OLIN Corp

Cash Flow Data

Operating Activities

For the nine months ended September 30, 2024, cash provided by operating activities decreased by $196.2 million from the nine months ended September 30, 2023, primarily due to a decrease in operating results, partially offset by a smaller increase in working capital compared with the prior year. For the nine months ended September 30, 2024, working capital increased $58.7 million compared to an increase of $172.6 million for the nine months ended September 30, 2023. Accounts payable and accrued liabilities decreased $77.2 million from December 31, 2023, primarily as a result of timing of payments during the third quarter of 2024.

Investing Activities

Capital spending was $144.1 million for the nine months ended September 30, 2024, compared to $173.0 million for the comparable period in 2023. Our capital spending forecast represents normal capital spending to maintain our current operating facilities. For the full year 2024, we expect our capital spending to be approximately $200 million, including $10 million of additional capital associated with Hurricane Beryl. We expect 2024 depreciation and amortization expense to be approximately $525 million.

For the nine months ended September 30, 2024, payments under other long-term supply contracts were $58.6 million for energy modernization on the U.S. Gulf Coast. Our payments for this project were completed in the third quarter.

For the nine months ended September 30, 2023, we received $28.5 million of cash proceeds for the sale of our domestic private trucking fleet and operations.

Financing Activities

For the nine months ended September 30, 2024 and 2023, we had long-term debt borrowings, net of repayments, of $216.7 million and $206.6 million, respectively.

For the nine months ended September 30, 2024 and 2023, 4.9 million and 10.8 million shares, respectively, of common stock were repurchased and retired at a total value of $256.8 million and $595.1 million, respectively.

We issued 0.9 million and 0.8 million shares representing stock options exercised for the nine months ended September 30, 2024 and 2023, respectively, with a total value of$22.6 million and $22.3 million, respectively. For the nine months ended September 30, 2024, we withheld and paid $10.5 million for employee taxes on share-based payment arrangements.

For the nine months ended September 30, 2023, we received $44.1 million of cash contributions from noncontrolling interests for BWA.

The percent of total debt to total capitalization increased to 58.0% as of September 30, 2024 from 54.1% as of December 31, 2023, 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.

In the first three quarters of 2024 and 2023, we paid a quarterly dividend of $0.20 per share. Dividends paid for the nine months ended September 30, 2024 and 2023, were $70.9 million and $76.6 million, respectively. On October 24rd, 2024, our Board of Directors declared a dividend of $0.20 per share on our common stock, payable on December 13th, 2024, to shareholders of record on November 14th, 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.

We maintain a $1,550.0 million senior credit facility (Senior Credit Facility) which 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 existing 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 September 30, 2024, we had $849.6 million available under our $1,200.0 million Senior Revolving Credit Facility because we had $350.0 million borrowed under the facility and issued $0.4 million of letters of credit. During 2024, the Senior Revolving Credit Facility borrowings were partially utilized to repay $50.0 million of Go Zone and $20.0 million of Recovery Zone tax-exempt variable-rate bonds.

We were in compliance with all covenants and restrictions under all our outstanding credit agreements as of September 30, 2024, 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 September 30, 2024, 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 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 our 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 nine months ended September 30, 2024, 4.9 million shares of common stock have been repurchased and retired at a total value of $256.8 million. As of September 30, 2024, 24.2 million shares of common stock have been repurchased and retired at a total value of $1,258.0 million under the 2022 Repurchase Authorization program, and $742.0 million of common stock remained authorized to be repurchased under the 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 September 30, 2024, December 31, 2023 and September 30, 2023, we had $339.8 million, $328.5 million and $350.0 million, respectively, drawn under the agreement. As of September 30, 2024, $473.9 million of our trade receivables were pledged as collateral and we had $0.3 million 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 $134.5 million and certain of our foreign subsidiaries may sell their accounts receivable up to a maximum of €16.5 million. We will continue to service the outstanding accounts sold. These receivables qualify for sales treatment under ASC 860 and, accordingly, the proceeds are included in net cash provided by operating activities in the condensed 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 condensed statements of operations. The factoring discount was $0.8 million and $1.3 million for the three months ended September 30, 2024 and 2023, respectively, and $2.9 million and $3.8 million for the nine months ended September 30, 2024 and 2023, respectively. The agreements are without recourse and therefore no recourse liability has been recorded as of September 30, 2024.

At September 30, 2024, we had total letters of credit of $167.3 million outstanding, of which $0.4 million were issued under our Senior Revolving Credit Facility. The letters of credit were used to support certain long-term debt obligations, workers compensation insurance policies, plant closure and post-closure obligations, international payment obligations and international pension funding requirements.

Our current debt structure is used to fund our business operations. As of September 30, 2024, we had long-term borrowings, including the current installment, of $2,889.5 million, of which $1,110.4 million were at variable rates. Included within long-term borrowings on the condensed balance sheets were deferred debt issuance costs and unamortized bond original issue discount of $14.1 million as of September 30, 2024. Commitments from banks under our Senior Revolving Credit Facility and AR Facilities are additional sources of liquidity.

We have registered an undetermined number 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 September 30, 2024:

On August 8, 2024, S&P affirmed Olin’s BB+ rating and revised its outlook from positive to stable. On June 24, 2024, Moody’s affirmed Olin’s Ba1 rating and stable outlook. On March 14, 2024, Fitch affirmed Olin’s BBB- rating and stable outlook.

Contractual Obligations

Purchasing commitments are utilized in our normal course of business for our projected needs. We have supply contracts with various third parties for certain raw materials including ethylene, electricity, propylene and benzene. These agreements are maintained through long-term cost based contracts that provide us with a reliable supply of key raw materials. There have been no material changes in our contractual obligations and commitments as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023, other than those which occur in the ordinary course of business.

New Accounting Pronouncements

Discussion of new accounting pronouncements can be referred to under Item 1, within Note 2, “Recent Accounting Pronouncements.”