Olin Corp. reported sales at its Winchester ammunition segment slightly more than doubled in the second quarter, to $404.0 million compared to $192.6 million in the second quarter of 2020.
Second-quarter 2021 segment earnings were $109.9 million compared to $16.0 million in the second quarter 2020.
On October 1, 2020, Winchester began operating the Lake City U.S. Army Ammunition Plant in Independence, MO.
Olin said in a statement that the increase in second-quarter sales and segment earnings at Winchester was primarily due to higher commercial and military sales, which included ammunition produced at Lake City and higher commercial ammunition pricing. The segment earnings were also impacted by higher commodity costs. Winchester’s second-quarter 2021 results included depreciation and amortization expense of $5.5 million compared to $4.7 million in the second quarter 2020.
Companywide, sales grew to $2.22 billion from $1.24 billion. In its other two segments, Chlor Alkali Products and Vinyl sales for the second quarter 2021 were $967.3 million compared to $651.2 million in the second quarter 2020. Epoxy sales for the second quarter 2021 were $850.0 million compared to $397.4 million in the second quarter 2020.
Second-quarter 2021 reported net income was $355.8 million, or $2.17 per diluted share, which compares to second quarter 2020 reported net loss of $120.1 million, or $0.76 per diluted share. Second-quarter 2021 adjusted EBITDA of $559.2 million excludes depreciation and amortization expense of $142.0 million and restructuring charges of $14.0 million. Second-quarter 2020 adjusted EBITDA was $71.5 million. Sales in the second quarter 2021 were $2,221.3 million compared to $1,241.2 million in the second quarter 2020.
Scott Sutton, chairman, president and chief executive officer, said, “Our performance in the second quarter continues to demonstrate the growing success of our unique winning model that prioritizes ‘value first.’ As predicted, we increased the Electrochemical Unit Profit Contribution Index (ECU PCI). Olin drove sequential pricing improvement in the second quarter 2021 for chlorine, chlorine derivatives, including epoxy resins, and caustic soda. Our Epoxy business continued to improve margins and delivered record quarterly segment results. Our Winchester business also delivered record quarterly segment results. Continuing to build on these successes in the second half 2021, Olin now expects to deliver adjusted EBITDA of at least $2.1 billion for 2021. We expect Chlor Alkali Products and Vinyls, Epoxy and Winchester third quarter segment results to increase sequentially. Overall, we also expect third-quarter 2021 adjusted EBITDA to improve sequentially from second quarter 2021 levels.”
Corporate And Other Costs
Other corporate and unallocated costs in the second quarter of 2021 decreased $6.5 million compared to the second quarter 2020 primarily due to lower costs associated with the absence of implementation of new enterprise resource planning, manufacturing, and engineering systems and the related infrastructure costs. This project was completed in late 2020. This reduction was partially offset by higher incentive costs, which include mark-to-market adjustments on stock-based compensation.
Second-quarter 2021 restructuring charges included $10.1 million for employee severance and related benefit costs associated with a productivity initiative to align the organization with the new operating model and improve efficiencies. This organizational alignment initiative is expected to reduce annual costs by approximately $25 million.
Cash And Debt Reduction
The cash balance on June 30, 2021 was $272.8 million. During the first half of 2021, Olin reduced debt by $490.2 million, ending the second quarter 2021 with net debt of $3,110.1 million and net debt to adjusted EBITDA ratio of 2.0 times. Through a combination of improved adjusted EBITDA, disciplined capital spending and debt reduction, Olin expects its net debt to adjusted EBITDA ratio to improve to less than 1.5 times by year-end 2021. During 2021, Olin is targeting a debt reduction of approximately $1 billion using the cash generated from operations.
Photos courtesy Winchester
