OLIN Corp

We define segment results as income (loss) before interest expense, interest income, other operating income (expense), non-operating pension income, other income and income taxes. We have three operating segments: Chlor Alkali Products and Vinyls, Epoxy and Winchester. The three operating segments reflect the organization used by our management for purposes of allocating resources and assessing performance. Chlorine and caustic soda used in our Epoxy segment is transferred at cost from the Chlor Alkali Products and Vinyls segment.

Chlor Alkali Products and Vinyls

Chlor Alkali Products and Vinyls sales for the three months ended September 30, 2024 were $871.6 million compared to $969.6 million for the same period in 2023, a decrease of $98.0 million, or 10%. The sales decrease was primarily due to lower pricing, primarily caustic soda.

Chlor Alkali Products and Vinyls segment income was $45.3 million for the three months ended September 30, 2024 compared to $172.3 million for the same period in 2023. The decrease in segment results of $127.0 million was due to the negative impact of Hurricane Beryl resulting in incremental costs to restore operations, unabsorbed fixed manufacturing costs, and reduced profit from lost sales ($76.7 million), lower pricing ($79.5 million), primarily caustic soda, and higher raw material and operating costs ($17.6 million), partially offset by increased volumes ($43.6 million) and lower costs associated with product purchased from other parties ($3.2 million). Chlor Alkali Products and Vinyls third quarter 2023 segment results were negatively impacted by a maintenance turnaround and subsequent operating issues with the vinyl chloride monomer plant at the Freeport, TX facility, resulting in higher costs and reduced profit from lost sales. Chlor Alkali Products and Vinyls segment results included depreciation and amortization expense of $106.5 million and $107.6 million for the three months ended September 30, 2024 and 2023, respectively.

Chlor Alkali Products and Vinyls sales for the nine months ended September 30, 2024 were $2,676.5 million compared to $3,089.0 million for the same period in 2023, a decrease of $412.5 million, or 13%. The sales decrease was primarily due to lower pricing, primarily caustic soda, partially offset by increased sales volumes associated with products purchased from other parties.

Chlor Alkali Products and Vinyls segment income was $221.2 million for the nine months ended September 30, 2024 compared to $598.3 million for the same period in 2023. The decrease in segment results of $377.1 million was due to lower pricing ($476.1 million), primarily caustic soda, the negative impact of Hurricane Beryl resulting in incremental costs to restore operations, unabsorbed fixed manufacturing costs, and reduced profit from lost sales ($76.7 million), and an unfavorable product mix ($39.9 million), partially offset by lower costs associated with products purchased from other parties ($120.9 million) and lower raw material and operating costs ($94.7 million). Chlor Alkali Products and Vinyls third quarter 2023 segment results were negatively impacted by a maintenance turnaround and subsequent operating issues with the vinyl chloride monomer plant at the Freeport, TX facility, resulting in higher costs and reduced profit from lost sales. Chlor Alkali Products and Vinyls segment results included depreciation and amortization expense of $319.1 million and $335.3 million for the nine months ended September 30, 2024 and 2023, respectively.

Epoxy

Epoxy sales for the three months ended September 30, 2024 were $285.1 million compared to $321.6 million for the same period in 2023, a decrease of $36.5 million, or 11%. The sales decrease was due to lower sales volumes ($35.4 million), primarily as a result of Hurricane Beryl and an unfavorable effect of foreign currency translation ($2.1 million), partially offset by higher product prices ($1.0 million).

Epoxy segment loss was $42.8 million for the three months ended September 30, 2024 compared to segment loss of $28.8 million for the same period in 2023. The decrease in segment results of $14.0 million was due to the negative impact of Hurricane Beryl resulting in incremental costs to restore operations, unabsorbed fixed manufacturing costs, and reduced profit from lost sales ($32.7 million) and decreased volumes ($1.3 million), partially offset by lower raw material and operating costs ($20.0 million). A significant percentage of our Euro denominated sales are of products manufactured within Europe. As a result, the impact of foreign currency translation on revenue is primarily offset by the impact of foreign currency translation on raw materials and manufacturing costs also denominated in Euros. Epoxy segment results included depreciation and amortization expense of $13.7 million and $14.7 million for the three months ended September 30, 2024 and 2023, respectively.

Epoxy sales for the nine months ended September 30, 2024 were $944.1 million compared to $1,016.1 million for the same period in 2023, a decrease of $72.0 million, or 7%. The sales decrease was due to lower product prices ($132.6 million) and an unfavorable effect of foreign currency translation ($4.5 million), partially offset by increased sales volumes ($65.1 million), which were negatively impacted by Hurricane Beryl.

Epoxy segment loss was $57.6 million for the nine months ended September 30, 2024 compared to segment loss of $7.9 million for the same period in 2023. The decrease in segment results of $49.7 million was due to lower product prices ($133.4 million), which continues to be impacted by significant exports out of Asia into the European and North American markets, and the negative impact of Hurricane Beryl resulting in incremental costs to restore operations, unabsorbed fixed manufacturing costs, and reduced profit from lost sales ($32.7 million), partially offset by increased volumes and improved product mix ($82.2 million) and lower raw material and operating costs ($34.2 million). A significant percentage of our Euro denominated sales are of products manufactured within Europe. As a result, the impact of foreign currency translation on revenue is primarily offset by the impact of foreign currency translation on raw materials and manufacturing costs also denominated in Euros. Epoxy segment results included depreciation and amortization expense of $40.6 million and $44.4 million for the nine months ended September 30, 2024 and 2023, respectively.

Winchester

Winchester sales were $432.8 million for the three months ended September 30, 2024 compared to $380.2 million for the same period in 2023, an increase of $52.6 million, or 14%. The increase was due to higher sales to domestic and international military customers ($43.5 million), higher sales to commercial customers ($10.4 million), partially offset by lower sales to law enforcement agencies ($1.3 million). Commercial sales were primarily impacted by 2024 sales from White Flyer, partially offset by lower ammunition volumes.

Winchester segment income was $53.4 million for the three months ended September 30, 2024 compared to $64.5 million for the same period in 2023, a decrease of $11.1 million. The decrease in segment results was due to higher commodity and operating costs ($17.2 million), including propellant costs, partially offset by higher sales volumes ($4.1 million), which includes White Flyer, and higher product pricing ($2.0 million). Winchester segment income included depreciation and amortization expense of $8.5 million and $6.6 million for the three months ended September 30, 2024 and 2023, respectively.

Winchester sales were $1,248.2 million for the nine months ended September 30, 2024 compared to $1,113.3 million for the same period in 2023, an increase of $134.9 million, or 12%. The increase was due to higher sales to commercial customers ($75.3 million) and higher sales to domestic and international military customers ($70.1 million), partially offset by lower sales to law enforcement agencies ($10.5 million). Commercial sales were primarily impacted by 2024 sales from White Flyer.

Winchester segment income was $195.9 million for the nine months ended September 30, 2024 compared to $190.2 million for the same period in 2023, an increase of $5.7 million. The increase in segment results was due to higher sales volumes ($27.1 million), which includes White Flyer, partially offset by higher commodity and operating costs ($16.8 million), including propellant costs, and lower product pricing ($4.6 million). Winchester segment income included depreciation and amortization expense of $24.7 million and $19.1 million for the nine months ended September 30, 2024 and 2023, respectively.

Corporate/Other

For the three months ended September 30, 2024, charges to income for environmental investigatory and remedial activities were $7.2 million compared to $6.9 million for the three months ended September 30, 2023. These charges related primarily to expected future investigatory and remedial activities associated with past manufacturing operations and former waste disposal sites.

For the three months ended September 30, 2024, other corporate and unallocated costs were $25.9 million compared to $22.9 million for the three months ended September 30, 2023, an increase of $3.0 million. The increase was primarily due to higher stock-based compensation ($2.2 million), which includes mark-to-market adjustments, and higher legal and legal-related settlement expenses ($1.6 million).

For the nine months ended September 30, 2024, charges to income for environmental investigatory and remedial activities were $19.4 million compared to $23.1 million for the nine months ended September 30, 2023. These charges related primarily to expected future investigatory and remedial activities associated with past manufacturing operations and former waste disposal sites.

For the nine months ended September 30, 2024, other corporate and unallocated costs were $68.7 million compared to $79.6 million for the nine months ended September 30, 2023, a decrease of $10.9 million. The decrease was primarily due to lower variable incentive compensation costs ($6.3 million), which includes mark-to-market adjustments on stock-based compensation expense, and a favorable foreign currency impact ($3.0 million).

Restructurings

In connection with the previously announced Epoxy Optimization Plan, for the three months ended September 30, 2024 and 2023, we recorded restructuring charges of $6.3 million and $8.6 million, respectively, and for the nine months ended September 30, 2024 and 2023, we recorded restructuring charges of $15.6 million and $79.7 million, respectively. We expect to incur additional restructuring charges through 2025 of approximately $10 million related to these actions.

For the three months ended September 30, 2024 and 2023, we incurred charges of $1.6 million and $3.3 million, respectively, and for the nine months ended September 30, 2024 and 2023, we incurred charges of $7.4 million and $12.3 million, respectively, associated with other previously disclosed restructuring plans. We expect to incur additional restructuring charges through 2027 of approximately $40 million related to these actions. Discussion on our restructuring activity, including a description of each plan, is referenced under Item 1, within Note 4, “Restructuring Charges.” Pretax restructuring charges related to our actions include facility exit costs, lease and other contract termination costs, employee severance and related benefits costs and the write-off of equipment and facilities.