OLIN Corp

Cash Flow Data

Operating Activities

For 2023, cash provided by operating activities decreased by $947.6 million from 2022, primarily due to a decrease in operating results compared with the prior year. For 2023, working capital decreased $68.6 million, compared to a decrease of $65.2 million in 2022. Inventories decreased by $94.4 million from December 31, 2022, primarily due to inventory destocking efforts. A portion of the working capital decrease in 2023 was offset by incremental working capital associated with BWA.

For 2022, cash provided by operating activities increased by $180.9 million from 2021, primarily due to a decrease in working capital compared with the prior year. For 2022, working capital decreased $65.2 million, compared to an increase of $243.1 million in 2021. Receivables decreased by $160.8 million from December 31, 2021, primarily as a result of lower sales in the fourth quarter of 2022 compared to fourth quarter of 2021. Inventories increased by $86.3 million from December 31, 2021, primarily as a result of increased raw material costs and increased inventory quantities within our Winchester and Epoxy businesses.

Investing Activities

Capital spending was $236.0 million and $236.9 million in 2023 and 2022, respectively. In 2024, we expect our capital spending to be in the $225 million to $250 million range. Our capital spending forecast represents normal capital spending to maintain our current operating facilities.

On October 1, 2023, Olin acquired the assets of White Flyer from Reagent for $63.9 million. The acquisition was financed with cash on hand.

For the year ended December 31, 2023 and 2022, payments of $64.5 million and $37.7 million, respectively, were made under other long-term supply contracts for energy modernization projects on the U.S. Gulf Coast and we expect to make payments in the $25.0 million to $50.0 million range in 2024.

For the year ended December 31, 2023, we received $28.5 million of cash proceeds from the sale of our domestic private trucking fleet and operations. For the year ended December 31, 2022, we received proceeds of $14.9 million from the sale of two former manufacturing facilities.

Financing Activities

During 2023 and 2022, activity of our outstanding debt included:

In 2022, we paid debt issuance costs of $4.4 million, primarily for the refinancing of our senior credit facilities.

In 2023 and 2022, we repurchased and retired 13.3 million and 25.7 million shares, respectively, of common stock with a total value of $711.3 million and $1,350.7 million, respectively.

In 2023 and 2022, we issued 1.0 million and 1.1 million shares, respectively, with a total value of $25.4 million and $25.7 million, respectively, representing stock options exercised.

The percent of total debt to total capitalization increased to 54.1% as of December 31, 2023, from 50.4% as of December 31, 2022, primarily as a result of a higher level of debt outstanding and lower shareholders’ equity, primarily due to common stock repurchases partially offset by our operating results.

For the year ended December 31, 2023, we received $44.1 million of cash contributions from noncontrolling interests for BWA.

Dividends per common share were $0.80 in 2023 and 2022. Total dividends paid on common stock amounted to $101.0 million and $116.2 million in 2023 and 2022, respectively. On February 21, 2024, our Board of Directors declared a dividend of $0.20 per share on our common stock, payable on March 15, 2024, to shareholders of record on March 7, 2024.

The payment of cash dividends is subject to the discretion of our Board of Directors and will be determined in light of then-current conditions, including our earnings, our operations, our financial condition, our capital requirements and other factors deemed relevant by our Board of Directors. In the future, our Board of Directors may change our dividend policy, including the frequency or amount of any dividend, in light of then-existing conditions.

Liquidity and Other Financing Arrangements

Our principal sources of liquidity are from cash and cash equivalents, cash flow from operations and borrowings under our Senior Revolving Credit Facility, Receivables Financing Agreement (as defined below) and AR Facilities (as defined below). Additionally, we believe that we have access to the high yield debt and equity markets.

On October 11, 2022, we entered into a $1,550.0 million senior credit facility (Senior Credit Facility) that replaced our 2021 Senior Credit Facility. The Senior Credit Facility includes a senior term loan facility with aggregate commitments of $350.0 million (Term Loan Facility) and a senior revolving credit facility with aggregate commitments of $1,200.0 million (Senior Revolving Credit Facility). The Term Loan Facility was fully drawn on the closing date with the proceeds of the Term Loan Facility used to refinance the loans and commitments outstanding under the 2021 Senior Credit Facility. The Term Loan Facility requires principal amortization payments which began on March 31, 2023, at a rate of 0.625% per quarter through the end of 2024, increasing to 1.250% per quarter thereafter until maturity. The maturity date for the Senior Credit Facility is October 11, 2027.

The Senior Revolving Credit Facility includes a $100.0 million letter of credit subfacility. At December 31, 2023, we had $1,131.6 million available under our $1,200.0 million Senior Revolving Credit Facility because we had $68.0 million borrowed under the facility and issued $0.4 million of letters of credit.

We were in compliance with all covenants and restrictions under all our outstanding credit agreements as of December 31, 2023, and no event of default had occurred that would permit the lenders under our outstanding credit agreements to accelerate the debt if not cured. In the future, our ability to generate sufficient operating cash flows, among other factors, will determine the amounts available to be borrowed under these facilities. As a result of our restrictive covenant related to the net leverage ratio, the maximum additional borrowings available to us could be limited in the future. The limitation, if an amendment or waiver from our lenders is not obtained, could restrict our ability to borrow the maximum amounts available under the Senior Revolving Credit Facility and the Receivables Financing Agreement. As of December 31, 2023, there were no covenants or other restrictions that limited our ability to borrow.

We believe, based on current and projected levels of cash flow from our operations, together with our cash and cash equivalents on hand and the availability to borrow under our Senior Revolving Credit Facility, Receivables Financing Agreement and AR Facilities, we have sufficient liquidity to meet our short-term and long-term needs to make required payments of interest on our debt, fund our operating needs, working capital, and capital expenditure requirements and comply with the financial ratios in our debt agreements.

On July 28, 2022, our Board of Directors authorized a share repurchase program for the purchase of shares of common stock at an aggregate price of up to $2.0 billion. This program will terminate upon the purchase of $2.0 billion of common stock.

For the years ended December 31, 2023 and 2022, 13.3 million and 25.7 million shares, respectively, of common stock have been repurchased and retired at a total value of $711.3 million and $1,350.7 million, respectively. As of December 31, 2023, a cumulative total of 19.2 million shares were repurchased and retired at a total value of $1,003.0 million and $997.0 million of common stock remained authorized to be repurchased under the 2022 Repurchase Authorization program.

We maintain a $425.0 million Receivables Financing Agreement (Receivables Financing Agreement) that is scheduled to mature on October 14, 2025. Under the Receivables Financing Agreement, our eligible trade receivables are used for collateralized borrowings and continue to be serviced by us. In addition, the Receivables Financing Agreement incorporates the net leverage ratio covenant that is contained in the Senior Credit Facility. As of December 31, 2023 and 2022, we had $328.5 million and $300.0 million drawn under the agreement. As of December 31, 2023, $456.6 million of our trade receivables were pledged as collateral and we had $33.3 million of additional borrowing capacity under the Receivables Financing Agreement, which was limited by our borrowing base.

Olin also has trade accounts receivable factoring arrangements (AR Facilities) and pursuant to the terms of the AR Facilities, certain of our domestic subsidiaries may sell their accounts receivable up to a maximum of $175.5 million and certain of our foreign subsidiaries may sell their accounts receivable up to a maximum of €22.0 million. We will continue to service the outstanding accounts sold. These receivables qualify for sales treatment under ASC 860 “Transfers and Servicing” and, accordingly, the proceeds are included in net cash provided by operating activities in the consolidated statements of cash flows.

The following table summarizes the AR Facilities activity:

The factoring discount paid under the AR Facilities is recorded as interest expense on the consolidated statements of operations. The factoring discount for the years ended December 31, 2023 and 2022 was $4.7 million and $3.1 million, respectively. The agreements are without recourse and therefore no recourse liability has been recorded as of December 31, 2023.

We have registered an undetermined amount of securities with the SEC, so that, from time-to-time, we may issue debt securities, preferred stock and/or common stock and associated warrants in the public market under that registration statement.

Credit Ratings

We receive ratings from three independent credit rating agencies: Fitch Ratings (Fitch), Moody's Investor Service (Moody's) and Standard & Poor's (S&P). The following table summarizes our credit ratings as of January 31, 2024:

On January 12, 2023, Fitch assigned a first-time inaugural rating of BBB- and a stable outlook. On June 30, 2023, Moody's affirmed Olin’s Ba1 rating and stable outlook. On April 4, 2023, S&P affirmed Olin’s BB+ rating and positive outlook.

Contractual Obligations

Our current debt structure is used to fund our business operations. As of December 31, 2023, we had long-term borrowings, including the current installment, of $2,670.1 million, of which $893.7 million was at variable rates. We expect to meet our contractual obligations through our normal sources of liquidity and believe we have the financial resources to satisfy these contractual obligations.

We have several defined benefit pension and defined contribution plans, as described in Note 13 “Pension Plans” and Note 17 “Contributing Employee Ownership Plan” in the notes to consolidated financial statements contained in Item 8. We fund the defined benefit pension plans based on the minimum amounts required by law plus such amounts we deem appropriate. Given the inherent uncertainty as to actual minimum funding requirements for qualified defined benefit pension plans, no amounts are included in this table for any period beyond one year for the domestic qualified defined benefit plan. Based on the current funding requirements, we will not be required to make any cash contributions to the domestic qualified defined benefit pension plan at least through 2024. We also have postretirement healthcare plans that provide health and life insurance benefits to certain retired employees and their beneficiaries, as described in Note 14 “Postretirement Benefits” in the notes to consolidated financial statements contained in Item 8. The defined contribution and other postretirement plans are not pre-funded, and expenses are paid by us as incurred. Our long-term contractual commitments associated with debt, contingent tax liabilities, pension and other postretirement benefits consisted of the following:

(1)Excludes unamortized debt issuance costs and unamortized bond original issue discount of $16.8 million at December 31, 2023. All debt obligations are assumed to be held until maturity.

(2)For the purposes of this table, we have assumed for all periods presented that there are no changes in the interest rates from those in effect at December 31, 2023, which ranged from 5.0% to 9.5%.

(3)These amounts are only estimated payments for our foreign qualified pension plans, assuming a weighted average annual expected rate of return on pension plan assets of 4.4% and a discount rate on pension plan obligations of 3.2%. These estimated payments are subject to significant variation and the actual payments may be more than the amounts estimated. In connection with international qualified defined benefit pension plans we made cash contributions of $1.0 million, $1.3 million and $1.1 million in 2023, 2022 and 2021, respectively, and we anticipate less than $5 million of cash contributions to international qualified defined benefit pension plans in 2024.

Non-cancelable operating leases and purchasing commitments are utilized in our normal course of business for our projected needs. Our operating lease commitments as described in Note 22 “Leases” are primarily for railcars, but also include logistics, manufacturing, storage, real estate, and information technology assets. Virtually none of our lease agreements contain escalation clauses or step rent provisions. We also have supply contracts with various third parties for certain raw materials, including ethylene, electricity, propylene and benzene. These contracts have initial terms ranging from several to 20 years. Our long-term contractual commitments associated with operating leases and purchasing commitments consisted of the following:

Other Guarantees

We also have standby letters of credit outstanding of $120.7 million of which $0.4 million have been issued under our Senior Revolving Credit Facility. The letters of credit were used to support certain long-term debt, workers compensation insurance policies, plant closure and post-closure obligations, international payment obligations and international pension funding requi rements.