Olin Corp. reported sales at its Winchester ammunition segment for the first quarter 2021 were $389.2 million compared to $188.0 million in the first quarter 2020.
First-quarter 2021 segment earnings were $85.1 million compared to $10.5 million in the first quarter 2020.
Olin said the increase in first-quarter sales and segment earnings was primarily due to higher commercial and military sales, which included ammunition produced at Lake City, and higher commercial ammunition pricing. On October 1, 2020, Winchester began operating the Lake City U.S. Army Ammunition Plant (Lake City).
The segment earnings were also impacted by higher commodity and operating costs. Winchester’s first quarter 2021 results included depreciation and amortization expense of $5.6 million compared to $5.0 million in the first quarter 2020.
Companywide, net income was $243.6 million, or $1.51 per diluted share, which compares to the first quarter 2020 reported a net loss of $80.0 million, or $0.51 per diluted share. Olin’s two other segments make chemicals and include Chlor Alkali Products and vinyl and epoxy.
First-quarter 2021 adjusted EBITDA of $540.4 million excludes depreciation and amortization expense of $145.2 million and restructuring charges and other non-recurring items of $4.7 million. The first quarter 2021 adjusted EBITDA included a gain of $99.9 million associated with Winter Storm Uri due to Olin’s customary financial hedges and contracts maintained to provide protection from rapid and dramatic changes in energy costs, partially offset by unabsorbed fixed manufacturing costs and storm-related maintenance costs. First-quarter 2020 adjusted EBITDA was $122.8 million. Sales in the first quarter 2021 were $1,918.8 million compared to $1,425.1 million in the first quarter 2020.
Scott Sutton, chairman, president and CEO, said, “Our team’s performance in the first quarter demonstrates the success of our unique winning model, that prioritizes ‘value first,’ and highlights the value still to be unlocked across our Chemicals and Winchester businesses. As predicted, we increased the Electrochemical Unit Profit Contribution Index (ECU PCI) in the face of softening caustic soda values. Olin drove sequential pricing improvement in the first quarter 2021 for chlorine and almost all chlorine derivatives, including epoxy resins. Our Winchester business also continued to deliver record quarterly segment results. Continuing to build on these successes, Olin now expects to deliver adjusted EBITDA of $1.8 billion to $2.1 billion for 2021.
“As we look forward to second quarter 2021 in our Chemicals businesses, we expect our winning model to push the ECU PCI higher, with Olin’s recent price increase announcements for chlorine, epichlorohydrin, epoxy resins, bleach, ethylene dichloride, chlorinated organics, and caustic soda forecast to positively contribute. We expect some volume offsets as Olin continues to selectively sell less into poor quality markets, as we remain disciplined in our approach to caustic soda. We expect sequentially higher maintenance costs and unabsorbed fixed manufacturing costs of approximately $40 million associated with planned Epoxy maintenance turnarounds in the second quarter 2021. With our recently announced price increases for ammunition and primers, we expect Winchester second quarter segment results to increase sequentially. Overall, we expect second-quarter 2021 adjusted EBITDA to improve sequentially from first quarter 2021 levels excluding the net one-time financial benefits from Winter Storm Uri.”
Photo courtesy Winchester
