Olin Corporation reported Winchester sales for the first quarter were $162.6 million compared to $183.7 million in the first quarter of 2016, a drop of 11.5 percent.
First quarter 2017 segment earnings were $25.1 million compared to $28.7 million in the first quarter 2016. The decrease in sales and segment earnings primarily reflects lower shipments to commercial customers reflecting lower demand for pistol, rifle, and shotshell ammunition. The segment earnings reduction associated with the decline in commercial demand was partially offset by lower operating costs in the first quarter of 2017 compared to first quarter 2016.
Winchester first quarter 2017 results included depreciation and amortization expense of $4.9 million compared to $4.6 million in first quarter 2016.
Companywide, Olin reported net income was $13.4 million, or $0.08 per diluted share, which compares to a net loss of $37.9 million, or ($0.23) per diluted share for the first quarter 2016. First quarter 2017 adjusted EBITDA of $220.4 million reflects depreciation and amortization expense of $135.1 million, restructuring charges of $8.2 million, and acquisition-related integration costs of $7.0 million. First quarter 2016 adjusted EBITDA was $214.5 million. Sales in the first quarter 2017 were $1,567.1 million compared to $1,348.2 million in the first quarter 2016.
John E. Fischer, Chairman, President and Chief Executive Officer, said, “Our overall first quarter 2017 results were in line with our expectations. Our first quarter 2017 adjusted EBITDA reflects better than expected results in the Chlor Alkali Products and Vinyls segment, which more than offset weaker than expected results in the Epoxy segment. The favorable results in Chlor Alkali Products and Vinyls were primarily the result of higher than anticipated caustic soda and ethylene dichloride pricing. The shortfall in the Epoxy segment earnings from expectations reflects higher than expected raw material costs associated with benzene and propylene pricing. First quarter 2017 Epoxy volumes improved approximately 11 percent compared to last year’s first quarter levels. As expected, Winchester’s first quarter 2017 segment earnings declined year over year due to lower commercial sales volumes partially offset by lower operating costs.
“For full year 2017, we are reiterating our annual adjusted EBITDA forecast of approximately $1 billion with upside opportunities and downside risks of approximately 5 percent.
“We expect second half 2017 adjusted EBITDA to be significantly stronger than the first half 2017 levels. The Chlor Alkali Products and Vinyls business is expected to benefit in second half 2017 from reduced maintenance turnaround activity, which reduced first half volumes and increased maintenance expenses, seasonally stronger second half demand, and improved caustic soda and chlorine prices. We also expect improved performance from both Epoxy and Winchester in the second half of 2017 compared to the first half of the year. The second half 2017 Epoxy results are expected to benefit from lower raw material costs than were experienced in the first quarter. Second half 2017 Winchester results include the seasonally strong third quarter and expected higher military sales.
“Second quarter 2017 adjusted EBITDA is forecast to improve slightly compared to first quarter 2017 levels. We anticipate sequential improvement in both caustic soda and ethylene dichloride pricing. The second quarter 2017 will also include the benefits of the new bleach plant in Freeport, Texas, which began production in March. Second quarter 2017 chlor alkali products volumes are expected to be lower than first quarter 2017 due to planned maintenance turnarounds at our largest production facility in Freeport, Texas. These planned maintenance turnarounds are forecast to reduce adjusted EBITDA sequentially by approximately $25 million. We expect second quarter 2017 Epoxy segment earnings to improve sequentially as implemented and announced price increases fully offset the current forecast for raw material costs associated with benzene and propylene pricing. We expect Winchester’s second quarter 2017 segment earnings to be less than second quarter 2016 earnings due to lower commercial sales volumes.”
Olin Corporation is a leading vertically-integrated global manufacturer and distributor of chemical products and a leading U.S. manufacturer of ammunition. The chemicals side includes Chlor Alkali Products and Vinyls and Epoxy.
