Olin Corporation announced financial results for the third quarter ended September 30, 2023. Third quarter 2023 reported net income was $104.1 million, or $0.82 per diluted share, which compares to third quarter 2022 reported net income of $315.2 million, or $2.18 per diluted share.

Third quarter 2023 adjusted EBITDA of $314.8 million excludes depreciation and amortization expense of $131.0 million and restructuring charges of $11.9 million. Third quarter 2022 adjusted EBITDA was $547.8 million. Sales in the third quarter 2023 were $1,671.4 million, compared to $2,321.7 million in the third quarter 2022.

Scott Sutton, Chairman, President, and Chief Executive Officer, said, "Despite the contracting demand environment over the last six quarters, Olin's team continues to prove our model's resilience and the ability to deliver higher trough level adjusted EBITDA and corresponding cash flows than the previous cycles' peak results. We continue to prioritize share repurchases from excess cash flow with approximately 8% of outstanding shares repurchased so far in 2023.

"Although electrochemical unit (ECU) values have been declining in 2023, we believe the global conditions for our Chlor Alkali Products and Vinyls business are approaching a favorable inflection point. Therefore, our team has taken the dramatic step to considerably reduce our operating rates; thereby, further reducing our market participation and accelerating the favorable inflection point, as we remain disciplined in our approach to ECU values.

“We have idled our St. Gabriel, Louisiana, facility and our largest chlor alkali plant at our Freeport, Texas facility. This 'value accelerator initiative' is expected to reduce our fourth quarter 2023 adjusted EBITDA outlook by approximately $100 million compared to our previous expectation; however, we anticipate it should deliver an improved 2024 adjusted EBITDA compared to 2023. We expect Winchester segment fourth quarter results to be similar to third quarter 2023 levels even as we perform our holiday shutdowns. Overall, we expect Olin's fourth quarter 2023 adjusted EBITDA to be in the $200 million range."

SEGMENT REPORTING

Olin defines segment earnings as income (loss) before interest expense, interest income, other operating income (expense), non-operating pension income, other income, and income taxes.

CHLOR ALKALI PRODUCTS AND VINYLS

In first quarter 2023, the Blue Water Alliance joint venture began operations and is consolidated in our Chlor Alkali Products and Vinyls segment. Chlor Alkali Products and Vinyls sales for the third quarter 2023 were $969.6 million, compared to $1,263.5 million in the third quarter 2022. The decrease in Chlor Alkali Products and Vinyls sales was primarily due to 6% lower volumes, lower pricing, and a less favorable mix. Third quarter 2023 segment earnings were $172.3 million, compared to $253.9 million in the third quarter 2022.

The $81.6 million decrease in segment earnings was primarily due to lower volumes and lower pricing, primarily caustic soda, partially offset by lower raw material and operating costs. The Chlor Alkali Products and Vinyls third quarter 2023 segment results were also negatively impacted by higher costs and reduced profit from lost sales associated with operating issues, related to the previous quarter's maintenance turnaround at our vinyl chloride monomer plant at the Freeport, Texas facility. The vinyl chloride monomer plant resumed normal operations in the latter half of the third quarter. Chlor Alkali Products and Vinyls third quarter 2023 results included depreciation and amortization expense of $107.6 million compared to $121.1 million in the third quarter 2022.

EPOXY

Epoxy sales for the third quarter 2023 were $321.6 million, compared to $644.1 million in the third quarter 2022. The decrease in Epoxy sales was primarily due to lower product pricing, lower resin and systems volumes, and $163.8 million of lower cumene and bisphenol A sales. As part of the Epoxy business restructuring actions to right-size our global asset footprint to the most cost-effective asset base to support our strategic operating model, the Epoxy business ceased operations at our cumene facility in Terneuzen, Netherlands in first quarter 2023 and one of our bisphenol A production lines at our Stade, Germany facility in fourth quarter 2022.

Third quarter 2023 segment loss was ($28.8) million, compared to segment earnings of $80.1 million in the third quarter 2022. The $108.9 million decrease in Epoxy segment earnings was primarily due to lower pricing and incremental costs associated with inventory reduction, partially offset by lower raw material and operating costs, mainly decreased natural gas and electrical power costs, and an improved product mix. Epoxy third quarter 2023 results included depreciation and amortization expense of $14.7 million compared to $20.1 million in the third quarter 2022.