Olin Corp. said Winchester delivered the best quarterly performance in its 155-year history in the fourth quarter ended December 31 due to outsized demand for ammunition, with even better quarters expected throughout 2021.
“The Olin Winchester team relishes its commitment to support both the U.S. warfighter and the more than 55 million of us who enjoy shooting sports,” said Scott Sutton, Olin’s CEO, on a conference call with analysts. ”These themes are woven into the fabric of America, and we expect that elevated shooting sports participation is here to stay. U.S. military modernization initiatives are expected to create additional opportunities for Winchester as well.”
About half of Winchester’s business supports the military with the other half supporting commercial operations.
In the year, revenues for the Winchester segment reached $927.6 million, up from $665.5 million. Earnings more than doubled to $92.3 million from $40.1 million.
“Winchester results are going to continue to improve and continue to improve throughout 2021,” said Sutton in the Q&A section of the call.
He said Winchester’s profitability has been helped by the segment’s ability to pass through three or four price increases over the last six months. A second factor supporting Winchester’s profitability is the move in October 2020 to assume full management and operational control of the Lake City Army Ammunition Plant in Independence, MO. The U.S. Army selected Winchester to operate and manage the Lake City Plant in September 2019. Winchester has said its assumption of the plant has made it the world’s largest small arms ammunition manufacturer.
Sutton said the capacity provided by the new plant will help Winchester restock as shortages of ammunition have been seen across retail during the pandemic. Sutton said, “We continue to run that hard. And instead of expanding capacity, what we are doing is looking to optimize that capacity, so that we do the right things for unit margin.”
Sutton also said Olin has not seen a softening in demand for ammunition that often follows an election cycle. Said the CEO, “In terms of election and looking out, the fundamentals have shifted for that business, which is different than it’s ever been before. Shooting participation is way up, and we expect that to continue as a long-term trend. My point here is this is not just a 2021 phenomenon, we expect that business to do much better throughout a number of future years.”
Olin also operates chemical businesses, including chlorine and caustic soda, vinyl, epoxies, chlorinated organics, bleach, and hydrochloric acid.
The fourth quarter overall showed a loss of $33.0 million, or 21 cents per share, an improvement from a loss of $77.2 million, or 49 cents, a year ago. Adjusted EBITDA rose 42.4 percent to $246.2 million from $173.2 million. Adjusted earnings exclude restructuring charges and other non-recurring costs of $4.7 million. Revenues rose 19.2 percent to $1.65 billion compared to $1.39 billion a year ago.
Photo courtesy Winchester