sides. Obviously, you know, particularly are you know you guys brought it up in Q1 and again in Q2 under recession side of things look as I take a look at your Q3 guidance and what's implied for Q4, you know the Q4 sort of.

Implied guidance range seems to be an EBITDAR of 426 20 million right and if I take the lower end of that guidance range for Q4 again for 'twenty one.

Annualize that that's you know slightly north of 1.6 billion, which kind of falls on the lower end of your trough guidance range of one five to 2 billion. So my question really is what are you guys seeing in your order books are due to I guess imply that sort of guidance for Q4.

I mean are you seeing some sort of the dominant.

Imminent recession or is that you guys being conservative.

As it begins to be last quarter, if the yen.

Yeah, I mean, thanks Hassan let me look at Q4 is a bit different than some of the other quarters. We traditionally you know face some slowdowns and then we do some purpose all things like really closed out Winchester for a couple of weeks at the end of the year. So Nat.

Really Q4 is really one of our lower quarters I will just say that I know maybe it's the essence of that question is trying to get to 2023 and the outlook there and I'll. Just say you know, we're taking a cautionary approach air and we are.

We're basing our outlook and our plans on some sort of a recession that seems to be materializing and you know, we're seeing some weaker demand, particularly in the vinyls chain and continuing in our policy.

Very helpful Scott and as a follow up you know could you just give us an update on the progress of <unk>.

Some of the growth vectors that you guys identified earlier you know in particular, you know on the on the sort of B B C. Joint venture side of things you know companies like <unk> that have come out talk about potentially sort of considering sort of joint venturing in in in the BDC domain. So so any updates on that would be helpful.

Yeah sure.

I mean, I would say the one that is furthest along and we're moving into the phase of regulatory approval.

<unk> is our blue water joint venture with Mitsui, where we'd be you know basically the largest manager of liquidity in the world. So we need another six months or so probably to get that that operational.

Terms of the buy.

Vinyls venture.

We continue to work on that Hassan and we're making progress you know, we probably need a couple of quarters before we get to something that we can announce there.

Very helpful. Scott. Thank you so much.

Sure.

The next question comes from Jeff Zekauskas with Jpmorgan. Please go ahead.

Thanks very much.

Can you talk about the state of the policy market.

What your policy volumes were like in the second quarter relative to first.

Yeah, Yeah yeah.

Hey, Jeff Yeah, I mean in a hot see our volumes in the second quarter actually declined from the first quarter. In fact, we ran the lowest volume quarter in the history of the business.

The Big driver there, Jeff is China, I mean, China is at least 50% of the world's consumption of a pace.

Assumption has declined much more than supply decline and essentially China has slipped its trade flows has effectively become.

Net exporter of part C and epichlorohydrin in a lot of that material is moving into Asia.

And consequently, all of that material that has already produced in other parts of Asia is moving into Europe and into North America. Now. We all know this is a temporary situation, but it is incredibly dramatic and <unk>.

Secondly, we're running that business you can think of it at 50% sort of asset utilization and we're taking those difficult choices and making those asset and market moves to make sure. We preserve value through this time it just really doesn't.

Get much worse that yes. This is sort of beyond what you would expect out of a recession when you combine the European situation as well.

Hey, good and can you talk a little bit about.

Caustic demand.

Whether it's it seems to be holding up.

And sort of the differences between you know caustic.

Prices or tightness in the United States in caustic prices or tightness in Asia.

Yeah, I think demand is is okay, Jeff I mean, I think the more interesting part of that whole discussion goes all the way back through the EC you and back to the Vinyls chain you know, what's what's happening with P. B C pricing declining.

<unk> PVC demand decline.

Declining you know the key PVC producers are sort of in this twisted between world right now where caustic values are very good you know in part to olin's actions and so they're sort of running their businesses.

Take advantage of that and putting even more finals into the marketplace, which is further driving down price that can't hold very long pretty soon you know that will flip to where vinyls production is reduced and then caustic supply demand fundamentals get.

Even better than they are today and that's our expectation.

Okay, great. Thank you so much.

Sure.

The next question comes from let's see yeah for malls with Keybanc capital markets. Please go ahead.

Thanks.

Good morning, everyone. Scott can you just talk about volumes for.

I guess, the chloro vinyls business in the third quarter versus sector, what what's the ballpark how much is it going to be down.

Oh yeah.

Yeah, Yeah, Hey, Alexia.

So you've seen the announcement that we made of course, where we said we weren't going to curtail R. E. D. C production and of course that has an upstream impact on our <unk> production as well at our Freeport, Texas facility and so you know.

Our production is going to be significantly reduced our market participation doesn't necessarily reduce as much as our production declines because we do go out and access liquidity that's available in the market place. So were taken two steps there.

Same time, one we're reducing our production to where accessing liquidity that is available in the market place still our participation is lower than it than it was in first quarter and fourth quarter of last year and you know we're doing.

In order to support the value of our U D. C. So it's down so that's the one item on our core alkali chain, you know where were working to preserve value as much as we can but still prices decline.

Okay. Thanks, a lot for that Scott.

$2 billion buyback program, how are you thinking about the timing something between 12 or 24 months and also would you consider increasing leverage to kind of hit that buyback number or or this was entirely from available free cash flow.

Yeah, I mean, I'll, let Josh I'll start with the back of that question first and look at our intention is to you know buy shares out of our lever free cash flow. So you know we take as much of that as we can and repurchase.

<unk> shares so knowing that that is generally our intention.

If you think about the first half of this year, we probably bought back about 8% of our outstanding shares and you should expect us to do something similar to that in the back half of this year and then we will continue on into 2023. So that's the kind of run rate you might.

C.

Great. Thanks, a lot.

Yeah.

The next question comes from Arun Viswanathan with RBC. Please go ahead.

Great. Thanks. So you you also mentioned I guess in it.

Uh huh.

But you know you'd likely see a reduction in rates are at shot as well and so does that mean that you kind of flip back and increase the rates at Freeport them could you just update on how you're thinking about managing through this higher energy cost environment and in some of those demand trends that you're seeing there.

Yeah, Yeah sure I mean, we are in and if we take that action later here in the in the third quarter I mean will balance some of that with you know ramping up production at our other sites, but still in this time period, this third quarter and move.

And our fourth quarter, I mean, you're going to see us run our overall system in our proxy still at very very low rates as we reduce our participation.

Lots of lots of areas of that that market are still pretty pretty poor quality.

Yeah.

Thanks, just.

A quick follow up on you know you mentioned that China is flip their trade flows are in and the proxy I think in and just curious.

If you're concerned at all about that as it relates to caustic or or are other Korean products just because.

You know if your if your outlook does call for you know potentially increase caustic margins.

Or you see your margins you know.

Because of reductions in operating rates.

Flooring weakness.

What you know do.

Do you expect more exports to wind up on the west coast or the East coast here because the returns are so great and or is that is that unlikely.

And then I guess just on that note.

Are you satisfied I guess with that the 865000 tons of closures is does that kind of take care of all of your high cost capacity or would you expect to take more action on that side. Thanks.

Yeah sure I mean, what what you described theres already been happening I mean with the slowdown generally in China demand relative to production, we've already seen additional caustic exports out of China, just like Theres been a lot of extra P V.

See exports as well so that has been going on in our model is already adapted to offset that exposure and we've seen those flows coming here and we're working around those flows and still we go out in certain cases.

Purchased some liquidity you know out of the global market space and maybe move it to a different area I mean look with with regard to the 865000 Acu times and just as a reminder, that 865000 Acu times you know included shutting down the road.

Meaning 200000 tons of E. C. U capacity that is diaphragm based in Mcintosh, Alabama, and we have already accomplished that in fact, we pulled it forward. So all of the diaphragm capacity is down and.

In Macintosh, Alabama.

We'll have to see it where we're satisfied with that I mean, certainly that's made a difference in our ability to be nimble and drop for value, but you know that that that number has taken us to a reasonable point for now theres always other options.

Okay. Thanks.

The next question comes from Mike Sison with Wells Fargo. Please go ahead.

Hey, guys.

So just in terms of the third quarter if you.

Got the volume that you're willing to walk away from whats your EBITDA be higher or lower or about the same.

Hey, Mike This is Scott So let me make sure I understand your question, you're saying if we were to get the volume that we are instead, making proactive decisions to walk away from what would be the.

Oh come on EBITDA relative to what we forecasted.

Yeah.

Yeah, Yeah, well look I mean, we're aware we're purposely you know not participating for a reason right. So if we were to go out and grab you know that that volume it would be exactly counter to what we're trying.

To achieve but it's not impossible that we could accomplish that and have significantly higher EBITDA in the quarter, but it wouldn't be the right thing to do for 2023 and the back half of this year.

Got it got it Okay and then.

I guess when I take a look at your E.

S U P. C. I you know continues to go up does that reverse and and where do you think it goes in the second half of the year.

So yeah.

Yeah, I mean look I'll I'll, let Todd Todd Todd I'll comment on this in just a minute you know there's clearly some things. We have you know there is opportunity for pricing to move down. However, you know fundamentally I would say that you know most of our prices are.

Gonna move up so that if you saw a change in that it is likely be predominantly from mix or the impacts of our vinyls chain Todd help help me on that I don't know that.

That's right that's right.

Great. Thank you.

The next question comes from Frank Mitsch with Permian Research. Please go ahead.

Hey, good morning, a nice result, I. It was it was curious on Winchester I saw that you're guiding <unk> to be down due to higher cost typically our Winchester has its best quarter in the third quarter. So does that imply that you basically been running flat out here in the second quarter and so you know there's not much more.

You can get from a volume perspective, and it's really just a function of you know the higher the higher input costs is that how we think about it.

Okay.

Hi, Frank It's Todd Yeah, we would expect that volumes in Q3 will be similar to Q2.

As you get into the demand environment. We're in I think that's how you should expect Winchester to operate again, it's a you know that that's for Winchester is we have a high degree of confidence as you know where you. We had there's a lot of our commodities and so where we have a high degree of confidence or a commodity.

Costs in the third quarter will be higher than it was in the second quarter. So you know that's the headwind that we're facing here.

In the very near term.

Helpful. Thank you and and coming back to coming back to slide four I just want to make sure I understand.

The comment about a relative to today.

If you were to run your assets at 50% chemical assets at 50% for an entire year, we should be thinking about EBITDA and a 1.5 billion is is that a is that how we read that.

Yeah I would.

I would say in the one $5 billion to $2 billion right I mean, if if if.

If the imminent recession.

You know became so bad and lasted that long and we had turned out everything that lull Apple that we would end up somewhere in the one five to 2 billion I mean, if you get that occurred we'd be taken a lot of other actions.

You know pushes upward in that range, but that's the impact that a dramatic move and dramatic actions like that could have on homeaway.

Very helpful. Thank you so much.

Sure.

Okay.

The next question comes from Kevin Mccarthy from vertical research. Please go ahead.

Yes, good morning, Scott, if Germany went to phase three of their energy contingency program. How do you think that would impact supply demand in the markets, where you compete in and by extension Olin.

Yeah Yeah.

Yeah, I mean, there there'd be a direct impact on Olin and then there'd be indirect and tertiary impacts likely so I mean look the direct impact would be somewhat of a negative hit just because of our assets there, but as we've shown recently.

We certainly have the ability to curtail those and still be okay. When you get to the you know the secondary impact its more than likely to increase product values and trade flows that move into and so you're up.

Any increase in the product value of those trade flows is a positive for olin.

Okay I appreciate that and then secondly, I wanted to ask you about caustic soda.

Reising I think in early July you proposed an increase and then if some of the consultant notes are to be believed you.

You doubled the amount of the increase a couple of or a week or two later in mid July .

Is that accurate and if so why did you do that maybe you can elaborate on on what you're seeing in that market today.

Yeah sure Yeah, I mean, I always say, that's generally accurate that we did take that step you know because that product has more more value in today's environment, but what's what's really behind that and driving that is that with the weakness of chlorine derivatives.

And again, you can think of part C. You can think of polyurethane you can think of P. B C and are supporting vinyl intermediates, there with that evolving weakness it essentially changed beside of the E. C U E.

You bet is weaker than the other side. So for many many months the caustic side has been the weaker saw relative deploring of derivatives now chlorine derivatives are the weaker side of ease of use so we have flip flopped.

Our model just over the recent course of.

History, and we've set our market participation on our first order.

Based on that weaker side of EC you being core and a derivatives. So basically concurrently with that we expect an increase in the value of the caustic side and so we've moved our pricing up.

Perfect. Thank you so much.

Sure.

The next question comes from Steve Byrne with Bank of America. Please go ahead.

Thank you just a couple.

Questions regarding the statement about Youre running you could run your assets at 50% rates for a year.

Where would you estimate your operating rates are likely to be in the third quarter.

And can you comment on the significance of the one year freeze as that.

Is there something implicit in running at that rate, but it is.

<unk> is really unsustainable beyond just the the financial and tax.

Yeah sure I mean, you know the only business that we've really provided you know indications are we're running is our parts business and we've said, we're running that business pretty close.

50% operating range I would just say in our C. A P V business that you know, we're well above that level and have plenty of room there.

The only significance into one year as we were trying to demonstrate you know what is the lowest full year EBITDAR that OLED might have.

Sure. So we picked a pretty long recession scenario in other words, one year, where the global economy declined so much that we had to run at that rate every day for our full year, we're trying to be a bit.

Serve it in here, because clearly Owens equity value is driven by the view that under that kind of scenario, our EBITDA must be much lower than where we believe it is so we're just trying to present a compelling case.

That says we are good in a recession and in fact, we can create value via a really good capital allocation right through the middle of that recession. So that's the idea that's behind that 12 month window.

And.

I also wanted to ask you just whether or not you're getting any collective criticisms from the municipal water treatment authorities on the price of chlorine and anything going on there, but it's kind of unusual.

No I wouldn't I wouldn't say that there's anything unusual I think the real issue is that you know chlorine has only been moved up to call. It 50 cents a pound and for the value. It provides and then the importance of the material that you.

Directionally in that market has got to move it toward a dollar a pound. So that's the only criticism. We have is our own that it's undervalued.

Yeah.

Okay. Thank you.

The next question comes from Josh Spector with UBS. Please go ahead.

Hey, guys. This is James Cameron on for Josh.

Yeah.

Further to lower your utilization and shut plants down would there be a significant working capital release.

Well look I mean the.

Working capital release should one.

Occur.

You know, we would likely be at the face or at the initial point of a slowdown that that that's when you would see it it's not necessarily associated with a curtailment or shut down those are generally not related.

Okay. Thank you.

Sure.

The next question comes from Matthew Blair with T. P. H. Please go ahead.

Hey, Good morning, Scott how are you thinking about the global cost curve for these to you in the back half of the year, we've seen a big increase in European natural gas pricing so far in July .

Does that provide some price support for caustic and chlorine or do you expect these demand factors outweigh that.

Yeah Yeah.

Yeah, Yeah. Thanks for the question I mean, generally I, just don't think about it at all.

But the truth I mean, we're focused on the value of V. C use for what they deliver in the market place and in the world, but I mean your point is relevant that you know as the energy complex and other.

Other cost inflation in the world that may be different between the regions. So you're right. We can sort of point at Europe here as that moves up it certainly helps put what I'll call a psychological margin auto world.

More on where the Val U E C use might be so is the trends that are happening are generally only favorable there.

Makes sense and then could we circle back to the Winchester Guide for Q3 M I.

I guess, you know, we're seeing copper and lead prices and they're actually cheaper in July versus the Q2 average so could you walk through exactly what what commodity costs are causing the headwinds in Q3.

Matthew This is Todd.

As you know, we do hedge our commodity cost not just natural gas, but you know copper for when copper and zinc for Winchester for brass and so you know a quarter out we are very heavily hedged if you ever rolling four quarter program, so because of our hedge position.

I mean, you just can't look at the I'll say, the current month or the spot prices in the market and assume that will be off the value of it runs through our P&L. So we again, we do have a high degree of confidence based on our hedges, our commodity costs and other material costs, you're going to be higher than the third.

Quarter than the second.

Sounds good thank you.

The next question comes from.

Castile with Morgan Stanley .

Please go ahead.

Hey, guys. This is Alex on for Angel them I'm, just wondering if bolt on M&A is still in the mix and if so what kind of opportunities are you looking at there and how are valuations trending.

Yeah weak background.

Yeah, Hi, I mean, it's it's definitely part of the mix I mean, when we do think about our capital allocation program. I mean, you know we're going to take.

Take care of our dividend, there's a very limited amount.

Bonds that you know, we'd like to pay by the end of the year, but that's capped at roughly $200 million. Most of that is going to go to a share repurchase there is some opportunistic.

Small bolt on M&A available I'm I'm doubtful that you know there is a high chance that that a lot of that would happen in the back half of this year 2023 is not impossible. What is more likely is that we continue to make progress on some of these along.

It says and joint ventures, which are very low capital endeavors.

And maybe just to add a comment Scott as we look at.

Bolt on or M&A activities, you know those investments truly needs to compete with investing in olins stock and buying all of the shares back with a directionally a 20% free cash flow yield. So you know, though the lenses M&A has to compete with that and today you know.

Even though maybe multiples have come in a little bad it's still a pretty high hurdle to for that to compete with the over the the Olin stock price.

Understood. Thank you.

The next question comes from Eric Petrie with Citi. Please go ahead.

Hey, good morning, Scott and Pat.

Good morning.

I was wondering if you could comment a little bit of your thoughts on the Epa's proposal to ban it would be.

That's a cell based production and in terms of all in would you take that as an opportunity to keep capacity flat or expand or reduce capacity.

Yeah, Yeah sure I mean, there's a proposed it's a proposed rule right now and the proposed rule has a two year phase out of all you know diaphragm asbestos phase chlorine production. So.

Do you know roughly 30% to 40% up as countries you know E. C. You production of chlorine production is based on asbestos diaphragm. So you know if the E. P. A what is to be able to finalize that rule in its current form.

You know you'd probably crippled by country.

That's not going to happen you know we've been engaged in this activity for quite a while and have pushed back on it I think you're you're not likely to see a final rule come out that is asked propose if that rule came out like that there'd be no choice.

But just shut down immense amounts of capacity and you would see us turned into gold if that happens.

Helpful. And then for my follow up question, you're guiding third quarter, you'd pick up down 15% quarter over quarter, how would you bucket that roughly between volume price and higher costs.

Yeah, well I think you know you see you see some elements.

Of all of that and you know like Todd Todd commented, where we have hedge positions and other things and caused some of that is as you know well well known you know because of the steps that we've announced to curtail some of our production. There is an element of that that is volume which is.

Offset by the material that we purchase and resell and pricing across more products than not are likely to increase up yet offsetting some of that as well. So it's kind of a balance.

Okay. Thank you.

Yeah.

The next question comes from Mike <unk> with Barclays. Please go ahead.

Great. Thanks, Good morning, guys.

First question I, just wanted to follow up on a comment Bob majors, but just given all of the energy volatility can you just remind us your hedging position or just philosophy around locking in natural gas or electricity costs.

Yeah.

Mike Yeah, we you know wheel for you think of energy Directionally, 70% of our you know.

North American power is natural gas space and we are a very heavy.

Hedger of gas.

Roxy for our energy consumption. So a quarter out we are very heavily hedged. So we have you know a significant hedge position already locked in for the third quarter and it's really a rolling our rolling four quarter of <unk>.

And that is a sliding scale with remaining quarters. So as gas is gas code stays up youll see it roll through our P&L as higher energy cost when gas comes down you know that gives us an opportunity to lock into lower prices. So you know that.

That's that's we're confident that.

We will have higher costs in.

Our chemical businesses for power in the third quarter.

Got it makes sense and then maybe just secondly, I wanted to circle back to I think your answer to Jeff's question about the Pax era, and trying to turn into a net exporter and just when you look at other chemical products are cycles, where you see that happen things do tend to get a bit sloppy for a bit of time. So can you just walk through your comfort that that's not.

The case for a box and you're at right now.

Right.

Well no I would just say that it is already the case for F. B and a pox C. There is so much material that used to be imported into China.

Now because of you know the the.

Mismatch of China's internal consumption versus their production.

Now that material that is used to move into China does not anymore. Most of that material came from other Asian countries. Consequently, those other Asian countries had been exporting that material to North America and to Europe .

And that's been going on for a number of months and that is why you know our proxy earnings came down you know we've elected not to participate in that have our value remain where it is and when that reverses, which it will reverse.

[noise], where west where our volumes return, but they return at the pricing level that we had launched it up too.

Great makes sense. Thank you.

The next question comes from Roger Spitz with Bank of America Credit. Please go ahead.

Thank you and good morning.

I'm wondering can we have it.

Update us.

On your desire to actually achieve I G ratings, and perhaps your share repurchase.

Program announced that suggests that.

You're not really chasing that.

[noise] Hi, Roger It's Todd Yeah, obviously, you know in the past Olin has been and there has been an investment grade credit.

We've been operating with investment grade metrics since late.

Late last year.

Yeah.

As you can see from the recession scenario that we laid out on slide four frankly, we can continue to operate with investment grade metrics during a recession.

Given the strong balance sheet earnings and cash flows of the business.

So to your question about the share repurchase I don't think that we are sacrificing any of our credit metrics on our share repurchase program and we understand the question about investment grade and we're going to continue to.

Evaluate whether investment grade really should be an objective for all that you have.

The view is we can operate with those metrics.

In a recession as well as you know without.

Great and secondly.

A number of the European Chlor.

Alright, I'll climb producers have been able to.

Expand our their spreads in the face of extraordinarily high electrical power costs.

I Wonder if you could speak to your Chlor alkali on a non Ford integrated basis, how your spreads have looked here and in North America.

Oh, Yeah, I would just say that a big constantly expanding and you know if you kind of referred to a chart. We have in the appendix you know the E. C. U P. C. I, it's basically shows the expanding contribution margin.

And bear so that is our you know variable margins and its been ever expanding over nearly the last couple of years and that's slide nine in the deck Roger.

Got it.

Thank you very much.

Sure.

As there are no further questions. This concludes our question and answer session I would like to turn the conference back over to Scott Sutton for closing comments.

Yeah no. Thanks, Thanks, a lot I would just thank everyone for joining us today and we appreciate the questions. Thanks a lot.

Thank you for attending today's presentation you may now disconnect.

Yeah.

Yeah.

[music].

Yeah.