OLIN Corp

Sales for the three months ended September 30, 2024 were $1,589.5 million compared to $1,671.4 million in the same period last year, a decrease of $81.9 million, or 5%. Chlor Alkali Products and Vinyls sales decreased by $98.0 million primarily due to lower pricing, primarily caustic soda. Epoxy sales decreased by $36.5 million, primarily due to lower sales volumes, primarily as a result of Hurricane Beryl. Winchester sales increased by $52.6 million, primarily due to third quarter 2024 sales from White Flyer and increased sales to international military customers and military project revenue, partially offset by lower commercial ammunition sales.

Gross margin decreased $134.6 million for the three months ended September 30, 2024 compared to the prior year. Chlor Alkali Products and Vinyls gross margin decreased by $117.7 million primarily due to the impact of Hurricane Beryl and lower pricing, primarily caustic soda. Epoxy gross margin decreased by $11.0 million primarily due to the impact of Hurricane Beryl, partially offset by lower raw material and operating costs. Winchester gross margin decreased by $6.9 million primarily due to higher commodity and operating costs, including propellant costs. Gross margin as a percentage of sales decreased to 8% in 2024 from 16% in 2023, across all segments.

Selling and administrative expenses for the three months ended September 30, 2024 were $111.7 million, an increase of $20.8 million from the prior year. The increase was primarily due to higher legal and legal-related settlement expense of $11.9 million, consulting and contract services of $2.3 million, and stock-based compensation expense of $2.2 million, which includes mark-to-market adjustments. Selling and administrative expenses as a percentage of sales increased to 7% in 2024 from 5% in 2023.

Restructuring charges for the three months ended September 30, 2024 and 2023 were $7.9 million and $11.9 million, respectively. Restructuring charges were primarily associated with our 2023 actions to reconfigure our global Epoxy asset footprint to optimize the most productive and cost effective assets to support our strategic operating model, which resulted in pretax restructuring charges of $6.3 million and $8.6 million for the three months ended September 30, 2024 and 2023, respectively.

Interest expense increased by $2.2 million for the three months ended September 30, 2024 from the prior year, primarily due to higher average interest rates.

Non-operating pension income includes all components of pension and other postretirement net periodic benefit (income) cost, other than service costs. Non-operating pension income was higher for the three months ended September 30, 2024 primarily due to a decrease in the discount rate used to determine interest costs, partially offset by higher actuarial losses recognized to income.

The effective tax rate for the three months ended September 30, 2024 included a net $2.9 million tax expense, primarily associated with a change in tax contingencies and remeasurement of deferred taxes due to an increase in our state effective tax rates, partially offset by a benefit from prior year tax positions. Excluding these items, the effective tax rate for the three months ended September 30, 2024 of 11.5% was lower than the 21.0% U.S. federal statutory rate primarily due to state income tax, foreign income inclusions and an increase in the estimated annual effective tax rate, partially offset by favorable permanent salt depletion deductions. The effective tax rate for the three months ended September 30, 2023 included a net $7.2 million tax benefit, primarily associated with stock-based compensation and prior year tax positions, partially offset by an expense from a change in tax contingencies. Excluding these items, the effective tax rate for the three months ended September 30, 2023 of 23.2% was higher than the 21.0% U.S. federal statutory rate primarily due to state income tax and an increase in the valuation allowance related to losses in foreign jurisdictions, partially offset by favorable permanent salt depletion deductions and foreign income taxes.

Sales for the nine months ended September 30, 2024 were $4,868.8 million compared to $5,218.4 million in the same period last year, a decrease of $349.6 million, or 7%. Chlor Alkali Products and Vinyls sales decreased by $412.5 million primarily due to lower pricing, primarily caustic soda. Epoxy sales decreased by $72.0 million, primarily due to lower product pricing, partially offset by increased sales volumes. Winchester sales increased by $134.9 million, primarily due to 2024 sales from White Flyer and increased sales to international military customers and military project revenue.

Gross margin decreased $402.2 million for the nine months ended September 30, 2024 compared to the prior year. Chlor Alkali Products and Vinyls gross margin decreased by $360.9 million primarily due to lower pricing, primarily caustic soda, partially offset by lower costs. Epoxy gross margin decreased by $50.9 million primarily due to lower product pricing, partially offset by increased volumes. Winchester gross margin increased by $4.1 million primarily due to higher sales volume, including White Flyer, partially offset by higher commodity and operating costs, including propellant costs. Gross margin as a percentage of sales decreased to 12% in 2024 from 19% in 2023, across all segments.

Selling and administration expenses for the nine months ended September 30, 2024 were $308.2 million, an increase of $4.3 million from the prior year. The increase was primarily due to higher legal and legal-related settlement expense of $13.6 million, partially offset by a favorable foreign currency impact of $3.0 million and lower stock-based compensation expense of $2.7 million, which includes mark-to-market adjustments. Selling and administration expenses as a percentage of sales was 6% for both the nine months ended September 30, 2024 and 2023.

Restructuring charges for the nine months ended September 30, 2024 and 2023 were $23.0 million and $92.0 million, respectively. The decrease was primarily due to charges associated with our 2023 actions to reconfigure our global Epoxy asset footprint to optimize the most productive and cost effective assets to support our strategic operating model, which resulted in pretax restructuring charges of $15.6 million and $79.7 million for the nine months ended September 30, 2024 and 2023, respectively.

Other operating income for the nine months ended September 30, 2023 included a gain of $27.0 million for the sale of our domestic private trucking fleet and operations.

Interest expense increased by $5.7 million for the nine months ended September 30, 2024 from the prior year primarily due to higher average interest rates.

Non-operating pension income includes all components of pension and other postretirement net periodic benefit (income) cost, other than service costs. Non-operating pension income was higher for the nine months ended September 30, 2024 primarily due to a decrease in the discount rate used to determine interest costs, partially offset by higher actuarial losses recognized to income.

The effective tax rate for the nine months ended September 30, 2024 included a net $0.4 million tax benefit, primarily associated with stock-based compensation, U.S. Federal tax credits purchased at a discount, and a benefit from prior year tax positions, partially offset by a change in tax contingencies and remeasurement of deferred taxes due to an increase in our state effective tax rates. Excluding these items, the effective tax rate for the nine months ended September 30, 2024 of 28.2% was higher than the 21.0% U.S. federal statutory rate primarily due to state income tax and foreign income inclusions, partially offset by favorable permanent salt depletion deductions. The effective tax rate for the nine months ended September 30, 2023 included a net $24.4 million tax benefit, primarily associated with stock-based compensation and prior year tax positions, partially offset by an expense from a change in tax contingencies. Excluding these items, the effective tax rate for the nine months ended September 30, 2023 of 24.1% was higher than the 21.0% U.S. federal statutory rate primarily due to state income tax and an increase in the valuation allowance related to losses in foreign jurisdictions, partially offset by favorable permanent salt depletion deductions and foreign income taxes.