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Item 2. Management’s Discussion and Analysis

2022-07-29 compared with 2022-04-29 · 183 added, 123 removed, 158 unchanged (66% of the section changed)

7 unchanged sentences

All of our business segments are capital intensive manufacturing businesses.

The Chlor Alkali Products and Vinyls segment manufactures and sells chlorine and caustic soda, ethylene dichloride and vinyl chloride monomer, methyl chloride, methylene chloride, chloroform, carbon tetrachloride, perchloroethylene, hydrochloric acid, hydrogen, bleach products and potassium hydroxide.

The Chlor Alkali Products and Vinyls segment manufactures and sells chlorine and caustic soda, ethylene dichloride (EDC) and vinyl chloride monomer, methyl chloride, methylene chloride, chloroform, carbon tetrachloride, perchloroethylene, hydrochloric acid, hydrogen, bleach products and potassium hydroxide.

The Epoxy segment produces and sells a full range of epoxy materials and precursors, including aromatics (acetone, bisphenol, cumene and phenol), allyl chloride, epichlorohydrin, liquid epoxy resins, solid epoxy resins and downstream products such as converted epoxy resins and additives.

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2022 Overview

Net income for the three months ended March 31, 2022 was $393.0 million compared to $243.6 million for the comparable prior year period in 2021.

The increase in results from the prior year was due to improved operating results across all our business segments.

The first quarter 2021 included a net pretax favorable impact 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.

For the three months ended March 31, 2021, Chlor Alkali Products and Vinyls segment results included a favorable impact of $121.4 million and Epoxy segment results included an unfavorable impact of $21.5 million associated with Winter Storm Uri.

Chlor Alkali Products and Vinyls reported segment income of $328.6 million for the three months ended March 31, 2022.

Chlor Alkali Products and Vinyls segment results were higher than in the comparable prior year period primarily due to higher pricing, primarily chlorine, caustic soda and ethylene dichloride, partially offset by higher raw material and operating costs and lower volumes.

Epoxy reported segment income of $138.0 million for the three months ended March 31, 2022.

Epoxy segment results were higher than in the comparable prior year period primarily due to higher product prices, partially offset by higher raw material costs, primarily benzene and propylene, lower volumes and higher operating costs.

Our Epoxy segment experienced weaker European epoxy resin demand in our system, which caused us to temporarily curtail epoxy resin production at our Stade, Germany facility and refrain from selling incremental volume into a poor-quality market.

Winchester reported segment income of $118.9 million for the three months ended March 31, 2022.

Net income for the three and six months ended June 30, 2022 was $422.1 million and $815.1 million, respectively, compared to $355.8 million and $599.4 million, respectively, for the comparable prior year periods in 2021.

For the six months ended June 30, 2022, the increase in results from the prior year was primarily due to improved operating results across all our business segments.

For the three months ended June 30, 2022, the increase in results from the prior year was primarily due to improved operating results within our Chlor Alkali Products and Vinyls and Winchester business segments, partially offset by a decline in Epoxy results.

During first quarter 2022, our Epoxy segment experienced weaker epoxy resin demand in Europe , which was exacerbated by the uncertainty following the Russian invasion of Ukraine.

The Epoxy business was unwilling to sell incremental volume into a poor-quality market and operating the epoxy resin facility at less than 50% operating rates was impractical.

As a result of these factors, the high natural gas and electrical power costs in Europe , and facility maintenance, we suspended epoxy resin production at our Stade, Germany facility in March and subsequently resumed production in May.

During second quarter 2022, our Epoxy segment experienced weaker epoxy resin demand in North America and South America.

As a result, late in the second quarter we announced we are temporarily suspending epoxy and related upstream inputs production at our Freeport, TX and Guaruja, Brazil facilities.

During April 2022, our Chlor Alkali Products and Vinyls facility at Plaquemine, LA experienced an unplanned production outage.

Approximately half of the facility returned to operations during June and the remainder is expected to return to operations in early August 2022.

With the resumption of its Plaquemine, LA operations, high electrical power costs in Texas and considering the poor-quality EDC market conditions, we announced late in the second quarter 2022 our Chlor Alkali Products and Vinyls segment is temporarily suspending a significant portion of its EDC and related chlor alkali production at its Freeport, TX facility.

Chlor Alkali Products and Vinyls reported segment income of $346.5 million and $675.1 million for the three and six months ended June 30, 2022, respectively.

Chlor Alkali Products and Vinyls segment results were higher than in the comparable prior year periods primarily due to higher product pricing across all products, partially offset by higher raw material and operating costs and lower volumes.

Epoxy reported segment income of $139.9 million and $277.9 million for the three and six months ended June 30, 2022, respectively.

Epoxy first half segment results were higher than in the comparable prior year period primarily due to higher product prices, partially offset by higher raw material costs, primarily benzene and propylene, lower volumes and higher operating costs.

Epoxy second quarter 2022 segment results continued to be negatively impacted by weaker epoxy resin demand, resulting in lower volumes compared to the prior year period.

As a result, Epoxy segment results for the second quarter declined from the prior year.

Winchester reported segment income of $119.3 million and $238.2 million for the three and six months ended June 30, 2022, respectively.

Winchester segment results were higher than in the comparable prior year period primarily due to increased commercial ammunition pricing, partially offset by higher commodity and operating costs.

During the three months ended March 31, 2022, we repurchased and retired 5.2 million shares of common stock at a total value of $263.2 million.

As of March 31, 2022, we have $789.0 million of remaining authorized common stock to be purchased under our 2021 $1.0 billion share repurchase program.

On July 28, 2022, our Board of Directors authorized a share repurchase program for the purchase of shares of common stock at an aggregate price of up to $2.0 billion.

This program will terminate upon the purchase of $2.0 billion of common stock.

During the six months ended June 30, 2022, we repurchased and retired 12.6 million shares of common stock at a total value of $689.7 million.

As of June 30, 2022, we have $362.5 million of remaining authorized common stock to be purchased under our 2021 $1.0 billion share repurchase program.

The authorization remaining available under the $1.0 billion 2021 share repurchase program is not affected by the authorization of the $2.0 billion 2022 share repurchase program.

The invasion of Ukraine by Russia and the sanctions imposed in response to this crisis have increased the level of economic and political uncertainty.

Russia sales represented less than 0.5% of our total sales for the full year 2021 and were minimal sales for the first quarter of 2022.

Russia sales represented less than 0.5% of our total sales for the full year 2021 and were minimal for 2022.

During the first quarter of 2022, we ceased all sales to and purchases from Russia.

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Consolidated Results of Operations

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

($ in millions, except per share data)

4 unchanged sentences

Restructuring charges 3.6 14.0 6.7 20.9

Other operating income 3.3 0.5 3.3 0.5

Operating income 565.4 395.0 1,111.9 776.2

3 unchanged sentences

Income before taxes 540.7 337.3 1,064.3 643.4

Income tax provision 130.6 62.5

Income tax provision (benefit) 118.6 (18.5) 249.2 44.0

Net income $ 422.1 $ 355.8 $ 815.1 $ 599.4

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Diluted $ 2.76 $ 2.17 $ 5.24 $ 3.69

Three Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021

Sales for the three months ended March 31, 2022 were $2,461.4 million compared to $1,918.8 million in the same period last year, an increase of $542.6 million, or 28%.

Chlor Alkali Products and Vinyls sales increased by $378.2 million due to higher product pricing, primarily chlorine, caustic soda and ethylene dichloride, partially offset by lower volumes.

Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021

Sales for the three months ended June 30, 2022 were $2,616.1 million compared to $2,221.3 million in the same period last year, an increase of $394.8 million, or 18%.

Chlor Alkali Products and Vinyls sales increased by $436.2 million due to higher product pricing across all products, partially offset by lower volumes.

Winchester sales increased by $35.9 million, primarily due to increased commercial ammunition pricing partially offset by lower volumes.

Epoxy sales decreased by $77.3 million due to lower volumes partially offset by higher product pricing.

Gross margin increased $155.6 million for the three months ended June 30, 2022 compared to the prior year.

Chlor Alkali Products and Vinyls gross margin increased by $177.7 million primarily due to higher product pricing, partially offset by higher raw material and operating costs.

Winchester gross margin increased by $11.5 million, primarily due to higher commercial ammunition pricing partially offset by higher costs.

Epoxy gross margin decreased by $28.9 million primarily due to lower volumes and higher costs, partially offset by higher product pricing.

Gross margin as a percentage of sales increased to 25% in 2022 from 23% in 2021.

Selling and administration expenses for the three months ended June 30, 2022 were $99.0 million, a decrease of $1.6 million from the prior year.

The decrease was primarily due to lower variable incentive compensation expense of $7.8 million, which includes mark-to-market adjustments on stock-based compensation expense, partially offset by higher legal and legal-related settlement expenses of $4.5 million and an unfavorable foreign currency impact of $4.7 million.

Selling and administration expenses as a percentage of sales decreased to 4% in 2022 from 5% in 2021.

Restructuring charges for the three months ended June 30, 2022 and 2021 were $3.6 million and $14.0 million, respectively.

During the second quarter of 2021, we committed to a productivity initiative to align the organization with our new operating model and improve efficiencies which resulted in pretax restructuring charges of $10.1 million for the six months ended June 30, 2021.

Interest expense decreased by $31.4 million for the three months ended June 30, 2022.

Interest expense for the three months ended June 30, 2021 included $12.3 million of bond redemption premiums and $3.1 million for write-off of deferred debt issuance costs and recognition of deferred fair value interest rate swap losses related to financing transactions during second quarter 2021.

Without these items, interest expense decreased by $16.0 million, primarily due to a lower level of debt outstanding and lower average interest rates.

The effective tax rate for the three months ended June 30, 2022 included a benefit associated with prior year tax positions and stock-based compensation, resulting in a net $8.5 million tax benefit.

After giving consideration to these items, the effective tax rate for the three months ended June 30, 2022 of 23.5% was higher than the 21% U.S.

federal statutory rate primarily due to state and foreign income taxes, partially offset by foreign income exclusions and favorable permanent salt depletion deductions.

The effective tax rate for the three months ended June 30, 2021 included a benefit from a net decrease in the valuation allowance related to deferred tax assets in foreign jurisdictions, a benefit associated with prior year tax positions, a benefit associated with stock-based compensation and an expense from a change in tax contingencies.

These factors resulted in a net $93.9 million tax benefit.

After giving consideration to these items, the effective tax rate for the three months ended June 30, 2021 of 22.4% was higher than the 21% U.S.

federal statutory rate primarily due to state taxes, foreign income inclusions and foreign income taxes, partially offset by a net decrease in the valuation allowance related to utilization of losses in foreign jurisdictions and favorable permanent salt depletion deductions.

Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021

Sales for the six months ended June 30, 2022 were $5,077.5 million compared to $4,140.1 million in the same period last year, an increase of $937.4 million, or 23%.

Chlor Alkali Products and Vinyls sales increased by $814.4 million due to higher product pricing across all products, partially offset by lower volumes.

Winchester sales increased by $73.4 million, primarily due to increased commercial ammunition pricing partially offset by lower volumes.

Epoxy sales increased by $49.6 million due to higher product prices, partially offset by lower volumes.

Winchester sales increased by $37.5 million, primarily due to increased commercial ammunition pricing.

Gross margin increased $158.9 million for the three months ended March 31, 2022 compared to the prior year.

Gross margin increased $314.5 million for the six months ended June 30, 2022 compared to the prior year.

Chlor Alkali Products and Vinyls gross margin increased by $233.0 million, Epoxy gross margin increased by $44.5 million and Winchester gross margin increased by $48.1 million.

Gross margin across all of our businesses increased due to higher product pricing, partially offset by higher raw material and operating costs.

Gross margin across all of our businesses increased due to higher product pricing, partially offset by higher raw material and operating costs and lower volumes.

Gross margin as a percentage of sales increased to 26% in 2022 from 24% in 2021.

Selling and administration expenses for the three months ended March 31, 2022 were $104.3 million, a decrease of $2.6 million from the prior year.

The decrease was primarily due to lower variable incentive compensation expense of $8.5 million, which includes mark-to-market adjustments on stock-based compensation expense, partially offset by higher legal and legal related settlement costs of $2.9 million.

Selling and administration expenses for the six months ended June 30, 2022 were $203.3 million, a decrease of $4.2 million from the prior year.

The decrease was primarily due to lower variable incentive compensation expense of $15.5 million, which includes mark-to-market adjustments on stock-based compensation expense, partially offset by higher legal and legal-related settlement expenses of $7.4 million and an unfavorable foreign currency impact of $3.9 million.

Selling and administration expenses as a percentage of sales decreased to 4% in 2022 from 5% in 2021.

Restructuring charges for the three months ended March 31, 2022 and 2021 were $3.1 million and $6.9 million, respectively.

In March 2021, we announced that we had made the decision to permanently close approximately 50% of our diaphragm-grade chlor alkali capacity, representing 200,000 tons, at our McIntosh, AL facility which resulted in pretax restructuring charges of $4.4 million.

Interest expense decreased by $51.6 million for the three months ended March 31, 2022.

Interest expense for the three months ended March 31, 2021 included $18.7 million of bond redemption premiums and $4.8 million for write-off of deferred debt issuance costs and recognition of deferred fair value interest rate swap losses related to financing transactions during first quarter 2021.

Restructuring charges for the six months ended June 30, 2022 and 2021 were $6.7 million and $20.9 million, respectively.

On March 15, 2021, we announced that we had made the decision to permanently close approximately 50% of our diaphragm-grade chlor alkali capacity, representing 200,000 tons, at our McIntosh, AL facility which resulted in pretax restructuring charges of $4.8 million for the six months ended June 30, 2021.

Interest expense decreased by $83.0 million for the six months ended June 30, 2022.

Interest expense for the six months ended June 30, 2021 included $31.0 million of bond redemption premiums and $7.9 million for write-off of deferred debt issuance costs and recognition of deferred fair value interest rate swap losses related to financing transactions during the first and second quarter 2021.

Without these items, interest expense decreased by $44.1 million, primarily due to a lower level of debt outstanding and lower average interest rates.

The effective tax rate for the three months ended March 31, 2022 included a benefit associated with prior year tax, stock-based compensation and a change in tax contingencies, resulting in a net $2.3 million tax benefit.

After giving consideration to these items, the effective tax rate for the three months ended March 31, 2022 of 25.4% was higher than the 21% U.S.

The effective tax rate for the six months ended June 30, 2022 included a benefit associated with prior year tax positions, stock-based compensation and a change in tax contingencies, resulting in a net $10.8 million tax benefit.

After giving consideration to these items, the effective tax rate for the six months ended June 30, 2022 of 24.4% was higher than the 21% U.S.

federal statutory rate primarily due to state and foreign income taxes, partially offset by foreign income exclusions and favorable permanent salt depletion deductions.

The effective tax rate for the three months ended March 31, 2021 included a benefit associated with prior year tax positions, an expense associated with stock-based compensation, an expense from a net increase in the valuation allowance related to foreign tax credits and an expense from a change in tax contingencies.

The effective tax rate for the six months ended June 30, 2021 included a benefit from a net decrease in the valuation allowance related to deferred tax assets in foreign jurisdictions, a benefit associated with prior year tax positions, a benefit associated with stock-based compensation, an expense from remeasurement of deferred taxes due to an increase in our state effective tax rates and an expense from a change in tax contingencies.

These factors resulted in a net $95.2 million tax benefit.

After giving consideration to these items, the effective tax rate for the three months ended March 31, 2021 of 20.8% was lower than the 21% U.S.

federal statutory rate primarily due to a net decrease in the valuation allowance related to utilization of losses in foreign jurisdictions and favorable permanent salt depletion deductions, partially offset by state taxes, foreign income inclusions and foreign income taxes.

After giving consideration to these items, the effective tax rate for the six months ended June 30, 2021 of 21.6% was higher than the 21% U.S.

Segment Results

4 unchanged sentences

Chlorine used in our Epoxy segment is transferred at cost from the Chlor Alkali Products and Vinyls segment.

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

($ in millions)

9 unchanged sentences

Environmental expense (1)

(5.0) (4.7) (10.6) (5.0)

Other corporate and unallocated costs (35.0) (30.9) (65.3) (63.9)

Restructuring charges (3.6) (14.0) (6.7) (20.9)

Other operating income 3.3 0.5 3.3 0.5

Interest expense (2)

3 unchanged sentences

Income before taxes $ 540.7 $ 337.3 $ 1,064.3 $ 643.4

(1) Environmental expense for the three months ended March 31, 2021 includes $2.2 million of insurance recoveries for environmental costs incurred and expensed in prior periods.

(2) Interest expense for the three months ended March 31, 2021 included a loss on extinguishment of debt of $23.5 million, which includes bond redemption premiums, write-off of deferred debt issuance costs and recognition of deferred fair value interest rate swap losses associated with the optional prepayment of existing debt.

(1) Environmental expense for the six months ended June 30, 2021 includes $2.2 million of insurance recoveries for environmental costs incurred and expensed in prior periods.

(2) Interest expense for the three and six months ended June 30, 2021 included a loss on extinguishment of debt of $15.4 million and $38.9 million, respectively, which includes bond redemption premiums, write-off of deferred debt issuance costs and recognition of deferred fair value interest rate swap losses associated with the optional prepayment of existing debt.

Chlor Alkali Products and Vinyls

Three Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021

Chlor Alkali Products and Vinyls sales for the three months ended March 31, 2022 were $1,245.2 million compared to $867.0 million for the same period in 2021, an increase of $378.2 million, or 44%.

The sales increase was primarily due to higher pricing, primarily chlorine, caustic soda and ethylene dichloride, partially offset by lower volumes.

Chlor Alkali Products and Vinyls segment income was $328.6 million for the three months ended March 31, 2022 compared to $271.1 million for the same period in 2021.

Chlor Alkali Products and Vinyls first quarter 2021 operating results were favorably impacted by Winter Storm Uri ($121.4 million), which includes a net one-time benefit associated with 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.

Without the impact of Winter Storm Uri, the increase in segment results of $178.9 million was primarily due to higher product prices ($384.4 million), primarily chlorine, caustic soda and ethylene dichloride, partially offset by higher raw material and operating costs ($94.2 million), primarily increased natural gas and electrical power costs, lower volumes ($73.1 million) and increased costs associated with product purchased from other parties ($38.2 million).

Chlor Alkali Products and Vinyls segment results included depreciation and amortization expense of $123.1 million and $115.8 million for the three months ended March 31, 2022 and 2021, respectively.

Three Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021

Epoxy sales for the three months ended March 31, 2022 were $789.5 million compared to $662.6 million for the same period in 2021, an increase of $126.9 million, or 19%.

The sales increase was primarily due to higher product prices ($281.5 million), partially offset by lower volumes ($127.4 million), primarily liquid epoxy resins, solid epoxy resins and downstream products and an unfavorable effect of foreign currency translation ($27.1 million).

Epoxy segment income was $138.0 million for the three months ended March 31, 2022 compared to $65.2 million for the same period in 2021.

Epoxy first quarter 2021 operating results were unfavorably impacted by Winter Storm Uri ($21.5 million), which included unabsorbed fixed manufacturing costs and storm-related maintenance costs.

Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021

Chlor Alkali Products and Vinyls sales for the three months ended June 30, 2022 were $1,403.5 million compared to $967.3 million for the same period in 2021, an increase of $436.2 million, or 45%.

The sales increase was primarily due to higher product pricing across all products, partially offset by lower volumes.

Chlor Alkali Products and Vinyls segment income was $346.5 million for the three months ended June 30, 2022 compared to $168.9 million for the same period in 2021.

The increase in segment results of $177.6 million was primarily due to higher product prices ($515.9 million) across all products, partially offset by higher raw material and operating costs ($190.5 million), primarily increased natural gas and electrical power costs, increased costs associated with product purchased from other parties ($85.9 million) and lower volumes ($61.9 million).

Chlor Alkali Products and Vinyls segment results included depreciation and amortization expense of $120.4 million and $114.5 million for the three months ended June 30, 2022 and 2021, respectively.

Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021

Chlor Alkali Products and Vinyls sales for the six months ended June 30, 2022 were $2,648.7 million compared to $1,834.3 million for the same period in 2021, an increase of $814.4 million, or 44%.

The sales increase was primarily due to higher product pricing across all products, partially offset by lower volumes.

Chlor Alkali Products and Vinyls segment income was $675.1 million for the six months ended June 30, 2022 compared to $440.0 million for the same period in 2021.

Chlor Alkali Products and Vinyls first half 2021 operating results were favorably impacted by Winter Storm Uri ($121.4 million), which includes a net one-time benefit associated with 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.

Without the impact of Winter Storm Uri, the increase in segment results of $356.5 million was primarily due to higher product prices ($900.3 million) across all products, partially offset by higher raw material and operating costs ($284.7 million), primarily increased natural gas and electrical power costs, lower volumes ($135.0 million) and increased costs associated with product purchased from other parties ($124.1 million).

Chlor Alkali Products and Vinyls segment results included depreciation and amortization expense of $243.5 million and $230.3 million for the six months ended June 30, 2022 and 2021, respectively.

Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021

Epoxy sales for the three months ended June 30, 2022 were $772.7 million compared to $850.0 million for the same period in 2021, a decrease of $77.3 million, or 9%.

The sales decrease was primarily due to lower volumes ($218.1 million), primarily liquid epoxy resins and solid epoxy resins, and an unfavorable effect of foreign currency translation ($37.8 million), partially offset by higher product prices ($178.6 million).

Epoxy segment income was $139.9 million for the three months ended June 30, 2022 compared to $165.3 million for the same period in 2021.

The decrease in segment results of $25.4 million was primarily due to lower volumes ($109.4 million), higher raw material costs ($77.2 million), primarily benzene and propylene, and higher operating costs ($17.4 million).

These decreases were partially offset by higher product prices ($178.6 million).

A significant percentage of our Euro denominated sales are of products manufactured within Europe.

As a result, the impact of foreign currency translation on revenue is primarily offset by the impact of foreign currency translation on raw materials and manufacturing costs also denominated in Euros.

Epoxy segment results included depreciation and amortization expense of $20.4 million and $20.3 million for the three months ended June 30, 2022 and 2021, respectively.

Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021

Epoxy sales for the six months ended June 30, 2022 were $1,562.2 million compared to $1,512.6 million for the same period in 2021, an increase of $49.6 million, or 3%.

The sales increase was primarily due to higher product prices ($460.1 million), partially offset by lower volumes ($345.5 million) and an unfavorable effect of foreign currency translation ($65.0 million).

Epoxy segment income was $277.9 million for the six months ended June 30, 2022 compared to $230.5 million for the same period in 2021.

Epoxy first half 2021 operating results were unfavorably impacted by Winter Storm Uri ($21.5 million), which included unabsorbed fixed manufacturing costs and storm-related maintenance costs.

Without the impact of Winter Storm Uri, the increase in segment results of $25.9 million was primarily due to higher product prices ($460.1 million), partially offset by higher raw material costs ($206.5 million), primarily benzene and propylene, lower volumes ($164.6 million) and higher operating costs ($63.1 million), primarily increased natural gas and electrical power costs.

1 unchanged sentence

Epoxy segment results included depreciation and amortization expense of $20.4 million and $22.1 million for the three months ended March 31, 2022 and 2021, respectively.

Three Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021

Winchester sales were $426.7 million for the three months ended March 31, 2022 compared to $389.2 million for the same period in 2021, an increase of $37.5 million, or 10%.

Epoxy segment results included depreciation and amortization expense of $40.8 million and $42.4 million for the six months ended June 30, 2022 and 2021, respectively.

Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021

Winchester sales were $439.9 million for the three months ended June 30, 2022 compared to $404.0 million for the same period in 2021, an increase of $35.9 million, or 9%.

The increase was due to higher ammunition sales to commercial customers ($39.1 million) and law enforcement agencies ($2.6 million), partially offset by lower sales to military customers ($5.8 million).

Commercial ammunition sales benefited from improved commercial pricing and a favorable product mix partially offset by lower volumes.

Winchester segment income was $118.9 million for the three months ended March 31, 2022 compared to $85.1 million for the same period in 2021, an increase of $33.8 million.

The increase in segment results was due to higher product pricing ($56.5 million) and a favorable product mix ($1.1 million), partially offset by higher commodity and operating costs ($23.8 million).

Winchester segment income included depreciation and amortization expense of $6.2 million and $5.6 million for the three months ended March 31, 2022 and 2021, respectively.

Commercial ammunition sales benefited from improved pricing partially offset by lower volumes.

Winchester segment income was $119.3 million for the three months ended June 30, 2022 compared to $109.9 million for the same period in 2021, an increase of $9.4 million.

The increase in segment results was due to higher product pricing ($43.4 million), partially offset by higher commodity and operating costs ($31.4 million) and lower volumes ($2.6 million).

Winchester segment income included depreciation and amortization expense of $5.9 million and $5.5 million for the six months ended June 30, 2022 and 2021, respectively.

Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021

Winchester sales were $866.6 million for the six months ended June 30, 2022 compared to $793.2 million for the same period in 2021, an increase of $73.4 million, or 9%.

The increase was due to higher ammunition sales to commercial customers ($92.3 million) and law enforcement agencies ($4.1 million), partially offset by lower sales to military customers ($23.0 million).

Commercial ammunition sales benefited from improved pricing partially offset by lower volumes.

Winchester segment income was $238.2 million for the six months ended June 30, 2022 compared to $195.0 million for the same period in 2021, an increase of $43.2 million.

The increase in segment results was due to higher product pricing ($99.9 million), partially offset by higher commodity and operating costs ($55.2 million) and lower volumes ($1.5 million).

Winchester segment income included depreciation and amortization expense of $12.1 million and $11.1 million for the six months ended June 30, 2022 and 2021, respectively.

Corporate/Other

Three Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021

For the three months ended March 31, 2022, charges to income for environmental investigatory and remedial activities were $5.6 million compared to $0.3 million for the three months ended March 31, 2021, which included $2.2 million of insurance recoveries for environmental costs incurred and expensed in prior periods.

Without these recoveries, charges to income for environmental investigatory and remedial activities for the three months ended March 31, 2021 would have been $2.5 million.

Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021

For the three months ended June 30, 2022, charges to income for environmental investigatory and remedial activities were $5.0 million compared to $4.7 million for the three months ended June 30, 2021.

These charges related primarily to expected future investigatory and remedial activities associated with past manufacturing operations and former waste disposal sites.

For the three months ended March 31, 2022, other corporate and unallocated costs were $30.3 million compared to $33.0 million for the three months ended March 31, 2021, a decrease of $2.7 million.

The decrease was primarily due to lower variable incentive compensation costs ($8.5 million), which includes mark-to-market adjustments on stock-based compensation expense, partially offset by higher legal and legal-related settlement expenses ($2.9 million).

In 2022, we expect to continue to benefit from Olin’s strategic operating model of optimizing value across our Chemicals and Winchester businesses.

In 2022, we expect operating results to improve across all our business segments compared to 2021.

We expect operating income for the second quarter 2022 to be higher than first quarter 2022 of $546.5 million.

We expect sequentially higher raw material and operating costs, mainly increased natural gas and electrical power costs, to be more than offset by increased product pricing across our entire chemicals value chain.

We expect the second quarter 2022 results from our Chemicals businesses to be higher than first quarter 2022.

Our Chlor Alkali Products and Vinyls second quarter 2022 results are expected to improve sequentially despite reduced margin from lost sales and production volumes, increased maintenance expense and other costs, as a result of the unplanned production outage at our Plaquemine, Louisiana facility.

During the second quarter, we expect the Epoxy business to continue to experience weaker epoxy resin demand and operate at low rates.

We expect our Winchester business second quarter 2022 results to be comparable with first quarter 2022 as higher product pricing is expected to be offset by higher commodity and other materials costs.

Other Corporate and Unallocated costs in 2022 are expected to be lower than the $135.1 million in 2021.

For the three months ended June 30, 2022, other corporate and unallocated costs were $35.0 million compared to $30.9 million for the three months ended June 30, 2021, an increase of $4.1 million.

The increase was primarily due to an unfavorable foreign currency impact ($4.7 million) and higher legal and legal-related settlement expenses ($3.3 million), partially offset lower variable incentive compensation costs ($4.0 million), which includes mark-to-market adjustments on stock-based compensation expense.

Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021

For the six months ended June 30, 2022, charges to income for environmental investigatory and remedial activities were $10.6 million compared to $5.0 million for the six months ended June 30, 2021, which included $2.2 million of insurance recoveries for environmental costs incurred and expensed in prior periods.

Without these recoveries, charges to income for environmental investigatory and remedial activities for the six months ended June 30, 2021 would have been $7.2 million.

These charges related primarily to expected future investigatory and remedial activities associated with past manufacturing operations and former waste disposal sites.

For the six months ended June 30, 2022, other corporate and unallocated costs were $65.3 million compared to $63.9 million for the six months ended June 30, 2021, an increase of $1.4 million.

The increase was primarily due to higher legal and legal-related settlement expenses ($6.9 million) and an unfavorable foreign currency impact ($3.9 million), partially offset by lower variable incentive compensation costs ($12.7 million), which includes mark-to-market adjustments on stock-based compensation expense.

We expect operating income for the third quarter 2022 to be lower than second quarter 2022 of $565.4 million.

We expect our third quarter 2022 Chemicals businesses results to be lower than second quarter 2022, primarily due to lower participation in chlorine derivative markets and operating at lower rates combined with sequentially higher raw material and operating costs, mainly increased natural gas and electrical power costs.

We expect Winchester third quarter results to be lower than second quarter 2022 levels primarily due to higher commodity and other materials costs.

Other Corporate and Unallocated costs in 2022 are expected to be comparable to the $135.1 million in 2021.

During 2022, we anticipate environmental expenses in the $25 million to $30 million range compared to $14.0 million in 2021.

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We expect 2022 depreciation and amortization expense to be in the $575 million to $600 million range.

We currently believe the 2022 effective and cash tax rates will be in the 25% to 30% range.

We currently believe the 2022 effective and cash tax rates will be approximately 25%.

Environmental Matters

Environmental provisions charged to income, which are included in costs of goods sold, were as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

($ in millions)

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Environmental expense $ 5.0 $ 4.7 $ 10.6 $ 5.0

Environmental expense for the three months ended March 31, 2021 includes $2.2 million of insurance recoveries for environmental costs incurred and expensed in prior periods.

Environmental expense for the six months ended June 30, 2021 includes $2.2 million of insurance recoveries for environmental costs incurred and expensed in prior periods.

Our liabilities for future environmental expenditures were as follows:

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With respect to unasserted claims, we accrue liabilities for costs that, in our experience, we expect to incur to protect our interests against those unasserted claims.

Our accrued liabilities for unasserted claims amounted to $9.0 million at March 31, 2022.

Our accrued liabilities for unasserted claims amounted to $9.3 million at June 30, 2022.

With respect to asserted claims, we accrue liabilities based on remedial investigation, feasibility study, remedial action and operation, maintenance and monitoring (OM&M) expenses that, in our experience, we expect to incur in connection with the asserted claims.

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Charges to income for investigatory and remedial efforts may be material to our operating results in 2022.

The condensed balance sheets included reserves for future environmental expenditures to investigate and remediate known sites amounting to $149.5 million, $147.3 million and $147.2 million at March 31, 2022, December 31, 2021 and March 31, 2021, respectively, of which $124.5 million, $122.3 million and $128.2 million, respectively, were classified as other noncurrent liabilities.

The condensed balance sheets included reserves for future environmental expenditures to investigate and remediate known sites amounting to $148.9 million, $147.3 million and $148.4 million at June 30, 2022, December 31, 2021 and June 30, 2021, respectively, of which $123.9 million, $122.3 million and $129.4 million, respectively, were classified as other noncurrent liabilities.

These amounts do not take into account any discounting of future expenditures or any consideration of insurance recoveries or advances in technology.

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Cash Flow Data

Three Months Ended March 31,

Six Months Ended June 30,

Provided By (Used For) ($ in millions)

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Long-term debt repayments, net (0.5) (490.2)

Debt early redemption premium — (18.7)

Debt early redemption premiums — (31.0)

Common stock repurchased and retired (689.7) —

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Operating Activities

For the three months ended March 31, 2022, cash provided by operating activities increased by $83.7 million from the three months ended March 31, 2021, primarily due to an increase in operating results.

For the three months ended March 31, 2022, working capital increased $195.5 million compared to an increase of $204.3 million for the three months ended March 31, 2021.

The working capital increase during the first quarter reflects normal seasonal working capital growth, along with reflecting higher raw material costs.

Receivables increased by $85.6 million from December 31, 2021, primarily as a result of higher sales during the first quarter of 2022.

For the three months ended March 31, 2022, our days sales outstanding (DSO), which was calculated by dividing period end accounts receivable by average daily sales for the period, improved from the comparable prior year period.

Inventories increased by $45.0 million from December 31, 2021 primarily as a result of increased raw material cost and accounts payable and accrued liabilities decreased $132.6 million primarily as a result of timing of payments during the first quarter of 2022.

For the six months ended June 30, 2022, cash provided by operating activities increased by $251.6 million from the six months ended June 30, 2021, primarily due to an increase in operating results.

For the six months ended June 30, 2022, working capital increased $183.6 million compared to an increase of $209.1 million for the six months ended June 30, 2021.

The working capital increase reflects normal seasonal working capital growth.

Receivables increased by $228.5 million from December 31, 2021, primarily as a result of higher sales during the second quarter of 2022.

Inventories increased by $90.4 million from December 31, 2021 and accounts payable and accrued liabilities increased $138.6 million primarily as a result of increased raw material costs.

Investing Activities

Capital spending of $47.3 million for the three months ended March 31, 2022 was $3.9 million lower than the corresponding period in 2021.

Capital spending of $103.9 million for the six months ended June 30, 2022 was $17.5 million higher than the corresponding period in 2021.

For the total year 2022, we currently expect our capital spending to be in the $200 million to $250 million range.

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Financing Activities

For the three months ended March 31, 2022 and 2021, we had long-term debt repayments, net of long-term debt borrowings of $0.2 million and $120.2 million, respectively.

On March 31, 2021, Olin redeemed $315.0 million of the outstanding 10.00% senior notes due October 15, 2025 (2025 Notes).

For the six months ended June 30, 2022 and 2021, we had long-term debt repayments, net of long-term debt borrowings of $0.5 million and $490.2 million, respectively.

During the six months ended June 30, 2021, we repaid $150.0 million of the Senior Secured Term Loans.

During the six months ended June 30, 2021, we repurchased, through open market transactions, a principal amount of $26.5 million of the outstanding aggregate principal amount of 5.625% senior notes due August 1, 2029 (2029 Notes) and $8.0 million of the outstanding aggregate principal amount of 5.00% senior notes due February 1, 2030 (2030 Notes).

These actions resulted in a total redemption premium of $3.1 million for both the three and six months ended June 30, 2021.

On March 31, 2021, Olin redeemed $315.0 million of the outstanding 10.00% senior notes due October 15, 2025 (2025 Notes) and on May 14, 2021, Olin redeemed the remaining $185.0 million of the outstanding 2025 Notes.

The 2025 Notes were redeemed at 105.0% of the principal amount of the 2025 Notes, resulting in a redemption premium of $25.0 million.

The 2025 Notes were redeemed by drawing $315.0 million of the Delayed Draw Term Loan along with utilizing $15.8 million of cash on hand.

The 2025 Notes were redeemed by drawing $315.0 million of the Delayed Draw Term Loan along with utilizing cash on hand.

On January 15, 2021, Olin redeemed the remaining $120.0 million of the 9.75% senior notes due 2023 (2023 Notes).

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The remaining 2023 Notes were redeemed by utilizing cash on hand.

For the three months ended March 31, 2022, 5.2 million shares of common stock were repurchased and retired at a total value of $263.2 million.

We issued 0.2 million and 1.2 million shares representing stock options exercised for the three months ended March 31, 2022 and 2021, respectively, with a total value of $5.2 million and $25.7 million, respectively.

For the three months ended March 31, 2021, we paid debt issuance costs of $3.1 million for the amendments to our Senior Credit Facility.

The percent of total debt to total capitalization decreased to 49.9% as of March 31, 2022 from 51.2% as of December 31, 2021 as a result of higher shareholders’ equity primarily resulting from our operating results.

In the first quarters of 2022 and 2021, we paid a quarterly dividend of $0.20 per share.

Dividends paid for the three months ended March 31, 2022 and 2021, were $30.8 million and $31.7 million, respectively.

On April 27, 2022, our board of directors declared a dividend of $0.20 per share on our common stock, payable on June 10, 2022 to shareholders of record on May 10, 2022.

For the six months ended June 30, 2022, 12.6 million shares of common stock were repurchased and retired at a total value of $689.7 million.

We issued 0.9 million and 2.4 million shares representing stock options exercised for the six months ended June 30, 2022 and 2021, respectively, with a total value of $20.9 million and $50.2 million, respectively.

For the six months ended June 30, 2021, we paid debt issuance costs of $3.1 million for the amendments to our Senior Credit Facility.

The percent of total debt to total capitalization decreased to 50.8% as of June 30, 2022 from 51.2% as of December 31, 2021 as a result of higher shareholders’ equity primarily resulting from our operating results.

In the first and second quarters of 2022 and 2021, we paid a quarterly dividend of $0.20 per share.

Dividends paid for the six months ended June 30, 2022 and 2021, were $60.9 million and $63.7 million, respectively.

On July 28, 2022, our Board of Directors declared a dividend of $0.20 per share on our common stock, payable on September 9, 2022 to shareholders of record on August 10, 2022.

The payment of cash dividends is subject to the discretion of our Board of Directors and will be determined in light of then-current conditions, including our earnings, our operations, our financial condition, our capital requirements and other factors deemed relevant by our Board of Directors.

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Additionally, we believe that we have access to the high-yield debt and equity markets.

On February 24, 2021, we entered into a $1,615.0 million senior secured credit facility (Senior Credit Facility) that amended our existing $1,300.0 million senior secured credit facility.

On July 28, 2021, the liens on the collateral provided under the Senior Credit Facility were released based on the achievement of a net leverage ratio below 3.50 for the prior two consecutive fiscal quarters.

The Senior Credit Facility includes a senior delayed-draw term loan facility with aggregate commitments of $315.0 million (Delayed Draw Term Loan), a senior term loan facility with aggregate commitments of $500.0 million (2020 Term Loan and together with the Delayed Draw Term Loan, the Senior Term Loans) and a senior revolving credit facility with aggregate commitments in an amount equal to $800.0 million (Senior Revolving Credit Facility).

We maintain a $1,615.0 million senior credit facility (Senior Credit Facility) which includes a senior delayed-draw term loan facility with aggregate commitments of $315.0 million (Delayed Draw Term Loan), a senior term loan facility with aggregate commitments of $500.0 million (2020 Term Loan and together with the Delayed Draw Term Loan, the Senior Term Loans) and a senior revolving credit facility with aggregate commitments in an amount equal to $800.0 million (Senior Revolving Credit Facility).

The maturity date for the Senior Credit Facility is July 16, 2024.

The amendment modified the pricing grid for the Senior Credit Facility by reducing applicable interest rates on the borrowings under the facility.

On March 30, 2021, Olin drew the entire $315.0 million of the Delayed Draw Term Loan and used the proceeds to fund the redemption of the 2025 Notes.

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The Senior Revolving Credit Facility includes a $100.0 million letter of credit subfacility.

At March 31, 2022, we had $799.6 million available under our $800.0 million Senior Revolving Credit Facility because we had issued $0.4 million of letters of credit.

Under the Senior Credit Facility, we may select various floating-rate borrowing options.

The actual interest rate paid on borrowings under the Senior Credit Facility is based on a pricing grid which is dependent upon the net leverage ratio as calculated under the terms of the applicable facility for the prior fiscal quarter.

The Senior Credit Facility includes various customary restrictive covenants, including restrictions related to the ratio of debt to earnings before interest expense, taxes, depreciation and amortization (net leverage ratio) and the ratio of earnings before interest expense, taxes, depreciation and amortization to interest expense (coverage ratio).

The calculation of debt in our net leverage ratio excludes borrowings under the Receivables Financing Agreement, up to a maximum of $250.0 million, and is reduced by all unrestricted cash and cash equivalents.

Compliance with these covenants is determined quarterly.

We were in compliance with all covenants and restrictions under all our outstanding credit agreements as of March 31, 2022, and no event of default had occurred that would permit the lenders under our outstanding credit agreements to accelerate the debt if not cured.

At June 30, 2022, we had $799.6 million available under our $800.0 million Senior Revolving Credit Facility because we had issued $0.4 million of letters of credit.

We were in compliance with all covenants and restrictions under all our outstanding credit agreements as of June 30, 2022, and no event of default had occurred that would permit the lenders under our outstanding credit agreements to accelerate the debt if not cured.

In the future, our ability to generate sufficient operating cash flows, among other factors, will determine the amounts available to be borrowed under these facilities.

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The limitation, if an amendment or waiver from our lenders is not obtained, could restrict our ability to borrow the maximum amounts available under the Senior Revolving Credit Facility and the Receivables Financing Agreement.

As of March 31, 2022, there were no covenants or other restrictions that limited our ability to borrow.

The overall increase in cash for the three months ended March 31, 2022 primarily reflects our operating results, partially offset by share repurchases, capital spending, and dividends paid.

As of June 30, 2022, there were no covenants or other restrictions that limited our ability to borrow.

The overall increase in cash for the six months ended June 30, 2022 primarily reflects our operating results, partially offset by share repurchases, capital spending, and dividends paid.

We believe, based on current and projected levels of cash flow from our operations, together with our cash and cash equivalents on hand and the availability to borrow under our Senior Revolving Credit Facility, Receivables Financing Agreement and AR Facilities, we have sufficient liquidity to meet our short-term and long-term needs to make required payments of interest on our debt, fund our operating needs, working capital and our capital expenditure requirements.

On April 26, 2018, our board of directors authorized a share repurchase program for the purchase of shares of common stock at an aggregate price of up to $500.0 million.

This program terminated during the first quarter of 2022 upon the purchase of $500.0 million of our common stock.

On November 1, 2021, our board of directors authorized an additional share repurchase program for the purchase of shares of common stock at an aggregate price of up to $1.0 billion.

On July 28, 2022, our Board of Directors authorized a share repurchase program for the purchase of shares of common stock at an aggregate price of up to $2.0 billion.

This program will terminate upon the purchase of $2.0 billion of common stock.

On November 1, 2021, our Board of Directors authorized a share repurchase program for the purchase of shares of common stock at an aggregate price of up to $1.0 billion.

This program will terminate upon the purchase of $1.0 billion of our common stock.

For the three months ended March 31, 2022, 5.2 million shares of common stock have been repurchased and retired at a total value of $263.2 million.

As of March 31, 2022, a total of 15.7 million shares of common stock were repurchased and retired at a total value of $500.0 million under the 2018 Repurchase Authorization program, terminating the program.

As of March 31, 2022, 4.3 million shares of common stock have been repurchased and retired at a total value of $211.0 million under the 2021 Repurchase Authorization program, and $789.0 million of common stock remained authorized to be repurchased under the program.

On April 26, 2018, our Board of Directors authorized a share repurchase program for the purchase of shares of common stock at an aggregate price of up to $500.0 million.

This program terminated upon the purchase of $500.0 million of our common stock during the first quarter of 2022.

For the six months ended June 30, 2022, 12.6 million shares of common stock have been repurchased and retired at a total value of $689.7 million.

As of June 30, 2022, 11.6 million shares of common stock have been repurchased and retired at a total value of $637.5 million under the 2021 Repurchase Authorization program, and $362.5 million of common stock remained authorized to be repurchased under the program.

We maintain a $300.0 million Receivables Financing Agreement (Receivables Financing Agreement) that is scheduled to mature on September 28, 2024.

The Receivables Financing Agreement includes a minimum borrowing requirement of 50% of the facility limit or available borrowing capacity, whichever is less.

Under the Receivables Financing Agreement, our eligible

trade receivables are used for collateralized borrowings and continue to be serviced by us.

Under the Receivables Financing Agreement, our eligible trade receivables are used for collateralized borrowings and continue to be serviced by us.

In addition, the Receivables Financing Agreement incorporates the net leverage ratio covenant that is contained in the Senior Credit Facility.

As of March 31, 2022, $642.4 million of our trade receivables were pledged as collateral and we had $300.0 million drawn with no additional borrowing capacity available under the Receivables Financing Agreement.

As of December 31, 2021 and March 31, 2021, we had $300.0 million and $125.0 million, respectively, drawn under the Receivables Financing Agreement.

As of June 30, 2022, $666.3 million of our trade receivables were pledged as collateral and we had $300.0 million drawn with no additional

borrowing capacity available under the Receivables Financing Agreement.

As of December 31, 2021 and June 30, 2021, we had $300.0 million and $125.0 million, respectively, drawn under the Receivables Financing Agreement.

Olin also has trade accounts receivable factoring arrangements (AR Facilities) and pursuant to the terms of the AR Facilities, certain of our domestic subsidiaries may sell their accounts receivable up to a maximum of $250.0 million and certain of our foreign subsidiaries may sell their accounts receivable up to a maximum of €43.4 million.

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These receivables qualify for sales treatment under ASC 860 and, accordingly, the proceeds are included in net cash provided by operating activities in the condensed statements of cash flows.

The gross amount of receivables sold for the three months ended March 31, 2022 and 2021 totaled $281.4 million and $312.0 million, respectively.

The gross amount of receivables sold for the three months ended June 30, 2022 and 2021 totaled $477.2 million and $487.3 million, respectively.

The factoring discount paid under the AR Facilities is recorded as interest expense on the condensed statements of operations.

The factoring discount was $0.5 million and $0.4 million for the three months ended March 31, 2022 and 2021, respectively.

The agreements are without recourse and therefore no recourse liability has been recorded as of March 31, 2022, December 31, 2021 and March 31, 2021.

As of March 31, 2022, December 31, 2021 and March 31, 2021, $97.9 million, $83.3 million and $142.5 million, respectively, of receivables qualifying for sales treatment were outstanding and will continue to be serviced by us.

At March 31, 2022, we had total letters of credit of $82.7 million outstanding, of which $0.4 million were issued under our Senior Revolving Credit Facility.

The factoring discount was $0.4 million and $0.3 million for the three months ended June 30, 2022 and 2021, respectively, and $0.9 million and $0.7 million for the six months ended June 30, 2022 and 2021, respectively.

The agreements are without recourse and therefore no recourse liability has been recorded as of June 30, 2022, December 31, 2021 and June 30, 2021.

As of June 30, 2022, December 31, 2021 and June 30, 2021, $109.9 million, $83.3 million and $85.7 million, respectively, of receivables qualifying for sales treatment were outstanding and will continue to be serviced by us.

At June 30, 2022, we had total letters of credit of $80.7 million outstanding, of which $0.4 million were issued under our Senior Revolving Credit Facility.

The letters of credit were used to support certain long-term debt, certain workers compensation insurance policies, certain plant closure and post-closure obligations, certain international payment obligations and certain international pension funding requirements.

Our current debt structure is used to fund our business operations.

As of March 31, 2022, we had long-term borrowings, including the current installment and finance lease obligations, of $2,780.1 million, of which $805.9 million were at variable rates.

Included within long-term borrowings on the condensed balance sheets were deferred debt issuance costs and unamortized bond original issue discount of $21.9 million as of March 31, 2022.

As of June 30, 2022, we had long-term borrowings, including the current installment and finance lease obligations, of $2,780.7 million, of which $805.9 million were at variable rates.

Included within long-term borrowings on the condensed balance sheets were deferred debt issuance costs and unamortized bond original issue discount of $20.9 million as of June 30, 2022.

Commitments from banks under our Senior Revolving Credit Facility, Receivables Financing Agreement and AR Facilities are additional sources of liquidity.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis