Winchester’s sales for the third quarter 2020 were $206.4 million compared to $188.7 million in the third quarter 2019, reflecting a gain of 9.4 percent.
Olin Corporation, the parent of Winchester, in a statement, said the increase in sales was primarily due to higher commercial ammunition sales. Third-quarter 2020 segment earnings were $21.0 million compared to $13.9 million in the third quarter 2019. The increase in segment earnings was primarily due to higher commercial ammunition volumes and pricing, which were partially offset by $5.7 million of transition costs related to the Lake City contract. Winchester’s third-quarter 2020 results included depreciation and amortization expense of $5.0 million compared to $5.2 million in the third quarter 2019.
Companywide, the third quarter 2020 reported net loss was $736.8 million, or $4.67 per diluted share, which compares to the third quarter 2019 reported net income of $44.2 million, or $0.27 per diluted share. Third-quarter 2020 adjusted EBITDA of $195.5 million excludes depreciation and amortization expense of $142.1 million, a goodwill impairment charge of $699.8 million, information technology integration costs of $25.5 million and restructuring charges and other non-recurring costs of $7.0 million. Third-quarter 2019 adjusted EBITDA was $292.9 million. Sales in the third quarter 2020 were $1,437.6 million compared to $1,576.6 million in the third quarter 2019.
Scott Sutton, president and CEO, said, “Third quarter 2020 sales for the Chemicals businesses increased sequentially from second-quarter 2020 by approximately 17 percent, and sales have increased every month since the low point in April. Additionally, Olin drove sequential pricing improvement in the third-quarter 2020 for chlorine and almost all chlorine derivatives, and our newly established ECU (Electrochemical Unit) Profit Contribution Index improved in the third quarter compared to the second quarter. Looking ahead, Olin’s recent price increases for chlorine, epoxy resins, bleach, ethylene dichloride, and chlorinated organics are expected to positively contribute to our ECU Profit Contribution Index in the fourth quarter. Fourth-quarter volumes are expected to be challenged based on customer year-end inventory reductions and Olin selectively selling less into poor quality markets, slightly more than offsetting the positives from driving price increases.
“The Winchester business continued to drive improved segment earnings from strong commercial ammunition demand. On October 1st, Winchester began to operate the Lake City U.S. Army Ammunition Plant (Lake City) and expects to generate sequential incremental adjusted EBITDA of approximately $10 million in fourth-quarter 2020 from both Lake City and price increases across the commercial ammunition portfolio.”
Sutton added, “Our employees are engaged in implementing a new winning model focused on leveraging Olin’s leadership across the whole ECU and ammunition landscape regardless of singular product demand.”
Photo courtesy Winchester
