Olin Corporation reported sales in the fourth quarter 2022 were $1.98 billion compared to $2.43 billion in the fourth quarter 2021.
The parent company of Winchester Ammunition had reported net income of $196.6 million, or $1.43 per diluted share, which compares to fourth quarter 2021 reported net income of $306.6 million, or $1.89 per diluted share. Fourth quarter 2022 adjusted EBITDA of $441.8 million excludes depreciation and amortization expense of $148.5 million and restructuring charges and other items of $10.0 million. Fourth quarter 2021 adjusted EBITDA was $686.7 million. Full-year 2022 reported net income was $1.33 billion, or $8.94 per diluted share, which compares to full year 2021 reported net income of $1.30 billion, or $7.96 per diluted share.
Scott Sutton, chairman, president, and CEO, said, “In 2022, we repurchased approximately 16 percent of our outstanding shares from available cash flow, while also reducing our net debt level. With our confidence in our ability to generate meaningful earnings and cash flow even in recessionary economic conditions, we expect to continue our capital allocation strategy, while committing to maintain an investment-grade balance sheet and achieve investment-grade credit ratings. Our 2022 performance continued to demonstrate how our winning model adapted in real-time to emphasize ‘value first’ versus a volume maximization approach. Despite the recessionary global economic conditions that developed during 2022, we generated over $1.3 billion of net income and over $2.4 billion of adjusted EBITDA.
“We expect the challenging global economic conditions to continue in 2023. Overall, we expect full-year 2023 adjusted EBITDA to be in the $1.5 to $2.0 billion range, demonstrating the resiliency of our winning model that should dramatically improve our recessionary trough level of adjusted EBITDA compared to Olin’s historical strategy and performance.
“In early 2023, we expect our chemical businesses to continue to be tested by European and North American epoxy demand weakness and vinyls intermediate demand weakness, aggravated by elevated levels of Chinese exports caused by lingering weak Chinese domestic demand. Our chemical businesses expect to continue at reduced operating rates as we refrain from selling incremental volume into poor-quality markets. We expect the first quarter 2023 results from our Chemical businesses to be slightly lower than fourth quarter 2022 levels. We expect our Winchester business first quarter 2023 results to increase sequentially from fourth quarter 2022 but to be lower than first quarter 2022 levels due to lower commercial ammunition shipments. Overall, we expect Olin’s first quarter 2023 adjusted EBITDA to decline slightly from fourth quarter 2022 levels.”
In segment reported, Olin indicated that Winchester sales for the fourth quarter 2022 were $320.0 million compared to $390.6 million in the fourth quarter 2021. The decrease in Winchester sales was primarily due to lower commercial ammunition shipments, partially offset by higher commercial ammunition pricing and higher military and law enforcement shipments.
During 2022, Winchester experienced a transition in its commercial ammunition business from refilling depleted supply chains to filling inventories at the rate of its customers’ sales. In some cases, customers’ inventories became too high so Winchester chose to preserve value by manufacturing and selling less commercial ammunition.
Winchester’s fourth quarter 2022 segment earnings were $45.7 million compared to $101.8 million in the fourth quarter 2021. The $56.1 million decrease in segment earnings was primarily due to lower commercial ammunition shipments and higher commodity and other materials costs partially offset by higher commercial ammunition pricing and higher military and law enforcement sales.
Winchester’s fourth quarter 2022 results included depreciation and amortization expense of $6.4 million compared to $6.5 million in the fourth quarter 2021.
Olin’s other corporate and unallocated costs in the fourth quarter of 2022 increased $4.3 million compared to the fourth quarter 2021 primarily due to unfavorable foreign currency impacts.
The company’s cash balance on December 31, 2022, was $194.0 million and Olin ended the year with net debt of approximately $2.4 billion and net debt to adjusted EBITDA ratio of 1.0 times. During 2022, Olin repaid $201.1 million of debt, which followed a $1,103.1 million debt reduction in 2021. On December 31, 2022, Olin had approximately $1.5 billion of available liquidity.
