Q2 2025 Olin Corp Earnings Call

Operator: This is a second quarter 2025 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Operator: Following today's brief opening comments, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your touch-tone phone. To withdraw your question, please press star, then...

Good morning and welcome to the incorporations second quarter 2025 earnings conference call. All participants will be in a listen-only mode. Should you need assistance? Please signal a conference specialist by pressing the star key followed by zero.

Operator: Please note, this event is being recorded.

Steve Keenan: I would now like to turn the conference over to Steve Keenan, Olin's Director of Investor Relations. Please go ahead. Thank you, operator.

Following today's brief opening comments, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your touchtone phone to withdraw your question. Please press star then 2. Please note this event is being recorded.

I would now like to turn the conference over to Steve Keenan, Owens' Director of Investor Relations. Please go ahead, Steve.

Steve Keenan: Good morning, everyone. We truly appreciate you joining us today to review Olin's second quarter results. Please keep in mind that today's discussion, together 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 Olin's actual results could differ materially from those projected.

Thank you, operator.

Good morning, everyone. We truly appreciate your joining us today to review our Q2 2025 results.

Please keep in mind that today's discussion together 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 olan's actual results could differ materially from those projected.

Steve Keenan: 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 in yesterday's second quarter earnings press For more information visit www.FEMA.gov 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 related financial data and information are available under press release.

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, 10K.

And in yesterday's second quarter, earnings press release.

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

Our earnings press release and related financial data. And information are available under press releases.

Steve Keenan: With me this morning are Ken Lane, Olin's president and CEO, and Todd Slater, Olin's CFO. We'll start with some prepared remarks, then we'll look forward to taking your questions.

With me this morning are Ken Lane olan's president and CEO and Todd Slater en CFO.

Steve Keenan: In order to give everyone an opportunity, we will limit participants to one question with no follow-up.

We'll start with some prepared remarks. Then we'll look forward to taking your questions.

Ken Lane: I'll now turn the call over to Olin's president and CEO, Ken Lane. Ken?

In order to give everyone an opportunity, we will limit participants to 1 question with no follow-ups.

I'll now turn the call over to olan's president and CEO Ken Lane.

Ken.

Ken Lane: Thank you, Steve, and thanks to everyone for joining us today. I'll start with slide three in our second quarter highlights. Second quarter of 2025 provided another proof point for a value first commercial approach as we continue to preserve value across our integrated ECU product. Despite this being the 7th quarter in a row of trough demand conditions. In the face of this lengthy downturn, North American Chlorine Index values remain stable and higher than any prior trough. Epoxy resins faced ongoing strong import competition, partially offset by our growing formulated solutions business. The second quarter outlook we provided anticipated our chemicals businesses would deliver flat sequential results, overcoming a $32 million sequential headwind from planned turnaround.

Thank you, Steve. And thanks to everyone for joining us today.

I'll start with slide 3 in our second, quarter highlights.

Second quarter of 2025, provided another proof point for our value. First commercial approach, as we continue to preserve value, across our integrated ECU products, despite this being the seventh quarter in a row of trough demand conditions,

and the face of this lengthy, downturn, North American chlorine index values. Remain stable and higher than any prior trough.

Residents faced ongoing strong import competition.

Partially offset by our growing formulated Solutions business.

Ken Lane: However, unplanned operating events limited our results to the lower end of our second quarter outlook. Winchester continued to see strength in the defense business, while headwinds from customer destocking, lower commercial pricing, and higher raw material costs negatively impacted our commercial business results, in line with what we had expected. Despite the chemical operational headwinds, our teams executed well, generating operating cash flow of more than $212 million, easily funding Winchester's second quarter acquisition of our new Manitowoc, Wisconsin ammunition facility, paying down $39 million of debts, and buying back $10 million of Olin shares.

The second quarter outlook we provided anticipated our Chemicals businesses would deliver flat sequential results, overcoming a $32 million sequential headwind from planned turnarounds.

However, unplanned operating events limited our results to the lower end of our second quarter Outlook.

Winchester continued to see strength in the defense business, while headwinds from customer to stocking lower commercial pricing, and higher raw material costs, negatively impacted our Commercial Business results in line, with what we had expected.

Despite the chemical operational. Headwinds our teams executed, well, generating operating cash flow of more than 212 million dollars, easily funding Winchester's. Second quarter acquisition of our new Manitou, Wisconsin ammunition, facility paying down. 39 million of debt and buying back 10 million of En shares.

Ken Lane: Now let's turn to slide four and review our chloralkali products and vinyls. Caustic soda remains the strong side of the EU. Global demand for caustic soda into alumina remains robust with continued expansion of Latin American pulp and paper capacity, more than offsetting reductions to U.S. Domestic caustic soda demand remains stable as seasonal water treatment, mining, and agricultural demand strengthen. We expected second quarter EBC values to present a small headwind, but the price decline was much steeper than expected. Olin's cost-advantaged North American ethylene and EDC positions provide some insulation during these trough conditions, allowing us to continue operating profitably on an integrated basis.

Now, let's turn to slide 4 and review our floor, Alkali products and vinyls results.

Caustic soda Remains the strong side of the ECU Global demand for caustic, soda into aluminum remains robust with continued expansion of Latin American Pulp and Paper capacity more than offsetting reductions to us capacity.

Domestic caustic soda demand remains stable as seasonal water treatment Mining and agricultural demand. Strengthens

we expected second quarter, EDC values to present a small headwind, but the price decline was much steeper than expected.

Profitably on an integrated basis.

Ken Lane: As I mentioned earlier, during the quarter, we experienced several unplanned operating events that caused earnings to be at the low end of our expectation. One of our core values is to operate our facility safely and reliably, and we are taking actions to significantly improve in both areas, as you'll hear about shortly. We continue to view tariff impacts as generally neutral to our fluoropoly business. This balance may shift if we see an increase in retaliatory tariffs, especially across South America, a key destination for our caustic soda and EDC exports. Our PBC tolling initiative continues to develop as we successfully broaden our product and customer portfolios.

As I mentioned earlier during the quarter, we experienced several unplanned operating events that caused earnings to be at the low end of our expectations.

One of our core values is to operate our facility safely and reliably. We are taking actions to significantly improve in both areas, as you'll hear about shortly.

We continue to view tariff impacts as generally neutral to our chloro Alkali business.

This balance may shift if we see an increase in retaliatory, tariffs, especially across South America. The key destination for our cost of soda and EDC exports.

Our PVC tolling initiative continues to develop as we successfully, broaden our product and customer portfolio.

Ken Lane: We're committed to finding the highest value, most capital efficient long-term option for our PBC market participation, leveraging our fully integrated VCM assets.

We're committed to finding the highest value. Most Capital efficient long-term option for our PVC Market participation leveraging, our fully integrated vcm asset.

Ken Lane: Now let's turn to slide 5 for a brief look at our epoxy. Our formulated solutions business sequentially grew both in volume and margin. Lower resin material costs in the second quarter were partially offset by sequentially higher operating costs.

Now, let's turn to slide 5 for a brief. Look at our epoxy results.

Our formulated solutions business sequentially grew both in volume and margin.

Lower resin material costs. In the second quarter were partially offset by sequentially higher operating costs.

Ken Lane: at Poxy Face's second quarter-adjusted EBITDA headwind of approximately $7 million for the STATA maintenance turnaround. Building and construction, automotive, and consumer electronics remain weak in both the U.S. and Europe. In spite of that, Olin's second quarter epoxy resin volume improved year over year as customers shifted more of their requirements back to Olin, focusing on the reliability and security of supply that we offer as the last remaining fully integrated epoxy producer in North America and Europe.

Epoxy faces second quarter adjusted. EBA headwind of approximately 7 million dollars for the shaddaa maintenance, turnaround.

Building and construction, automotive, and consumer electronics remain weak in both the U.S. and Europe.

Despite the old and second quarter of epoxy, resin volume improved year-over-year as customers shifted more of their requirements. Back to Olin focusing on the reliability and security of supply that we offer as the last remaining fully integrated epoxy producer in North America and Europe.

Ken Lane: As a reminder, an important next milestone in our Epoxy Self-Help Strategy will be the initiation of the Stata Germany key supplier contract, delivering more than half of our $80 million 2028 Epoxy Structural Cost Reduction Target starting on January 1, 2026.

As a reminder, an important next milestone in our epoxy self-help strategy will be the initiation of the start of Germany key supplier contracts.

delivering more than half of our 80 million dollars 2028, epoxy structural cost reduction Target, starting on January 1st 2026,

Ken Lane: Slide six provides an update on our Winchester business. Winchester's defense business continues to grow, based upon strong domestic military ammunition demand, international military ammunition shipments, and our Lake City government-funded Next Generation Squad Weapon Project. However, our commercial ammunition business remains challenged. Costs have increased, retail channel inventories remain high, and consumer demand is being impacted by weak discretionary spending. All of these factors contribute to a highly competitive environment, resulting in lower commercial pricing and margin weakness. None of these challenges are structural, but the confluence of the three create an unprecedented, perfect storm of our commercial ammunition business.

slide 6 provides an update on our Winchester business.

Winchester's defense. Business continues to grow based upon strong. Domestic military ammunition, demand International military ammunition shipments and our Lake City government funded Next Generation Squad weapon project.

however, our commercial ammunition business remains challenged

costs have increased retail Channel, inventories, remain high, and consumer demand is being impacted by weak discretionary spending

All of these factors contribute to a highly competitive environment, resulting in lower commercial, pricing, and margin weakness.

None of these challenges are structural, but the confluence of the three creates an unprecedented perfect storm for our commercial ammunition business.

Ken Lane: Turning to our recent Manitowoc, Wisconsin ammunition plant acquisition. We expect this acquisition to generate five million dollars of incremental adjusted EBITDA during the second half of 2025. And after our first three months of ownership, have strengthened our confidence in delivering $40 million of EBITDA by year.

Turning to our recent man to walk Wisconsin Ammunition, plant acquisition. We expect this acquisition to generate 5 million dollars of incremental, adjusted ebit da during the second half of 2025.

and after our first 3 months of ownership, have strengthened our confidence in delivering 40 million dollars of ebit Da by year 3,

Ken Lane: Let's turn to slide 7 for a deeper look into our Beyond 250 cost savings project. As I mentioned earlier, the foremost value for Olin is our commitment to safe and reliable operations. cornerstone of our strategy to create long-term value.

Let's turn to slide 7 for a deeper. Look into our Beyond 250 cost savings project.

As I mentioned earlier, the foremost value for an Is our commitment to safe and reliable operations.

Ken Lane: Overall, we anticipate our efforts will result in 2025 year-end run rate cost savings of $70 to $90 million. As part of our Optimize the Core strategic pillar, the ON250 includes right-sizing our CAPV and epoxy manufacturing facilities. Accelerating a Performance-Driven Culture and Leveraging Continuous Improvement in Operational Excellence Initiatives. Through all of this, we will identify and implement best practices throughout our operations in both chemicals and wind chest. To accelerate our objectives, we've enlisted industry-leading specialists with the necessary talent and expertise. Our Freeport, Texas site is piloting this transformation, taking the lead for our chemicals business. This effort was launched during the second quarter.

Cornerstone of our strategy to create long-term value.

Overall, we anticipate our efforts will result in 2025 year and run rate cost Savings of 70 to 90 million.

As part of our optimized, the core strategic pillar the on 250 includes, right? Sizing, our capv, and epoxy manufacturing facilities.

Accelerating a performance-driven culture and leveraging continuous improvement and operational excellence initiatives.

Through all of this, we will identify and implement best practices throughout our operations in both chemicals and Winchester.

To accelerate our objectives, we've enlisted industry-leading specialists with the necessary talent and expertise.

Our Freeport Texas site is piloting this transformation taking the lead for our chemicals businesses.

Ken Lane: Beyond 250 will strip away various remnant costs left behind by our earlier asset closure. We anticipate this effort to be a significant driver of value. As a result, our manufacturing footprint will be more flexible, fit for purpose, and standardized across all Olin sites. yielding lower costs and increased reliability. Our teams are already gaining momentum as we begin to streamline our maintenance practices, reduce our contractor reliance, and ultimately achieve a performance-driven culture.

This effort was launched during the second quarter.

Beyond 250 will strip away various Remnant costs, left behind by our earlier asset closures.

We anticipate this effort to be a significant driver of value.

Yielding lower costs and increased reliability.

Our teams are already gaining momentum. As we begin to streamline our maintenance practices, reduce our contractor reliance, and ultimately achieve a performance-driven culture.

Ken Lane: Also contributing to the cost savings, Winchester has implemented a parallel efficiency program and is on track to deliver on their commitments made during our investment.

Also contributing to the cost savings Winchester has implemented a parallel efficiency program and is on track to deliver on their commitments made during our investor day.

Todd Slater: I'll now turn the call over to Todd Slater to walk us through some financial highlights. Thanks, Ken. I'll start with slide 8 for a review of our sequential quarterly adjusted EBTA bridge. Second quarter adjusted EBITDA declined by 5% compared to the first quarter of 2025. primarily due to a headwind of $32 million of planned maintenance turnaround costs in our chemicals business. Seasonal demand improvement in our chloroquine products and vinyls business, as well as higher volumes and margins in formulated solutions within our epoxy business, partially offset these increased turnarounds. The Winchester second quarter segment results were comparable with those in the first quarter.

I’ll now turn the call over to Todd Slater to walk us through some financial highlights.

Thanks Ken.

I'll start with slide 8 for a review of our sequential quarterly adjusted ebta Bridge.

Second quarter, adjusted EPA declined by 5% compared to the first quarter of 2025.

Primarily due to a headwind of $32 million in planned maintenance turnaround costs in our chemicals businesses.

Seasonal, demand improvement in our chloroxygen.

The Winchester second quarter segment results were comparable with those in the first quarter.

Todd Slater: Higher domestic and international military sales, along with greater revenue from military projects, were mostly offset by lower commercial ammunition pricing and higher commodity metal costs resulting from tariffs and threats of tariffs.

Higher domestic and international military sales along with greater revenue from military, projects were mostly offset by lower commercial ammunition pricing.

And higher commodity metal costs resulting from tariffs and threats of tariffs.

Todd Slater: Now let's turn to slide nine for a look at our cash flow and liquidity. With the continued challenging market conditions and uncertainty related to tariff. We remain focused on maximizing cash generation, supported by our strong financial foundation. During the second quarter, we generated $212 million in operating cash. We were able to fund, from cash flow, the $56 million Winchester acquisition of the ammunition manufacturing assets in Manitowoc, Wisconsin. Additionally, in the quarter, we reduced debt by $39 million and continued share repurchases totaling $10 million. During the second quarter, our teams accelerated their efforts on generating cash from reducing working capital.

Now, let's turn to slide 9 for a. Look at our cash flow and liquidity.

With the continued challenging market conditions and uncertainty related to tariffs.

We remain focused on maximizing cash, generation supported by our strong financial Foundation.

During the second quarter, we generated 212 million dollars in operating cash flow.

We were able to fund from cash flow, the 566 million Winchester acquisition of the ammunition manufacturing Assets in Manitoba Wisconsin.

Additionally, in the quarter, we reduced that by $39 million and continued share repurchases, totaling $10 million.

Todd Slater: As a result, we generated $182 million from working capital, excluding tax payment time. through June 30th, working capital, excluding the timing effects of tax payments. was a source of approximately $12 million in cash.

During the second quarter, our team accelerated their efforts on generating cash from reducing working capital.

As a result, we generated $182 million from working capital.

Excluding tax payment timing.

Through June 30th, working capital, excluding the timing effects of tax payments.

Was a source of approximately $12 million in cash?

Todd Slater: For 2025, we expect working capital to be a source of at least $100 million of cash, excluding the timing effects of tax Consistent with what we had discussed last quarter, by year-end 2025, we expect net debt to be flat with year-end 2020.

For 2025.

We expect working capital to be a source of at least $100 million of cash. Excluding the timing effects of tax payments.

Consistent with what we discussed last quarter, by year-end 2025, we expect net debt to be flat with year-end 2024.

Todd Slater: We remain committed to our disciplined capital allocation approach and our priorities are clear. First and foremost, maintain our investment grade balance. Second, we fund our sustaining capital spending to maintain the safe and reliable operation of our assets. Third, we are committed to maintaining our quarterly dividend. Fourth, any available free cash flow is returned to our shareholders via either highly accretive growth opportunities such as the second quarter ammunition acquisition. or share by. Our teams continue to focus on cash generation, maintaining cost discipline, and supporting our Beyond 250 Cost Savings Initiative. Our strong financial foundation enables Olin to continue executing our value-first commercial approach while adhering to our capital allocation priorities and a prudent capital structure with a strong balance sheet and cash flow.

We remain committed to our disciplined capital allocation approach, and our priorities are clear.

First and foremost, maintain our investment-grade balance sheet.

Second, we fund our sustaining Capital spending to maintain the safe and reliable operation of our assets.

Third, we are committed to maintaining our quarterly dividend.

Any available free cash flow is returned to our shareholders via either highly accretive growth opportunities.

Such as the second quarter ammunition acquisition or share BuyBacks.

Our teams continue to focus on cash generation, maintaining cost discipline, and supporting our Beyond 250 cost-savings initiative.

Our strong financial Foundation enables en to continue executing. Our value first commercial approach while adhering to our Capital, allocation priorities, and a prudent capital structure with the strong, balance sheet, and cash flow.

Ken Lane: Now I'll hand the call back to you, Ken. Thanks, Todd.

Now, I'll hand the call back to you, Ken.

Ken Lane: Let's turn to slide 10 in our outlook for the third quarter. In the third quarter, we expect to see seasonal demand strength across Olin's business. Our expectations for third quarter chemical earnings include seasonally stronger demand for caustic soda and bleach. EDC pricing that stabilizes around where we exited the second quarter, continued formulated solutions volume growth, and a benefit from lower turnaround expenses. Winchester sails are expected to be seasonally stronger in the third quarter, although the typical seasonal peak will be below normal level. Earnings are expected to improve slightly in the third quarter, despite significantly higher commodity and metals costs.

Thanks, Todd. Let's turn to slide 10 and our outlook for the third quarter.

and the third quarter, we expect to see seasonal demand strengths

Quarter chemical earnings include seasonally stronger, demand for caustic, soda and bleach.

EDC pricing that stabilizes around where we exited the second quarter.

Continued, formulated Solutions, volume growth and a benefit from lower turnaround expenses.

Winchester, sales are expected to be seasonally stronger in the third quarter. Although the typical seasonal Peak will be below normal levels.

Ken Lane: To mitigate these higher costs, Winchester will be issuing a third-quarter commercial price.

Earnings are expected to improve slightly in the third quarter, despite significantly higher commodity and metals costs.

To mitigate these higher costs, Winchester will be issuing a third quarter commercial price increase.

Ken Lane: Given the ongoing macroeconomic and tariff uncertainty, we expect Olin's third quarter 2025 adjusted EBITDA to be in a range of $170 to $210 million.

Given the ongoing macroeconomic and tariff uncertainty. We expect, olan's third quarter, 2025 adjusted, EBA to be in a range of 170 to 210 million.

Operator: Operator, we're now ready to take questions. Thank you. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. To withdraw your question, please press star, then two. If you are using a speakerphone, please pick up your handset before pressing the keys.

Operator, we're now ready to take questions.

Thank you. We will now begin the question and answer session to ask a question. You may press star then 1 on your touchtone phone,

Operator: As a reminder, please limit yourself to one question, no follow-up.

To withdraw your question, please press star, then 2. If you are using a speakerphone, please pick up your handset before pressing the keys. As a reminder, please limit yourself to 1 question. No follow-ups.

David Begleiter: And your first question today will come from David Begleiter with Deutsche Bank. Please go ahead. Thank you. Good morning. Ken, I know you announced a caustic soda price increase back in June of $30 per ton. How is that price increase progressing?

And your first question today, will come from David beg, lighter, with Deutsche Bank, please go ahead.

Thank you. Good morning.

Um, can I know you announced a caustic, soda price, increase back in June of $30 per, uh, per ton. How is that price? Increase progressing?

Ken Lane: Good morning, Dave. Thank you for joining us. We appreciate that. Listen, we continue to see a strength in our system around caustic in terms of supply and demand. You know, like we talked about at the first quarter earnings call, you know, the tightness in the market is really driven more by supply and stable demand. So the developments that we see in the demand are, you know, continuing to be consistent across quarters. There is some noise in the system right now, particularly around the tariff situation. that hopefully we get some clarity around here in the next few days, but I think that's causing a little bit of...

Good morning, Dave. Thank you for joining us. We appreciate that. Um,

Listen, we continue to see strength in our system around caustic in terms of supply and demand. You know, like we talked about at the first quarter earnings call.

Ken Lane: a little bit of backup in the system because what we're seeing is less material being exported to Latin America just because of the threat of the tariffs that are there. And I think that's causing some headwind in the cost market in the short term. And we expect that to get worked through. That's why we highlighted the uncertainty in our prepared remarks. It's just to make sure we flag that.

Yeah. You know, the tightness in the market is really driven more by supply and stable demand, so the developments that we see in demand are, you know, continuing to be consistent across quarters. Um, you know, there is some noise in the system right now, particularly around the tariff situation, uh, that hopefully we get some clarity around here in the next, uh, few days. Uh, but I think that's causing a little bit of um,

Ken Lane: But once we get past the uncertainty. We still see continued strong demand, relatively strong demand, in the trawl for cost. So, you know, the expectation is that we're going to see some stability.

A little bit of backup in the system because what, we're what we're seeing is less material being exported to Latin America, just because of the threat of the tariffs that are there. And I think that's that's causing some some headwind and the cost at Market in the short term and we expect that to get worked through. That's why we highlighted the uncertainty, uh, in our prepared, remarks is just to, to make sure we flag that. But once we get past the uncertainty,

Uh we still see continued strong demand, relatively strong demand in in the trough for caustic.

So you know, the expectation is that we're going to see some stability there.

Patrick Cunningham: And your next question today will come from Patrick Cunningham with Citi. Please go ahead. Hi, good morning, thanks for taking my question. You know, on EDC pricing, you know, it's down more than 50% year-to-date, you know, took a significant step down 2Q versus 1Q and pretty close to record lows for this time of the season. I think last call you seemed to indicate a floor, you know, in EDC pricing that didn't play out.

And your next question today will come from Patrick Cunningham with City. Please go ahead.

Ken Lane: I mean, have you seen any signs of potential, you know, any potential support here, whether it's rationalization of assets in Asia at these prices or, you know, what gives you confidence that we have a floor here?

Hi, good morning, thanks for taking my question, you know, on, on EDC pricing, you know, it's down more than 50% year to date. You know, it took a significant step down to Cuba versus 1 q and, and pretty close to record lows for this time in the season. I think last call you seem to indicate a floor, you know, in EDC pricing that didn't play out. I mean, have you seen any signs of potential? You know, any potential support here, whether it's rationalization of assets, in Asia, these prices, or you know what? What gives you confidence that we have a floor here?

Ken Lane: Good morning, Patrick. Yeah, great, great question. We, we did see prices dip lower than we expected during the second quarter. You know, a lot of that if you go back to where we were when we were talking about this, after the first quarter or during the first quarter earnings call, the oil price has come down. So we've seen some softness in the oil price. And that gave a little bit of a lifeline to some of the higher cost Asian producers and allowed them to continue to participate in the market, even at even at lower price levels than what we thought.

Good morning, Patrick. Uh, yeah, great, great question. We, um, we did see prices dip lower than we expected during the second quarter, you know, a lot of that. If, if you go back to where we were when we were talking about this, uh, after the first quarter or during the the first quarter earnings call,

Ken Lane: So I do think that we're at a floor now, relatively speaking. We've seen again, some stability here in the oil price. So as long as we see that, with our advantage position that we have, you know, going back to the shale ethane advantage that we've got here in North America, we're the lowest cost So we're going to be able to continue to operate. We are seeing some curtailments already in Asia. because they've reached their limits and that's encouraging that we're starting to see that. But we're really not going to see a recovery in the EDC market until we see a recovery in demand.

The oil price has come down. So we've seen some softness in the oil price and that gave a little bit of a Lifeline, to some of the higher cost Asian producers and and allowed them to continue to, to participate in the market. Even at even at lower price levels than what we thought. So, I do think that we're at a floor now, relatively speaking.

um, we've seen again, some stability here in the oil price so as long as we see that

With our advantage to position that we have, you know, going back to the Shell ethane advantage that we've got here in North America. You know, we're the lowest-cost producer. So we're going to be able to continue to operate.

Uh, we are seeing some curtailment already in Asia.

Because they've, they've reached their limit and, you know, that, that's encouraging that we're starting to see that.

Ken Lane: And until you see housing come back and investments in real estate, frankly, around the world to start to absorb some of that capacity, we're going to continue to see challenges in the EDC market. So that's why we had said for the third quarter, we would expect to see EDC pricing staying in the similar level to where it was at the end of the quarter for the third quarter.

And you know until you see housing come back and investments. In real estate, frankly around the world to start to absorb some of that capacity. Uh we're going to continue to see challenges in the EDC market so you know that's why we had said for the third quarter we would expect to see EDC pricing staying in the in the similar level to where it was at the end of the quarter for the third quarter.

Duffy Fisher: And your next question today will come from Duffy Fisher with Goldman Sachs. Please go ahead. Yeah, good morning.

And your next question today will come from Duffy Fischer with Goldman Sachs. Please go ahead.

Duffy Fisher: A couple questions around Winchester, particularly on the commercial side. So roughly, what is price down? And is that price down to you the supplier? Or is that price down all the way through the retailer to the consumer? And then on the cost side, you mentioned metal, but are propellants still a year over your headwind on the cost side?

Yeah, good morning. Couple questions around Winchester um particularly on the commercial side. So roughly what is price down? Um, and is that price down to you? The supplier or is that price down all the way through uh, the retailer to the consumer. Um, and then on the cost side, you you mentioned metal. But are propellants still a year-over-year headwind on the cost side?

Duffy Fisher: Hi, Duffy. Thanks for joining us. Appreciate your question. You know, to answer that, when we look at the commercial business for Winchester, especially year over year, and you look at the decline, about half of that is really driven by volume. And then what's left is split pretty evenly between higher costs and lower pricing. And that's our pricing to our customers. So as you know, our customers continue to destock. That destocking is taking longer than what we thought at the beginning of the year. Again, that's related to just weaker consumer demand, you know, out-the-door sales at our customers.

I Duppy, thanks for joining us. Appreciate your question. Um, you know, to answer that when when we look at the uh, the commercial business for Winchester especially year-over-year and you look at the decline about half of that is really driven by volume.

Duffy Fisher: Um, but to To put a more specific answer on your question around propellant, yes, that continues to be a headwind versus prior year. That and metals are really the two things that are driving the higher cost. And that, you know, 25% or so of the lower margin that we're realizing today as part of the commercial business. But like I said, we have got to start to get some price back.

And then what's left is split pretty evenly between higher costs and lower pricing and that's our our pricing to our customers. So, as you know, our customers continue to do stock that do stocking is taking longer than what we thought at the beginning of the year. Um, again that's related to just weaker consumer demand, you know, out the door sales at at our customers

um, but to to

To put a more, you know, specific answer on on your question around propellant. Yes.

Duffy Fisher: Margins have dropped to a level now that frankly is just not acceptable and we've got to start pushing price and get some recovery.

That continues to be a headwind versus the prior year. That and metals are really the two things that are driving the higher costs, and that, you know, 25% or so of the lower margin that we're realizing today is part of the commercial business. But, like I said, we have got to start to get some price back.

Margins have dropped to a level. Now that frankly are just there's just not a not acceptable and we've got to start pushing price and get some recovery here.

Josh Spector: And your next question today will come from Josh Spector with UBS. Please go ahead.

And your next question, the day will come from Josh Spectre with UBS. Please go ahead.

Josh Spector: Hi, good morning. I was wondering if you could talk a little bit more about your cost savings program you talked about. So that $70 to $90 million, how much do you achieve in fourth quarter versus goes into 2026? And then assuming a lot of this is related with Freeport, how does the Dow and the diamond infrastructure solutions kind of set up change your ability to get costs? Is that better or a worse situation for Olin? Thanks.

Yeah. Hi, good morning. Um, I was wondering if you could talk a little bit more about your cost Savings Program, you talked about so that 70 to 90 million, how much do you achieve in fourth quarter? Versus goes into 2026? And then assuming a lot of this is related with Freeport like how does the Dow and the diamond infrastructure solutions kind of set up change your

Ability to get costs. Is that better or a worse situation for Olan? Thanks.

Ken Lane: Thank you, Josh. So I'm going to start, and then I'm going to hand it over to Todd and let him answer that as well. You know, the cost reductions that we're looking at are not all at Freeport. The majority of it is at Freeport.

Thank you Josh. Um,

Ken Lane: But we are doing some other things at other sites, like our McIntosh site, where we're right-sizing some of the infrastructure, because there we took half of the capacity out, and we're right-sizing some of the infrastructure that supports what's left to make sure that we're not carrying higher-cost assets than we need to for the production that we've got at that site. Generally when we look at what we're doing as a company, we've got some very good operations. But I would say that we've gone a little bit too far when you think about using outside contractors, which is a great thing to do when you're trying to streamline and maybe bring in some expertise that outside contractors may have.

so I'm going to start and then I'm going to hand it over to Todd and let him answer that as well. You know, the the cost reductions that we're looking at are not all at Freeport. Uh, there's the majority of it is at Freeport but we are doing some other things that that other sites, like our Macintosh site where we're, uh, right sizing some of the infrastructure because there we took half of the capacity out and we're right sides in some of the infrastructure that supports what's left to make sure that we're not carrying higher cost assets, that we need to for the production that we've got at that site. Um,

Ken Lane: And you do get a short-term kind of benefit in your cost structure, but if you do too much of that over time, you do start to find dis-synergies with that approach. And so now we've got to go back a little bit more to where we're controlling things and we're able to then get some costs out that have crept in because of some of the inefficiencies that have come as a result of that.

generally, when we look at what we're doing, as a company, you know, we've got some very good operations, but I would say that that we've, we've gone a little bit too far when you think about using outside contractors, which is a great thing to do when you're trying to streamline and maybe bring in uh some expertise that outside contractors may have

Todd Slater: But I'm going to let Todd talk a little bit more about the cost savings. As we had talked in our last call, we would expect for the full year of 2025 that we will realize cost savings of between $50 and $70 million from these structural cost and productivity initiatives that we have ongoing during the year. As we exit the year, we do expect this Beyond 250 initiative to improve that realization late in the year and let us move into next year with a better tailwind. Also, don't forget as we enter into 2026, we do have structural cost reductions coming in our epoxies.

and you do get a short-term kind of benefit in your cost structure, but if you do too much of that over time, you do start to find this in this synergies, you know, with, with that approach. And so now we've got to go back a little bit more to where we're controlling things and we're able to then get some costs out that have crept in because of some of the inefficiencies that have come as a result of that.

Todd Slater: that will lower our cost structure, in particular, in our Stade Germany facility. And we have commented on that before, that it will be over half of our expected cost reductions for epoxy, and that number was over half of the $80 million of cost saved for epoxy.

Also don't forget as we enter into 2026, we do have structural cost reductions coming in our epoxy business that will lower our cost structure in particular in our start of Germany facility. You know, and we have commented on that before that it will be over half of our expected uh cost reductions for epoxy and we that number was um, over half of the 80 million dollars of cost saved for epoxy.

Todd Slater: Thanks for your questions.

Thanks for your question, Josh.

Aleksey Yefremov: And your next question today will come from Aleksey Yefremov with KeyBank Capital Markets. Please go ahead. Thanks. Good morning, everyone.

And your next question today, will come from Alexi. Yep. With keybanc capital markets, please go ahead.

Aleksey Yefremov: I just wanted to ask you about just general spiel for Winchester. Is there a risk that things could actually get worse from here in the second half or in the next 12 months? And on the cost side in Winchester, are your costs continuing to ramp in the second half because of metals and because of sort of inventory cycle?

Aleksey Yefremov: That's just a part of the Winchester album.

Uh, thanks. Good morning, everyone. Uh, um, just wanted to ask you about general steel for Winchester. Is there a risk that these could actually get worse from here in the second half or in the next 12 months? And on the cost side in Winchester, are your costs continuing to ramp in the second half because of not all and because of sort of the inventory cycle?

So that's just a part of the Winchester Alpha.

Ken Lane: Thank you for your question Aleksey. Listen, it's it really is hard to see things getting worse. We're seeing margin levels that are we've never seen before.

Ken Lane: You know, I said on the prepared remarks that this is a perfect storm and that that's not a an overstatement. You know, we're not trying to be dramatic with that. We're really seeing things that we've not seen before all happening at the same time in terms of destocking higher cost.

Yeah, thank you for your question Alexi. Uh, listen, it's it really is hard to see things getting worse. We're seeing margin levels that are we've never seen before. You know, I I sat on the

prepared remarks that this is a perfect storm and that that's not a an overstatement, you know, we're not trying to be dramatic with that. We're really seeing things that we've not seen before.

Speaker: Mr. Volkow This was a program to emphasize health and safety information on the West Coast with the description of a number of oders that the World Health Organization and Crown Ordinance and etc. have issued this week.

Uh all happening at the same time in terms of destocking higher costs consumer um spending being lower. Those things are not going to last forever. This is not structural I I don't see things getting um worse with Winchester.

Ken Lane: All of this information is present that will be available to you at the period of oath, or probably first in the blind. Those opinions and thoughts leave no room for discussion, and as we persevere today, Hopefully some for later. But I just don't really see that being being a real case here. I think, as we said, you're going to see a little bit of an improvement in the third quarter. We've got to get some pricing back. through the chain. That's just something we've got to get because we've seen so many costs, pressure. Some of that's going to have to start to go through in pricing.

But of course, there are always things that can happen. We didn't anticipate the situation around tariffs on copper pricing. And you know, those are things that we just can't anticipate and are completely out of our control.

And we're going to do everything we can to to offset those.

But I just don't really see that being a real case here, I think.

As we said, you're going to see a little bit of an improvement in in the third quarter. We've got to get some pricing back. Um,

Through the chain. That's that's just something we've got to get. Because we've seen so many uh costs uh pressures.

Ken Lane: and so we're going to push very hard on it.

Todd Slater: Todd, you wanna add anything to that? Yeah, and Aleksey, as you know, we do hedge some of our raw materials, in particular copper. So, you know, copper has moved up, you know, with the, you know, during the second quarter and, you know, here early in the third quarter with the threats of tariffs. You know, originally the threat was 25% and now it's a 50% threat of tariff on copper. And as a result, you've seen copper, relatively speaking, was around $4 a ton and now it's well over five and a half. Those costs will seed into our system as we start here into the back half of the year and on into next year.

Some of that's going to have to start go through start to have to go through in pricing and and so we're going to push very hard on that side. You want to add anything to that. Yeah. And Alexei as you know, we do um hedge. Some of our raw materials in particular copper. So you, you know, copper has moved up, you know, with the, you know, it during the second quarter and you know, here early in the third quarter, with the threats of tariffs, you know, originally the threat was 25% and now it's a 50% threat of tariff on copper. And as a result, you've seen copper relatively speaking was around 4 dollars a ton. And now, it's well over 5 and a half.

Todd Slater: But we are a hedger, so you will see that move in, you know, a little slower than if we were just a general spot buyer. That's why when we talk about needing to raise price in, you know, here in the third quarter, that is necessary to offset this higher.

Hassan Ahmed: Copper stays up this higher commodity cost structure that's coming for when And your next question today will come from Hassan Ahmed with Alembic Global. Please go ahead.

Those costs will seat into our system as we start here, into the back half of the year and then into the next year. But we are a hedger, so you will see that move in, you know, a little slower than if we were just a general spot buyer. That's why when we talk about needing to raise price in, you know, here in Q3, that is necessary to offset this higher commodity cost structure that's coming for Winchester. If copper stays up, this higher commodity cost structure is coming.

And your next question today will come from Hassan Ahmed with Olympic Global. Please go ahead.

Hassan Ahmed: Morning, Ken and Todd. You know, guys, I am just trying to bridge the Q3 guidance range of $170 to $210 million in EBITDA you guys have given with the $176 million you reported in Q2. I mean, as I sort of, you know, read through the guidance commentary, you know, in Cap V, you know, you guys won't have the unplanned events. You know, in Epoxy, you will have lower maintenance costs. It seems Winchester, you know, things will be seasonally better in Q3. And I understand maybe costs play a certain role there. But, you know, along even product lines, you guys are talking about higher sort of bleach volumes and caustic volumes and at the very least pricing to be stable.

Morning, Ken and Todd. Um, you know, guys, I am just trying to bridge the Q3 guidance range of $170 to $210 million in EBITDA you guys have given with the $176 million you reported in Q2. I mean, as I sort of, you know, read through the guidance commentary, um, you know, in Cap V, you know, you guys won't have the unplanned events. You know, in epoxy, you'll have lower maintenance costs, it seems Winchester, you know, things will be seasonally better.

Hassan Ahmed: So as I sort of, you know, connect all of these dots, I mean, you know, from the sounds of it, it seems, you know, the number for Q3 could be at the higher end of that guidance range, particularly keeping in mind the $176 million you guys reported in Q2. So what am I missing over here?

Number for Q3 could be at the higher end of that guidance range, particularly keeping in mind the $176 million you guys reported in Q2. So, what am I missing over here?

Ken Lane: Hi, Hassan, thanks for joining. Listen, we obviously we want to be at the high end of the range, there's no doubt about it. But I'll tell you, just like we talked about on the first quarter earnings call, we put a broader range out there, you know, so you look at 170 to 210. The reason why it's so broad is because of the amount of uncertainty that we see. And hopefully we start to get some more stability here in the back half of the year. So yes, there are some things that are going to improve. We're going to see sequentially some lower turnaround costs.

Ken Lane: Obviously, the plan is for us to be able to operate our assets more reliably. That's something we're not planning to return to that. But there will continue to be some headwinds. So the higher raw material costs that we talked about around Winchester, that is going to happen. And frankly, we've got to see some of the price improvement. Now, let's see what happens with that. As we went through the quarter, the second quarter, you know, it really dropped quite a bit. And what we're what we're now projecting in the third quarter is that we're going to be stable at that lower level.

Hi Hassan, thanks for joining. Um, listen. We obviously we want to be at the high end of of of the range. There's no doubt about it. Uh but I'll tell you just like we talked about on the first quarter Ernie's call, we put a broader range out there, you know, so you look at 170 to 210. The reason why it's so broad is because of the amount of uncertainty that we see and and hopefully we start to get some more stability here in the back half of the year. Um, so yes, there are some things that are going to improve. We're going to see sequentially, some lower turnaround costs. Obviously the the uh, the plan is for us to be able to operate our assets more reliably. That's something we're not we're not planning to to return to that, but there will continue to be some headwinds. So the higher raw material costs that we talked about around Winchester, that is going to happen. And frankly we've we've got to see some of the price Improvement. Now, you know, let's let's see what happens with that. But the other thing is,

The EDC pricing.

As we went through the quarter of the second quarter, you know, it really dropped quite a bit

Ken Lane: And, you know, we're the biggest exporter of EDC from the U.S. market. That's that's a pretty painful part of the equation here. So, you know, when we look at all of that on balance, we think that the first quarter or sorry, the third quarter can look pretty similar to the second quarter in terms of results. But obviously, we're going to be working really hard to be at the high end of that range. We're going to continue to be very focused on generating as much cash flow as we can. That is something that I can promise you the organization knows.

and what we're what we're now projecting in. The third quarter is that we're going to be stable at that lower level and and you know we're the biggest uh, exporter of of EDC from from the US market. That's that's a pretty painful um part of the equation here. So you know, when we look at all of that on balance we think that the first quarter or sorry, the the the third quarter can look pretty similar to the second quarter in terms of results. Um but obviously we're going to be working really hard to be at the high end of that range.

We're going to continue to be very focused on generating as much cash flow as we can.

Ken Lane: We're not getting a lot of help from the market, so we've got to help ourselves in terms of our costs and our cash generation. Those are things that we're going to continue to prioritize.

Uh, that is something that I can promise you. The organization knows we're not getting a lot of help from the market, so we've got to help ourselves in terms of our costs and our cash generation. Those are things that we're going to continue to prioritize.

Matthew Deyo: And your next question today will come from Matthew Deyo with Bank of America. Please go ahead. Hi everyone.

And your next question today will come from Matthew do with Bank of America, please go ahead.

Hi everyone. Um,

Matthew Deyo: I can stay with me here a little bit because this is going to be a long one. But if I look at your ECI chart, I think the index score is 186 in 2Q of 25. And if I look at the average for 2021, it was it was 200. You know, but back then you did 2.1 billion of EBITDA. in CAV and Epoxy. And in 2022, you did a similar 2.1 billion, but that score was 274. And, you know, I'm looking at 2025 EBITDA, and I don't know, maybe it comes in a little over 100 million better than 2020, maybe a little bit more than that.

I can stay with me here a little bit because this is uh this is going to be a little a long 1. But um, if I look at your ECI chart,

You know, I think the index score is.

186 and 2 Q of 25.

Uh, and if I look at the average for 2021, it was it was 200.

You know, but back then you did $2.1 billion of IBA.

In cash and epoxy, in 2022, you did a similar $2.1 billion, but that score was 274.

and,

you know, I'm looking at 2025 ebit da and I don't know, maybe it comes in

Matthew Deyo: But, you know, you're 70 to 80 points higher than this 2020 index score.

Matthew Deyo: So like, what do I make of all this? Is this really...

Ken Lane: The best way to be telling the story of value creation and like, where is the negative operating leverage coming in here into this index and your profits that maybe wasn't there two years ago? What you see being delivered with our portfolio is stability in the ECU values. And we talked about that at the investor day, that that is going to be our focus. especially here at the trough level, so there's definitely a volume element to this. We are at trough demand level. And if you look just at the stability in that line, since the, you know, really the third quarter, fourth quarter of 2023, You know, that average is going to still be below the average of 2021 if you just take the numbers.

A little over 100 million better than 2020 maybe a little bit more than that but you know, your 70 to 80 points higher than this 2020 index score. So like what do I make of all this? Is this really

The best way to tell the story of value creation is to examine where the negative operating leverage is coming in, particularly in this index and your profits, which may not have been as evident two years ago.

Hi Matt, thanks for the question. Um, listen I think if you if you look at, you know what, we're trying to portray here with this with this index is to give people uh some confidence in our commercial model where we're focusing on value.

And what you see being delivered with our portfolio is stability in the ECU values and and we talked about that at the investor day, that that is going to be our Focus especially here at the trough level.

Um, so there's definitely a volume element to this. Um, you know, we are at trough demand levels.

uh, and if you look just at the stability in that line since the

you know, really the third quarter, fourth quarter of 2023

Ken Lane: So you saw quite a steep ramp up there at the back end of 2021. I hope we see that at the back back end of 2025. Unfortunately, I think in the market that we're in, that's very unlikely that we're going to see something like that. So, you know, we're focused on being disciplined. We're focused on being able to maintain stability with our portfolio and and generate as much value as we can at the trough conditions that we're in. That's how we see things playing out for the remainder of the year.

Um, you know, that average is going to still be below the average of 2021. If you just take the numbers. So you saw quite a steep ramp up there at the back end of of 2021. I hope we see that at the back back end of 2025. Unfortunately. I think in the market that we're in, that's very unlikely that we're going to see something like that. So, you know, we're focused on being disciplined, we're focused on, uh, being able to maintain stability with our portfolio and, and generate as much value as we can at the trough condensed conditions that we're in. Um,

How we see things playing out for the remainder of the year.

Matthew Blair: And your next question today will come from Matthew Blair with TPH. Please go ahead. Thank you and good morning. You mentioned lower EDC prices in your Q3 guide.

And your next question today will come from Matthew. Blair with TPH, please go ahead.

Ken Lane: Did you talk about where Olin's utilization rates are for EDC these days? And I think at one point every one cent per pound in EDC was worth about 20 million in EBITDA for Olin. I think that number is probably lower today. Do you think that, you know, sensitivity of maybe 10 to 15 million EBITDA for every one cent in EDC is appropriate? Thanks.

Uh, thank you, and good morning. Uh, you mentioned lower EDC prices in your Q3 guide. Could you talk about where Olin's utilization rates are for EDC these days? And I think at one point, every one cent per pound in EDC was worth about $20 million in EBITDA for Olin. I think that number is probably lower today. Do you think that the sensitivity of maybe $10 million to $15 million in EBITDA for every one cent in EDC is appropriate? Thanks.

Ken Lane: Hi Matthew, thanks for the question. You know, look, we continue to see the headwinds in the EDC market just in terms of supply and demand. There's not a lot of relief that we see in the short term. But going back to what I said earlier, you know, in terms of the cost structure, we're we're the most advantaged. So we're going to continue to operate our assets at a point that we can create the most value from the position that we have. In the second quarter, the utilization rates were down a little bit. We had some turnaround activity, so that impacted second quarter utilization rates, but we're going to continue to operate where we think we can generate the highest value with the asset that we've got.

I'm Matthew. Thanks for the question. Um, you know, look, we we continue to see um, the headwinds and the EDC Market uh just in terms of of supply and and demand.

Um there there's not a lot of relief that we see in the in the short term there, but going back to what I said earlier.

You know, in terms of the cost structure, we're the most advanced. So, we're going to continue to operate our assets at a point that we can create the most value from the position that we have.

Uh, in the second quarter, utilization rates were down a little bit. We had some turnaround activity, uh, so that impacted second quarter utilization rates. Uh, but we're going to continue to operate where we think we can generate the highest value with the assets that we've got.

Ken Lane: Utilization rates in Q3 you would expect them to come up just because we don't have the turnaround but You know, it's not something where we're going to be focusing on utilization rate. We're going to be focusing on value.

Uh, so

utilization rates in Q3 you would expect them to come up just because we don't have the turnaround but

You know, it's it's it's not something where we're going to be focusing on utilization rate, we're going to be focusing on value.

Frank Mitsch: And your next question today will come from Frank Mitsch with Firmium Research. Please go ahead. Thank you and good morning. So much of the uncertainty appears to be around tariffs and potential retaliatory actions by Brazil.

Ken Lane: So I'm just curious if you could talk through, you know, order of magnitude, how important is Brazil for Olin's caustic soda export sales? And obviously caustic is a pretty fungible product. So assuming that Brazil comes back with heavy retaliatory tariffs. on Caustic. How would you, can you talk through the various scenarios of how the trade flows would move and how long it would take to normalize? Because again, it is a pretty fungible product. Thank you.

And your next question today will come from Frank Mitch with Fermium Research. Please go ahead. Uh, thank you and good morning. Um, so much of the uncertainty appears to be around tariffs and potential or retaliatory actions by Brazil. So I'm just curious if you could talk through, you know, the order of magnitude: how important is Brazil for Olin's caustic soda export sales?

And obviously, caustic is a pretty fun product. So, assuming that Brazil comes back with heavy retaliatory tariffs...

On Caustic. Um, how would you can you talk to the various of, of how the trade flows would move and how long it would take to uh to normalize? Because again, it is a it is a pretty fun product. Thank you.

Ken Lane: Yeah, thank you, Frank. You're exactly right. It is. It's a global market. It's an important one for us. You know, you've seen the data. North America is a big exporter of caustic to South America. And as I had mentioned before, I do think that some of the noise that we're seeing just around caustic availability on the Gulf Coast and pricing, some of that is related to people not knowing where to move their product because they don't want to take the risk that they're going to put something on the water and then have a 50% tariff, right?

Yeah, thank you, Frank. You're exactly right. It is a global market.

It's an important 1 for for us. Um, you know, you can, you've seen the data North America's, a big exporter of costing to to South America. Um,

And, as I had mentioned before, I do think that some of the noise that we're seeing just around.

Ken Lane: That would be the worst case scenario. It won't take that long to kind of rewire where things are being shipped around.

Uh, caustic availability on the Gulf Coast and pricing—some of that is related to people not knowing where to move their product because they don't want to take the risk that they're going to, you know, put something on the water and then have a 50% tariff, right? That would be the worst-case scenario.

Ken Lane: So I would say there's probably a month to two months of noise that if there were to be some big retaliatory tariff put in place, it's going to take a month or two months to get things worked back out where you start to see products flow into Latin America, maybe from Europe or from Asia, and then you're going to see product going into those regions out of North America. Things will get reestablished and settle in a new trade flow.

It won't take that long to kind of rewire where things are being shipped around. So I would say there's probably a month to two months of noise.

That if there were to be some, some big retaliatory, tariff put in place, it's going to take a month or 2 months to get things worked back out where where you start to see products flow into Latin America, maybe from Europe, or from Asia. And then you're going to see products going into those regions out of North America things will will

Ken Lane: Hopefully that doesn't happen. You know, it's been a little bit encouraging to me that we've not heard a whole lot coming out of Brazil.

Kevin Mccarthy: Since the initial announcement about tariffs around retaliatory tariffs So I hope that this is going to get resolved and we can put this behind us, but it's too early to And your next question today will come from Kevin McCarthy with Vertical Research Partners. Please go ahead. Thank you and good morning. Ken, just to follow up on the prior question, what impact, if any, do you think the tariff-related and trade flow-related uncertainties will have on Olin's chloralkali operating rates in the third quarter? And related to that, maybe you could also weave in a comment on the operational challenges that you experienced.

You know, getting re-established and settling into a new trade flow. Hopefully, that doesn't happen. You know, it's been a little bit encouraging to me that we've not heard a whole lot coming out of Brazil.

uh, since the initial announcement about tariffs around retaliatory tariffs,

uh, so I hope that this is going to get resolved and we can put this behind us, but it's too early to say

And your next question today, will come from Kevin McCarthy, with vertical, research Partners, please go ahead.

Ken Lane: I'm not sure, you know, what exactly the impact of that was in the quarter, for example, and whether or not it's confined to the second quarter or there might be any spillover into the third quarter. Thank you very much. Thank you, Kevin. So listen, just in terms of tariffs, like we had discussed in the in the prepared comment. Right now, we think that it's net neutral for CAPV. The real headwind would come... in the case where there are significant retaliatory terror put on by Brazil. Now, again, we don't have visibility to that. August 1st is right around the corner, so we'll know something relatively soon.

Um, there might be any any spillover into the third quarter. Uh, thank you very much.

Thank you, Kevin. Um, so listen, just in terms of tariffs, like we had discussed in the prepared comments.

Right now, we think that it's net neutral for CAPV. The real headwind would come.

In the case where there are significant retaliatory tariffs,

Put on by Brazil.

Ken Lane: But even then, things can change pretty rapidly as we've seen. So it's really more about that in terms of CAPV and the impact around tariffs than anything else.

Now again we don't we don't have visibility to that August 1st is right around the corner. So, you know, we'll we'll know something relatively soon.

Ken Lane: I think once we get past that, if we can get some certainty there, then I think things are going to, you know, kind of...

Ken Lane: https://www.youtube.com.uk We did have the chlorine leak there. It was very unfortunate. That is behind us now. We have restarted all of the assets. We did take some downtime in the second quarter, but everything is running, and we've got everything corrected. We do have an investigation that's ongoing. You know, once that's finalized, of course, there'll be more that comes out about that, but we are still in the middle of the formal investigation, and we'll share more once we have that, but fortunately, we didn't have any injuries as a result of that. We've been very focused on making sure that we've got corrective actions in place to make sure that it doesn't happen again, and that includes engaging with the community and making sure that everyone is safe working at our sites and living around our sites.

Um, but even then, things can change pretty rapidly, as we've seen. So, it's really more about that in terms of CAPV and the impact around tariffs than anything else. I think once we get past that, if we can get some certainty there, then I think things are going to, you know, kind of.

Hit a state of equilibrium, and we're going to get back to a new normal, whatever that might look like. Uh, but that's the real.

Threats around tariffs that I see. Now, in terms of the operating issues that we had down at Freeport.

We did have the chlorine leak there. It was very unfortunate. Um, that's, um, is behind us. Now, we have restarted, all of the assets, we did take some downtime in the, uh, in the second quarter, uh, but everything is is running, and, uh, we've got everything corrected. We do have an investigation that's ongoing. Um, you know, once that's finalized, of course, there'll be more that comes out about that. But we are still in the middle of the formal investigation and and we'll share more once we have that. But fortunately, uh, we didn't have any injuries as a result of that, we've been very focused on making sure that we've got corrective actions in place to make sure that it doesn't happen again.

And that includes engaging with the community, and they can be sure that everyone is safe working at our sites and living around our sites.

Bhavesh Lodaya: And your next question today will come from Bhavesh Lodaya with BMO Capital Markets. Please go ahead. Good morning. Maybe one more on the tariff landscape. Things are obviously moving quite quickly there. Have you seen signs of your customers raising their inventories ahead of any potential negative announcements? And if that turns into a headwind, if tariffs are actually eventually resolved, or if not, then maybe just to... Reminder on where customer inventories stand across our GAPI business today. Yeah, Bhavesh, you broke up there for a second. I think your question was around customer inventory levels and CAPV.

And your next question today will come from Bob Esch Ludia with BMO Capital Markets. Please go ahead.

Good morning, maybe 1 more on the Tariff landscape. Things are obviously, moving quite quickly. There, have you seen signs of your customers, raising their inventories ahead of any potential, negative announcements. And and if, if that turns into a headwind, if that is that actually eventually resolved or if not, then maybe just to just to

Reminder on where in customer inventory we stand across the Gap. We business today.

Question was around customer, inventory levels, and and capv.

Ken Lane: You know, this goes back to even, gosh, probably late 2023, early 2024, where we were seeing in the chain, people were de-stocking. We have not seen people really begin to restock or take positions in terms of inventory other than maybe a little bit of seasonality since then. And I don't think that you're going to see any kind of a restocking happen in the CAPV chains until you start to see recovery in the markets and some price improvement. So people are, you know, doing what they should do. They're focusing on their balance sheet and they're focusing on making sure that they create cash and generate cash in this environment.

Um, you know this this goes back to even gosh probably.

Late 2023, early 2024, where we were seeing in the chain people were destocking.

Um, we have not seen people.

Uh, we really begin to, you know, restock or take positions in terms of inventory.

Other than maybe a little bit of seasonality since then.

Ken Lane: And we haven't seen any change in that behavior among our customers in the CAPV business.

Uh, I don't think that you're going to see any kind of a restocking happen in the supply chains until you start to see recovery in the markets and some price improvements. So people are, you know, doing what they should do; they're focusing on their balance sheets and they're focusing on making sure that they create cash and generate cash in this environment.

And we haven't seen any change in that behavior among our customers in the CAPV business.

Mike Sison: And your next question today will come from Mike Sison with Wells Fargo. Please go ahead. Hey, good morning, guys.

And your next question today will come from Mike Susan with Wells Fargo. Please go ahead.

Mike Sison: For Winchester, you know, where do you think EBITDA margins or just EBITDA, you know, on an analyzed basis can get back to, given where we are now? Just a quick follow-up on chloralkali.

Mike Sison: You know, if the housing market remains sluggish, which some have said could happen into the second half and maybe the first half. What do you think the industry needs to do to maybe shore up profitability from here and would you consider doing anything major? kind of improving the profitability.

Hey, good morning guys. Um, for Winchester, you know, where do you think IA? Margins or just IBA? You know, an annual on an annualized basis, can get back to giving where we are, where we are, where, where we at now? And then, and just a quick follow-up on Chlor, Alkali, um,

You know if if the housing market remains sluggish, which some have said could happen into the second half and and maybe the first half, you know, what do you think the industry needs to do to to maybe, you know, Shore up profitability from here? Um, and would you consider doing anything major in in in in, in kind of improving the profitability there?

Ken Lane: Hi, Mike. Thank you for your question. Listen, yeah, we certainly believe that Winchester margins are going to recover. You know, this is the perfect storm in terms of costs being higher, consumer spending being lower. You know, all of those things are going to work through the system, whether it takes six months or a year, I don't know. It's going to take more time, though, that the destocking, as we had commented earlier, is definitely going to go through 2025. We still see inventory levels that are elevated. They have come down, but still elevated. Um, you know, and then when we, when we look at what we see in the chemical market.

You know, this is the perfect storm in terms of costs being higher consumer spending, being lower. Um you know all of those things are going to work through the system whether it takes

6 months or a year. I don't know. It's going to take more time though. The the destocking as we had commented earlier is definitely going to go through 2025. We still see inventory levels that are elevated. They have come down, uh, but still elevated.

Ken Lane: I do see some signs of encouragement and frankly some things that you would normally see at the bottom of a cycle, which is you start to see rationalization of assets and you look at even what China is talking about doing. You know, the China involution is something that I am optimistic is going to have some impact. It will take time. This is not the first time China has talked about rationalizing either government controlled state-owned entities that are older, you know, higher cost, more polluting. They have talked about this for years. But I do think that you are getting to a tipping point where the amount of capacity and the squeeze on margins, because whether you look at Epoxy, whether you look at Chlorophyll I, PVC, a lot of these businesses, they are losing money.

Um, you know, and then when we look at what we see in the chemical market,

Ken Lane: They are losing cash. They are not just on a P&L basis negative, they are cash negative. And they can only carry that for so long. So there is going to be rationalization in the market. It's going to take time. It always does, but I am encouraged by some of the signs that we see and the strength that we have as a company, the financial foundation that we've got, the strength of our balance sheet. You saw what we were able to do with our cash generation in the second quarter. Those are the things that are going to carry us through to where we start to come out of this trough, and I am very optimistic about the future, and I feel very good about the position that Olin is in, where we're at today, and how our team has been able to manage the performance around cash generation and the focus on value.

I, I do see some signs of encouragement and frankly, some things that you would normally see at the bottom of of a cycle which is you start to see rationalization of assets and you look at even what China is talking about doing, you know, the China involution is something that I am, optimistic is going to have some impact, it will take time. This is not the first time, China has talked about rationalizing. Um, either government controlled state-owned entities uh that are older, you know, higher costs, more polluting, they've talked about this for years, but I do think that you're getting to a Tipping Point where the amount of capacity and, and the squeeze on margins, because whether you look at epoxy, whether you look at chlorophyll, uh, PVC a lot of these businesses they are losing money. They're losing cash.

They're not just, they're not just on a P&L basis, a negative. They're cash negative, and they can only carry that for so long. So, there is going to be rationalization in the market.

It's going to take time; it always does. But I am encouraged by some of the signs that we see.

Ken Lane: It has really been great to see.

And the strength that we have as a company, the financial Foundation that we've got the strength of our balance sheet. You saw what we were able to do with our cash generation and the second quarter, those are the things that are going to carry us through to where we start to come out of this trough. And and I am very optimistic about the future and I feel very good about the position that an is in where we're at today and how our team has been able to manage the performance around cash generation and the focus on value. It has really been great to see

John Roberts: And your next question today will come from John Roberts with Mizuho Securities. Please go ahead. Thank you.

And your next question today will come from John Roberts with mizuho Securities. Please go ahead.

John Roberts: Could you scope for us at all what the September quarter headwind might be if we had a 50% tariff on U.S. caustic soda into Brazil? You talked about a couple of months of turmoil.

Thank you. Um, could you sculpt for us at all what the September quarter might be if we had a 50% tariff on U.S. caustic soda to Brazil?

You talked about a couple of months of turmoil.

John Roberts: Hi, John. Thank you for the question. Listen, it is difficult to put a number on that because we don't really have an idea what the retaliatory tariff would be, if there is any at all. So when I think about it, there's a direct impact, and then there's an indirect impact. And probably the short-term indirect impacts are going to be worse than anything else, because it's going to take you a month or two for all the trade flows to get rewired here. Because you can imagine, we're certainly not going to be paying a 50% tariff going into Brazil, if that were the case.

Hi John. Thank you for the question. Uh, listen, it is difficult to put a number on that because we don't really have an idea what the retaliatory tariff would be, if there is any at all.

So when I think about it, there's a direct impact and then there's an indirect impact. Probably the short-term indirect impacts are going to be worse than anything else because it's going to take you a month or two.

Ken Lane: So we're going to be moving products into different regions, and it takes a little bit of time to do that. That will create noise just around spot pricing that you'll probably see on the Gulf Coast. I think we're already starting to see some of that today. So we really need to get this behind us to get more stability and to get things established to whatever region we're going to be exporting product to.

For all the trade flows to get you know rewired here. You can imagine we're certainly not going to be paying a 50% tariff going into Brazil. If that were the case,

Ken Lane: But I want to go back to the other point that I made earlier. Demand is still stable. We are not seeing any deterioration in demand globally around cost. You know, I'm not saying that it's gangbuster, but we are seeing robust demand. And it's just a matter now of being able for the market to react to these tariffs and let that get digested by supply chains.

So we're going to be moving products into different regions and, you know, we've got to it takes a little bit of time to do that. That will create noise just around spot pricing, that you'll probably see on the Gulf Coast. I think we're already starting to see some of that today, so we really need to get this behind us to get to get more stability and to get things established, uh, you know, to whatever region. We're going to be exporting product to, but I want to go back to the other point that I made earlier demand is still stable. We are not seeing any deterioration in demand globally around caustic.

You know, I'm not saying that it's gangbusters, but we are seeing robust demand, and it's just a matter now of being able for the market to react to these tariffs.

And let that get digested by supply chains.

Jeff Zekauskas: And your next question today will come from Jeff Zekauskas with J.P. Morgan. Please go ahead. Thanks very much. I think the Brazilian tariff on caustic these days is about 7%. In general, do you pay that? Or do you sell caustic to a trader who pays that? And Exclusive of retaliatory tariff. Hasn't the Brazil Chemical Association wanted to or has petitioned the government? to increase tariffs to 18% because their domestic industry is losing share. You know, what do you think the normal timeframe for an adjudication of that issue is? And then for Todd, you said that the working capital benefit would be about $100,000.

And your next question today will come from Jeff Sakas with J.P. Morgan. Please go ahead.

Uh, thanks very much.

I think the Brazilian tariff on caustic these days is about 7%.

In general, do you pay that, or do you sell caustic to a trader who pays that?

and,

Exclusive of retaliatory, tariffs.

2 or or has petitioned the government?

To increase tariffs to 18% because their domestic industry is losing share.

You know what? What do you think? The normal time frame for an adjudication of that issue is...

And then for Todd, um, you said that the working capital benefit would be about $100 million.

Todd Slater: There would be an 80 million offset. from a taxpayer. Your deferred taxes for the first half of the year are a little bit more than $50 million. Does that mean that the deferred tax burden is $80 million in total? Or is it a higher number and this $80 million hasn't been paid yet? Can you balance the deferred tax number with the working capital number?

But there would be an $80 million offset.

From a tax payment.

Your deferred taxes for the first half of the year are a little bit more than $50 million. Does that mean that the deferred tax burden is $80 million in total? Or is it a higher number than that? $80 million hasn't been paid yet, correct? Can you balance the deferred tax number with the working capital number?

Todd Slater: Good morning, Jeff. Thank you for joining us. Listen, I think the key difference here around the tariffs that you just mentioned is retaliatory tariffs specifically against the United States are different than a general tariff for all imports. When there's a general tariff for all imports, what we've seen, at least in commodity chemicals, is you will see the domestic price rise to reflect that tariff because everybody faces the same tariff. We are seeing that even in the Mexican market today with the tariff that they have. You know, a general tariff for everyone doesn't concern me, as a U.S.

Good morning, Jeff. Thank you for joining us. Listen, I think that the key difference here around the tariffs that you just mentioned is that retaliatory tariffs, specifically against the United States, are different than a general tariff for all imports. When there's a general tariff for all imports, what we've seen, at least in commodity chemicals, is that you will see the domestic price rise to reflect that tariff because everybody faces the same tariff. We are seeing that, even in the Mexican market today, with the tariff.

That that they have. So

You know, a general tariff for everyone doesn't concern me.

Ken Lane: producer, like a retaliatory tariff, potentially, of 50%. Now, we don't know where that's going to be, but if there's a 50% tariff just against the U.S., that is a different animal entirely than a general tariff, you know, which everybody is going to have to absorb and pass on to the market, which is typically what we see happening.

Todd Slater: So Todd, do you want to take the question around the... working capital and tax. Sure.

As a U.S. producer, a retaliatory tariff, potentially of 50%, would have significant implications. Now, we don't know where that's going to be, but if there's a 50% tariff specifically against the U.S., that is a different animal entirely than a general tariff that everyone is going to have to absorb and pass on to the market, which is typically what we see happening. So, Todd, do you want to take the question around the...

Todd Slater: No, thanks for the question, Jeff. Overall, on cash taxes for 2020, for cash taxes for 2025, we expect the full year we expect to pay around $175 million. Through the end of the second quarter, we've paid $144 million. So in the back half of the year, we would obviously think we're going to spend another $30 million in cash tax. in the last part of the year. I think that probably gets at your ultimate deferred tax question.

Todd Slater: When we look at our overall tax position, that's what we And your next question today will come from Vincent Andrews with Morgan Stanley. Please go ahead. Thanks, and good morning, everyone. Just a question, again, on Winchester and the pricing. I just want to make sure I understand the cadence of what's happened. It seems like in the second quarter, there was some competitive pricing activity, and maybe you could help us understand whether those were list price declines or whether they were buy one, get ones or whatever the structure of that was. But going to 3Q, because of inflation, you're looking to raise prices, and I'm wondering whether the competitors have matched those price increases, or maybe that's not clear yet one way or the other.

Working capital and tax. Sure, no, thanks for the question, Jeff. Um, overall, I'm cash taxes for 20, um, for cash. Taxes for 2025, we expect the full year, we expect to pay around 175 million through the end of the second quarter. We've paid 144 million. So in the back half of the year we would obviously think we're going to spend another 30 million dollars in cash taxes. Um in the last part of the year, I think that probably gets at the your ultimate deferred tax question. When we look at our overall um tax position that's what we think.

And your next question today will come from Vincent Andrews with Morgan Stanley. Please go ahead.

Vincent Andrews: But if they don't, are you baking into the forecast of potential volume erosion if you're sort of widening price gaps into a negative volume market?

Uh, thanks and good morning everyone. Um, just a question again on Winchester and the pricing. Um, I just want to make sure I understand that the Cadence of what's happened. It seems like in the second quarter, uh, there was some competitive pricing activity and maybe you could help us understand whether those were list price declines or whether they were buy 1, get 1 or or whatever the structure of that was but going to 3 Q because of inflation. You're looking to raise prices and I'm wondering whether the competitors have matched those price increases, or maybe, that's not clear yet, 1 way or the other. But if, if, if if if they don't are you banking into the forecast and potential volume erosion, if you're uh, you know, sort of widening, price, gaps into a negative volume Market.

Vincent Andrews: Hi, Vincent.

Vincent Andrews: Thanks for joining us. Listen, we've seen, since the end of the year last year, what we've seen is a combination of price, just general price erosion, rebates that have been granted. You know, that's predominantly what we have seen in the marketplace.

Hi Vincent, thanks for, uh, thanks for joining us.

Ken Lane: Now, I don't want to get into commenting on what retailers are doing, because there's a pretty broad portfolio of products that, you know, you can't draw, you know, you can't paint everything with the same brush. But there are some promotions that you see flowing through even into retail. Just in general, we have seen that. And we see that at the same time that costs are exploding.

Uh, listen, we've seen, um, since the end of the year last year, what we've seen is a combination of price, just general price erosion, uh, rebates that have been granted. Um, you know, that's predominantly what we have seen in the marketplace. Now, I don't want to get into commenting on what retailers are doing because there's a pretty broad portfolio of products that, um,

You know, you can't draw, you know, you can't paint everything with the same brush, but there are some some promotions that you see flowing through even into retail. Just, in general, we have seen that.

Ken Lane: That has to change for us as Winchester. I'm not going to comment on what others are doing. They can do what they want to do, but we've got to find a way to improve our margins in the face of really historic cost increases and destocking implications here. So that is something that we're looking to do in the third quarter. Like I had said on the prepared remarks, we expect to see some improvement in Winchester. Some of that is going to be seasonal, some of that will be a little bit of margin. But I hope we can get even more, to be honest with you.

And we see that at the same time that costs are exploding.

Um, that has to change for us as Winchester. I'm not going to comment on what others are doing; they can do what they want to do, but we've got to find a way to improve our margins in the face of, uh, really historic cost increases and, um, these stocking implications here. So, uh, that is something that we're looking to, uh, to do in the third quarter. Like I had said in the prepared remarks, we expect to see some improvement in Winchester.

Some of that is going to be seasonal.

You know, some of that will be a little bit of margin.

Ken Lane: But right now, it's a tough market, and our teams are going to be focused on getting the best that they can in terms of value. We're going to have the same value approach and mindset that we have with Winchester that we've got in chemicals. It's not just for chemicals that we're thinking about that, but we've got to get more in terms of margin out of that business.

Um but I hope we can get even more to be honest with you. But right now it's it's a tough, it's a tough market, and our teams are going to be focused on getting the best that they can. In terms of of value, we're going to have the same value approach and mindset that we have with Winchester that we've got in chemicals. It's

Uh, it's not just for chemicals that we're thinking about that. But, we've got to get more in terms of margin out of that business.

Arun Viswanathan: And your next question today will come from Arun Viswanathan with RBC Capital Markets. Please go ahead. Great. Thanks for taking my question. I hope you guys are well. So, a little bit of a two-part question. So, first off, you know, you guys had mentioned that, you know, the value over the volume strategy is still kind of your preferred operating strategy. Just wanted to confirm that's still the case. We've heard some, I guess, thoughts that maybe you guys are running a little bit fuller, and, you know, maybe just give us your thoughts there. And then, just on the guide, assuming that you do hit the midpoint of your Q3 guide, 190, usually your Q4 is lower, so, you know, we should assume a little bit of a drop-off there, maybe in Q4, correct me if I'm wrong.

And your next question today will come from Arun Biswan with RBC Capital Markets. Please go ahead.

Arun Viswanathan: And then, but that kind of puts you in the low 700s for the year. Is that kind of the run rate that you'd be exiting the year at? Is there any, you know, unusual items that we should add back when we think about 26? I'm sure there are on the barrel and other sides.

Great. Thanks for taking my question. I hope you guys are well. Um, so a little bit of a 2-part question. So, first off, um, you know, you guys had mentioned that, uh, you know, the value of the volume strategy is still kind of your preferred, um, operating strategy just wanted to confirm, that's still the case. Um, we've heard some I guess, uh, thoughts that maybe you guys are running a little bit Fuller and I and then, and then, you know, maybe just give us your thoughts there. And then, just on the guide, um, assuming that you do hit the midpoint of your Q3 guide. 190. Um, usually, your Q4 is lower. So, you know, uh, we were, we should assume a little bit of a drop off there, maybe in Q4, uh, correct me if I'm wrong. And then, but that kind of puts you in the, in the low 700s for the year, um, is that kind of the Run rate that you be

Arun Viswanathan: So, if you could just help with your operating strategy, and then maybe some of the unusual items that would help you bridge into a higher 26, that'd be great. Thanks.

Exiting the year at um, is there, is there any unusual items that we should add back? And we think about 2026, uh, I'm sure there are on the barrel and the other side. So if you can just help with, uh, with your operating strategy and then maybe some of the unusual items that would help you bridge into a higher 2026. That'd be great. Thanks.

Ken Lane: Absolutely. Thank you, Arun. The focus on value is not changing, and our volume will be adjusted based on how we think we can get the most value from the assets that we have in the market that we're participating in. So there are going to be times where we're going to want to run our assets harder in certain product lines, and there are going to be times where we're going to pull back. That's the nature of our model. We're going to continue to do that as a leader in the industry, and nothing has changed in that respect.

Absolutely, thank you, Arun.

The, um, you know, the focus on value is not changing, and our volume will be adjusted based on how we think we can get the most value from the assets that we have in the market that we're participating in.

Ken Lane: I think people have to remember some of our markets are very local, very regional. Some of them are global, and we will strategically and commercially play in those markets in the way that we think gives us the greatest advantage in terms of being able to extract the most value and generate the highest amount of cash for our shareholders. That is our focus, full stop. Now, in terms of Q4, when we look out, yes, normally Q4 is the weakest quarter for us in the year. We've got some other things that you saw in the slides that we sent out as part of the...

So there are going to be times where we're going to want to run our assets harder in certain product lines, and there are going to be times where we're going to pull back. Uh, that's the nature of our model. We're going to continue to do that as a leader in the industry, and nothing has changed in that respect. I think people have to remember that some of our markets are very local, very regional; some of them are global, and we will strategically and commercially play in those markets in the way that we think gives us the greatest advantage in terms of being able to extract the most value and generate the highest amount of cash for our shareholders. That is our focus, full stop.

Ken Lane: Our earnings call, we do have in the second half of the year, we've got higher turnaround costs as well, especially for Q4 and epoxy, you'll see that there's a pretty significant turnaround that we've got then. So Q4, we expect the pattern to be the same. Q3 is going to be similar to Q2 this year as we've put out in our guidance. And then Q4, we expect to see a week or quarter. Not any different than what we've seen in the past. So as I said, and as Todd had mentioned, we're going to focus on pulling as much working capital down and generating cash in that timeframe.

Ken Lane: And I expect we will be able to do that because when we have turnarounds, we're able to pull inventory. And that's what we're going to be doing between now and the end of the year to generate that cash.

Now, in terms of Q4, when when we look out, yes, normally Q4 is the weakest quarter for us in the year. Um, we've got, we've got some other things that that you saw in the slides that we sent out as as part of the um earnings call, we do have uh, in the second half of the year, we've got higher uh, turnaround costs as well, especially for Q4 and epoxy you you'll see that there's a pretty significant turnaround that we've got then. So you know, Q4 we expect the pattern to be the same, Q3 is going to be, you know, similar to Q2 this year, as, as we've put out in our guidance. And then Q4, we expect to see a week or quarter, not any different than what we've seen in the past. So um, as I said and as Todd had mentioned, we're going to focus on pulling as much working capital down and generating cash in that time frame. And I expect we will be able to do that because when we have turnarounds we're able to pull inventory and and that

That's what we're going to be doing between now and the end of the year to generate that cash.

Pete Osterland: And your next question today will come from Pete Osterland with Truist Securities. Please go ahead. Hey, good morning. Thanks for taking the questions.

And your next question today will come from Pete Austerland with Truist Securities. Please go ahead.

Pete Osterland: I wanted to ask one on the competitive dynamics in epoxy, particularly in Europe. You have a competitor that recently announced they're shutting down some capacity in the region. And then anti-dumping duties in the EU were finalized earlier this week. So all else equal, how do you see competitive activity there impacting Olin? I mean, do you expect that these developments could meaningfully impact volumes or profitability for that business going forward?

Hey, good morning. Thanks for taking the questions. Um, I wanted to ask one on the competitive dynamics in epoxy, particularly in Europe. Um, you have a competitor that recently announced they're shutting down some capacity in the region, and then, uh, anti-dumping duties in the EU were finalized earlier this week. So all else equal, how do you see competitive activity there impacting Olin? I mean, do you expect that these developments could meaningfully impact volumes or profitability for that business going forward?

Ken Lane: Good morning, Pete. Listen, you know, it's, it's, let me start by saying, I was very discouraged by what we saw by by the European Commission related to anti dumping duties, particularly for South Korea. You know, I watched what's happening in Europe, and I see them coming out and talking about, you know, this chemicals action plan. And, you know, they've got lots of great things that they're talking about.

Good morning, Pete. Uh, listen. You know, it's, um, let me start by saying I was very discouraged by what we saw from the European Commission related to anti-dumping duties, particularly for South Korea.

Ken Lane: It's too little too late, I believe. They're moving very slowly. They had an opportunity to protect a vital industry for a lot of what they want to do in terms of onshoring manufacturing. They're talking about developing their defense industry. Well, you need epoxy for all of that. And they chose not to put anti dumping duties on one of the worst offenders for dumping in Europe.

Ken Lane: So that was very disappointing for me. Now having said that, we are the last integrated supplier of epoxy resin in Europe. And that is something that we will need to take advantage of. And going back to what I said just a minute ago around value over volume and what's our commercial strategy, we watch what's happening in the market. And when we see things happening in the market, we're going to adjust our model to get the highest value based on what we see. We're the last integrated player. We see the local customers who need critical supply and reliability of supply coming to us.

It's too little, too late. I believe they're moving very slowly. They had an opportunity to protect a vital industry for a lot of what they want to do. In terms of onshoring manufacturing, they're talking about developing their defense industry. Well, you need epoxy for all of that, and they chose not to put anti-dumping duties on one of the worst offenders for dumping in Europe. So that was very disappointing for me.

I have said that we are the last integrated supplier of epoxy resin in Europe.

And that is something that we will need to take advantage of. Going back to what I said just a minute ago around value over volume and what our commercial strategy is, we watch what's happening in the market. When we see things happening in the market, we're going to adjust our model to get the highest value based on what we see.

Ken Lane: So we're going to be focused on getting the volume that we should as the last integrated player. And that is going to help us generate more value as we go into the new year and start to realize this new agreement that we have for the supply situation at Stata. So all of that is going to be built into our commercial strategy, and we're going to have to respond accordingly and go get the share of the market that we believe we're entitled to under the conditions that we currently see, which are not great, but at the end of the day, we've got to be competitive.

We're the last integrated player. We see the local customers, uh, who need critical supply and reliability of supply coming to us.

So, we're going to be focused on getting.

Getting the volume that that uh, that we should as the last integrated player and that is going to help us generate more value as we go into the new year and start to realize this uh this new agreement that we have for for the supply situation at sta. So all of that is going to be built into our commercial strategy and you know, we're going to have

We can respond accordingly and go get the share of the market that we believe we're entitled to under the conditions that we currently see, which are not great.

But at the end of the day, we've got to be competitive.

Roger Spitz: And your next question today will come from Roger Spitz with Bank of America. Please go ahead. Thank you very much.

And your next question today, will come from Roger Spitz with Bank of America. Please go ahead.

Roger Spitz: Can you please update us on your plan to test the U.S. PVC market with VCM you told to PVC through CHEM I?

Thank you very much. Uh can you please update us on your uh your plan to test the US PVC Market? Uh with vcm, you told to PVC through chem 1 thank you.

Ken Lane: Good morning, Roger. Thanks for the question. Yeah, so listen, I still continue to be very impressed with what our team has done from the beginning of the year until now. So we've got a handful of customers, we've got a handful of products that we're we're actively marketing today. We've got another of, you know, Long list, frankly, of customers that we're also qualifying with, so I'm very encouraged with what I see. You know, PVC is a weak market. We're not doing this because of the short-term market that we see. We're doing this because, really, this is getting us in front of customers and understanding the landscape and learning more about the dynamics around PVC and where we're going to go in the longer term.

Good morning, Roger. Thanks for the question. Yes, I still continue to be very impressed with what our team has done from the beginning of the year until now.

Uh, so we've got a handful of customers. We've got a handful of products that we're. We're we're actively marketing today. Uh, we've got another of, uh, you know.

Ken Lane: So we've got time. We've got until the end of 2030. My expectation is there's going to be a lot of things happen in the next 18 to 24 months before we've got to make any final decision on what we're going to do. But our goal is to make sure that we find the most capital-efficient way to continue to participate in the vinyl market with our fully integrated VCM asset. create the highest value for our shareholders and allocate the least amount of capital to be able to do that. That really is what we're trying to accomplish here.

Long list, frankly of of customers that were also qualified with. So I'm very encouraged with what I see. And you know PBC is a weak Market. We're not doing this because of the short term Market that we see, we're doing this because really, this is getting us in front of customers and and understanding the landscape and learning more about the Dynamics around PVC and where we're going to go in the longer term. So we've got, um, we've got time, we've got until the end of 2030.

Um, my expectation is there's going to be a lot of things happen in the next 18 to 24 months before, we've got to make any final decision on what we're going to do. Um, but our goal is to make sure that we find the most Capital efficient way, uh, to continue to participate in the vinyl Market.

With our fully integrated vcm asset.

Ken Lane: And so we're looking at all kinds of things. We're looking at commercial agreements. We're looking at potential joint ventures and partnerships and all of those things are on the table, but it's still very early. But commercially, what I see our team doing, I've been very impressed with.

Create the highest value for our shareholders and allocate? The least amount of capital to be able to do that. That really is what we're trying to accomplish here. And so we're looking at all kinds of things. We're looking at, uh, commercial agreements. We're looking at the potential joint ventures and Partnerships and all of those things are on the table, but it's still very early.

The commercially, what I see our team doing, I've been very impressed with.

Operator: As there are no further questions, this concludes our question and answer session.

Ken Lane: I would like to turn the conference back over to Ken Lane for closing comments. Well, good morning again to everyone. I just want to say thank you for joining us. We appreciate your interest in Olin and we certainly look forward to the next call. We wish you all a great week. Be safe.

As there are no further questions, this concludes our question and answer session. I would like to turn the conference back over to Ken Lane foreclosing, comments.

Well, good morning. Again, to everyone. I just want to say thank you for joining us. We appreciate your interest in Olan and we certainly look forward to the next call. Uh we wish you all a great week be safe.

Operator: The conference has now concluded. Thank you for attending today's presentation.

Operator: You may now disconnect.

The conference has now concluded, thank you for attending today's presentation. You may now disconnect