Earnings Call Excerpt
Olin Corporation (OLN)
Q2 2009 Earnings Call
July 28, 2009 10:00 am ET
Executives
Joseph D. Rupp - Chairman of the Board, President, Chief Executive officer
John E. Fischer - Chief Financial Officer, Vice President
John L. McIntosh - Vice President and President - Chlor Alkali Products Division
Larry Kromidas - Assistant Treasurer and Director of IR
Analysts
Frank J. Mitsch - BB&T Capital Markets
Christopher W. Butler - Sidoti & Company LLC
Edward H. Yang - Oppenheimer
Donald Carson - UBS
Michael Judd - Greenwich Consultants
Greg Goodnight - Unidentified Company
Christine McDuffie (ph) - Goldman Sachs
Michael Waferman (ph) - Morris & Cabot (ph)
Presentation
Good day, ladies and gentlemen, and welcome to the Olin Second Quarter 2009 Earnings Conference Call. My name is Michelle and I will be your coordinator for today. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of today's conference. (Operator's instructions) As a reminder, this conference is being recorded for replay purposes. And I would now like to turn the presentation over to your host for today's call, Mr. Joseph Rupp, Chairman, President and CEO. Please proceed.
Joseph D. Rupp
Thank you. Good morning, and thank you for joining us today. With me this morning are John Fischer, Vice President and Chief Financial Officer; John McIntosh, Vice President and President of our Chlor Alkali Products Business; and Larry Kromidas, our Assistant Treasurer and Director of Investor Relations.
Last night we announced that net income in the second quarter of 2009 was $27.8 million or 36 cents per diluted share, compared to $35.5 million or 47 cents per diluted share in the second quarter of 2008. During the second quarter of 2009, the Winchester business achieved the highest level of quarterly sales and earnings in the history of the business. These results reflect the continuation of the stronger-than-normal demand that began in the fourth quarter of 2008. Winchester earnings doubled in the second quarter of 2009 compared to the second quarter of 2008, driven by commercial sales, which increased 33% year over year. Chlor alkali earnings declined 32% in the second quarter of 2009 compared to the second quarter of 2008. This decline reflects lower shipment volumes of both chlorine and caustic soda, which declined 32% year over year. ECU netbacks in the second quarter of 2009 declined slightly compared to the second quarter of 2008. The second quarter 2009 chlor alkali operating rate was 70%, which was slightly improved from the first quarter 2009 rate of 65%, but well below the second quarter of 2008 rate of 89%. Third quarter 2009 earnings per share are forecast to be in the 20 cents per diluted share range. This forecast includes an anticipated $44 million pretax recovery of environmental costs incurred and expensed in prior periods. The combination of the precipitous decline in caustic soda prices and the continuation of weak demand will likely result in a third quarter segment loss in the chlor alkali business. ECU netbacks are expected to decline approximately 40% in the third quarter of 2009 when compared to the second. Winchester expects continued strong demand in the third quarter of 2009 with earnings comparable to the second quarter, which were well above historic levels.
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