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Item 2. Management’s Discussion and Analysis

2022-10-27 compared with 2022-07-29 · 184 added, 172 removed, 169 unchanged (68% of the section changed)

12 unchanged sentences

2022 Overview

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.

Net income for the three and nine months ended September 30, 2022 was $315.2 million and $1,130.3 million, respectively, compared to $390.7 million and $990.1 million, respectively, for the comparable prior year periods in 2021.

For the three months ended September 30, 2022, the decrease in net income from the prior year was primarily due to lower operating results across all of our business segments.

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

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

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

During the third quarter we have seen global economic conditions continue to deteriorate in both European and North American demand particularly in epoxy and vinyls intermediates, which has been aggravated by increased Chinese exports precipitated by continuing weak Chinese domestic demand.

The Epoxy business is unwilling to sell incremental volume into poor-quality markets and operating the epoxy resin facilities at less than 50% operating rates is impractical.

As a result of these factors and high natural gas and electrical power costs, we temporarily suspended epoxy resin production at our Stade, Germany, Freeport, TX and Guaruja, Brazil facilities at different times during the first nine months of 2022 to allow us to reduce our participation in these weak markets.

Chlor Alkali Products and Vinyls reported segment income of $253.9 million and $929.0 million for the three and nine months ended September 30, 2022, respectively.

Chlor Alkali Products and Vinyls segment results for third quarter 2022 were lower than in the comparable prior year period primarily due to lower volumes and higher raw material and operating costs, partially offset by higher pricing across all products except vinyls intermediates.

Chlor Alkali Products and Vinyls segment

results for the nine months ended September 30, 2022 were higher than in the comparable prior year period primarily due to higher pricing across all products, partially offset by higher raw material and operating costs and lower volumes across all products.

Epoxy reported segment income of $80.1 million and $358.0 million for the three and nine months ended September 30, 2022, respectively.

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

Winchester reported segment income of $89.0 million and $327.2 million for the three and nine months ended September 30, 2022, respectively.

Winchester segment results for the third quarter were lower than in the comparable prior year period primarily due to lower commercial volumes and higher commodity and operating costs, partially offset by increased commercial ammunition pricing and higher military and law enforcement sales.

Winchester segment results for the nine months ended September 30, 2022 were higher than in the comparable prior year period primarily due to increased commercial ammunition pricing, partially offset by higher commodity and operating costs and lower volumes.

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.

During the nine months ended September 30, 2022, we repurchased and retired 20.8 million shares of common stock at a total value of $1,100.6 million, most of which were repurchased under prior authorized share repurchase programs.

As of September 30, 2022, we have $1,951.6 million of remaining authorized common stock to be purchased under our $2.0 billion share repurchase program.

Subsequent Event

On October 11, 2022, we entered into a new $1,550.0 million senior credit facility (Senior Credit Facility) that replaced our existing $1,150.0 million senior credit facility (2021 Senior Credit Facility).

Pursuant to the agreement, the aggregate commitments under our senior revolving credit facility were increased from $800.0 million to $1,200.0 million (Senior Revolving Credit Facility) and the aggregate principal amount under our senior term loan facility remained at $350.0 million (Senior Term Loan).

The Senior Credit Facility will mature in October 2027.

On October 11, 2022, we also amended our existing Receivables Financing Agreement which increases the aggregate borrowing capacity from $300.0 million to $425.0 million and extends the maturity to October 2025.

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

1 unchanged sentence

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

Additionally, sanctions from the U.S., and the European Union continue to evolve, along with the overall impact the invasion has on the global economic and political environment.

Additionally, sanctions from the U.S.

and the European Union continue to evolve, along with the overall impact the invasion has on the global economic and political environment.

We continue to closely monitor the changing environment, including the increased volatility and heightened degree of uncertainty resulting from the invasion.

1 unchanged sentence

Consolidated Results of Operations

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

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

5 unchanged sentences

Restructuring charges 7.6 3.6 14.3 24.5

Other operating income 3.3 0.5 3.3 0.5

Other operating income (expense) 13.0 (0.5) 16.3 —

Operating income 393.5 549.0 1,505.4 1,325.2

3 unchanged sentences

Income before taxes 367.9 504.3 1,432.2 1,147.7

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

Income tax provision 52.7 113.6 301.9 157.6

Net income $ 315.2 $ 390.7 $ 1,130.3 $ 990.1

2 unchanged sentences

Diluted $ 2.18 $ 2.38 $ 7.44 $ 6.07

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.

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

Sales for the three months ended September 30, 2022 were $2,321.7 million compared to $2,340.1 million in the same period last year, a decrease of $18.4 million, or 1%.

Epoxy sales decreased by $233.6 million primarily due to lower volumes partially offset by higher product pricing.

Chlor Alkali Products and Vinyls sales increased by $201.1 million primarily due to higher pricing across all products except vinyls intermediates, partially offset by lower volumes.

Winchester sales increased by $14.1 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.

Gross margin decreased $179.5 million for the three months ended September 30, 2022 compared to the prior year.

Epoxy gross margin decreased by $138.2 million, Winchester gross margin decreased by $29.3 million and Chlor Alkali Products and Vinyls gross margin decreased by $7.8 million.

Gross margin decreases across all business segments were primarily due to lower volumes and higher raw material and operating costs, partially offset by higher product pricing.

Gross margin as a percentage of sales decreased to 21% in 2022 from 28% in 2021.

Selling and administration expenses for the three months ended September 30, 2022 were $92.7 million, a decrease of $14.5 million from the prior year.

The decrease was primarily due to lower variable incentive compensation expense of $11.8 million, which includes mark-to-market adjustments on stock-based compensation expense, partially offset by higher legal and legal-related settlement expenses of $2.7 million and an unfavorable foreign currency impact of $1.1 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.

Restructuring charges for the three months ended September 30, 2022 and 2021 were $7.6 million and $3.6 million, respectively.

During 2021, we announced that we had made the decision to permanently close our diaphragm-grade chlor alkali capacity at our McIntosh, AL facility which resulted in pretax restructuring charges for the three months ended September 30, 2022 and 2021 of $5.5 million and $0.4 million, respectively.

Other operating income (expense) for the three months ended September 30, 2022 included $13.0 million of gains for the sale of two former manufacturing facilities.

Interest expense decreased by $18.0 million for the three months ended September 30, 2022.

Interest expense for the three months ended September 30, 2021 included $6.7 million of bond redemption premiums and $2.0 million for write-off of deferred debt issuance costs related to financing transactions during third quarter 2021.

Without these items, interest expense decreased by $9.3 million, primarily due to a lower level of debt outstanding.

The effective tax rate for the three months ended September 30, 2022 included a net $36.6 million tax benefit primarily associated with a legal entity liquidation.

After giving consideration to this benefit, the effective tax rate for the three months ended September 30, 2022 of 24.3% 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.

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

These factors resulted in a net $1.1 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.

After giving consideration to these items, the effective tax rate for the three months ended September 30, 2021 of 22.7% 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.

Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021

Sales for the nine months ended September 30, 2022 were $7,399.2 million compared to $6,480.2 million in the same period last year, an increase of $919.0 million, or 14%.

Chlor Alkali Products and Vinyls sales increased by $1,015.5 million primarily due to higher product pricing, partially offset by lower volumes across all products.

Winchester sales increased by $87.5 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.

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

Epoxy sales decreased by $184.0 million, primarily due to lower volumes partially offset by higher product pricing.

Gross margin increased $135.0 million for the nine months ended September 30, 2022 compared to the prior year.

Chlor Alkali Products and Vinyls gross margin increased by $225.2 million and Winchester gross margin increased by $18.8 million primarily due to higher product pricing, partially offset by higher raw material and operating costs and lower volumes.

Epoxy gross margin decreased by $93.7 million primarily due to lower volumes and higher raw material and operating costs, partially offset by higher product pricing.

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

Selling and administration expenses for the nine months ended September 30, 2022 were $296.0 million, a decrease of $18.7 million from the prior year.

The decrease was primarily due to lower variable incentive compensation expense of $27.3 million, which includes mark-to-market adjustments on stock-based compensation expense, partially offset by higher legal and legal-related settlement expenses of $10.1 million and an unfavorable foreign currency impact of $5.0 million.

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

Restructuring charges for the nine months ended September 30, 2022 and 2021 were $14.3 million and $24.5 million, respectively.

The decrease in charges was primarily due to a productivity initiative to align the organization with our new operating model and improve efficiencies, which was completed during the second quarter of 2021, which resulted in pretax restructuring charges of $10.1 million for the nine months ended September 30, 2021.

During 2021, we announced that we had made the decision to permanently close our diaphragm-grade chlor alkali capacity at our McIntosh, AL facility which resulted in pretax restructuring charges for the nine months ended September 30, 2022 and 2021 of $7.1 million and $5.2 million, respectively.

On December 11, 2019, we announced that we had made the decision to permanently close a chlor alkali plant with a capacity of 230,000 tons and our vinylidene chloride (VDC) production facility, both in Freeport, TX, which resulted in pretax restructuring charges for the nine months ended September 30, 2022 and 2021 of $4.9 million and $2.2 million, respectively.

Other operating income (expense) for the nine months ended September 30, 2022 included $13.0 million of gains for the sale of two former manufacturing facilities.

Interest expense decreased by $101.0 million for the nine months ended September 30, 2022.

Interest expense for the nine months ended September 30, 2021 included $37.7 million of bond redemption premiums and $9.9 million for write-off of deferred debt issuance costs and recognition of deferred fair value interest rate swap losses related to financing transactions during 2021.

Without these items, interest expense decreased by $53.4 million, primarily due to a lower level of debt outstanding and lower average interest rates.

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.

The effective tax rate for the nine months ended September 30, 2022 included a net $47.5 million tax benefit primarily associated with a legal entity liquidation, prior year tax positions and stock-based compensation.

After giving consideration to these items, the effective tax rate for the nine months ended September 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 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.

The effective tax rate for the nine months ended September 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 $96.7 million tax benefit.

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.

After giving consideration to these items, the effective tax rate for the nine months ended September 30, 2021 of 22.2% was higher than the 21% U.S.

5 unchanged sentences

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

13 unchanged sentences

Restructuring charges (7.6) (3.6) (14.3) (24.5)

Other operating income 3.3 0.5 3.3 0.5

Other operating income (expense) (2)

13.0 (0.5) 16.3 —

Interest expense (3)

3 unchanged sentences

Income before taxes $ 367.9 $ 504.3 $ 1,432.2 $ 1,147.7

(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.

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

(2) Other operating income (expense) for both the three and nine months ended September 30, 2022 included $13.0 million of gains for the sale of two former manufacturing facilities.

(3) Interest expense for the three and nine months ended September 30, 2021 included a loss on extinguishment of debt of $8.7 million and $47.6 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 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).

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

Chlor Alkali Products and Vinyls sales for the three months ended September 30, 2022 were $1,263.5 million compared to $1,062.4 million for the same period in 2021, an increase of $201.1 million, or 19%.

The sales increase was primarily due to higher pricing across all products except vinyls intermediates partially offset by lower volumes.

Chlor Alkali Products and Vinyls segment income was $253.9 million for the three months ended September 30, 2022 compared to $263.0 million for the same period in 2021.

The decrease in segment results of $9.1 million was due to higher raw material and operating costs ($174.5 million), primarily increased natural gas and electrical power costs, lower volumes ($115.4 million) and increased costs associated with product purchased from other parties ($68.2 million), partially offset by higher prices across all products except vinyls intermediates ($349.0 million).

Chlor Alkali Products and Vinyls segment results included depreciation and amortization expense of $121.1 million and $116.7 million for the three months ended September 30, 2022 and 2021, respectively.

Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021

Chlor Alkali Products and Vinyls sales for the nine months ended September 30, 2022 were $3,912.2 million compared to $2,896.7 million for the same period in 2021, an increase of $1,015.5 million, or 35%.

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

Chlor Alkali Products and Vinyls segment income was $929.0 million for the nine months ended September 30, 2022 compared to $703.0 million for the same period in 2021.

Chlor Alkali Products and Vinyls 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 $347.4 million was due to higher prices across all products ($1,249.3 million), partially offset by higher raw material and operating costs ($459.2 million), primarily increased natural gas and electrical power costs, lower volumes across all products ($250.4 million) and increased costs associated with product purchased from other parties ($192.3 million).

Chlor Alkali Products and Vinyls segment results included depreciation and amortization expense of $364.6 million and $347.0 million for the nine months ended September 30, 2022 and 2021, respectively.

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

Epoxy sales for the three months ended September 30, 2022 were $644.1 million compared to $877.7 million for the same period in 2021, a decrease of $233.6 million, or 27%.

The sales decrease was due to lower volumes ($298.7 million) and an unfavorable effect of foreign currency translation ($45.9 million), partially offset by higher product prices ($111.0 million).

Epoxy segment income was $80.1 million for the three months ended September 30, 2022 compared to $215.2 million for the same period in 2021.

The decrease in segment results of $135.1 million was due to lower volumes ($160.3 million), higher raw material costs ($63.1 million), primarily benzene and propylene, and higher operating costs ($22.7 million).

These decreases were partially offset by higher product prices ($111.0 million).

1 unchanged sentence

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.

Epoxy segment results included depreciation and amortization expense of $20.1 million and $21.1 million for the three months ended September 30, 2022 and 2021, respectively.

Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021

Epoxy sales for the nine months ended September 30, 2022 were $2,206.3 million compared to $2,390.3 million for the same period in 2021, a decrease of $184.0 million, or 8%.

The sales decrease was primarily due to lower volumes ($644.2 million) and an unfavorable effect of foreign currency translation ($110.9 million), partially offset by higher product prices ($571.1 million).

Epoxy segment income was $358.0 million for the nine months ended September 30, 2022 compared to $445.7 million for the same period in 2021.

Epoxy 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 decrease in segment results of $109.2 million was primarily due to lower volumes ($324.9 million), higher raw material costs ($269.6 million), primarily benzene and propylene, and higher operating costs ($85.8 million), primarily increased natural gas and electrical power costs, partially offset by higher product prices ($571.1 million).

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

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 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%.

Epoxy segment results included depreciation and amortization expense of $60.9 million and $63.5 million for the nine months ended September 30, 2022 and 2021, respectively.

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

Winchester sales were $414.1 million for the three months ended September 30, 2022 compared to $400.0 million for the same period in 2021, an increase of $14.1 million, or 4%.

The increase was due to higher ammunition sales to military customers ($15.6 million) and law enforcement agencies ($7.8 million), partially offset by lower ammunition sales to commercial customers ($9.3 million).

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

Winchester segment income was $89.0 million for the three months ended September 30, 2022 compared to $115.3 million for the same period in 2021, a decrease of $26.3 million.

The decrease in segment results was due to higher commodity and operating costs ($19.3 million) and lower volumes ($21.1 million), partially offset by higher product pricing ($14.1 million).

Winchester segment income included depreciation and amortization expense of $6.1 million and $5.7 million for the three months ended September 30, 2022 and 2021, respectively.

Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021

Winchester sales were $1,280.7 million for the nine months ended September 30, 2022 compared to $1,193.2 million for the same period in 2021, an increase of $87.5 million, or 7%.

The increase was due to higher ammunition sales to commercial customers ($83.0 million) and law enforcement agencies ($11.9 million), partially offset by lower sales to military customers ($7.4 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.

Winchester segment income was $327.2 million for the nine months ended September 30, 2022 compared to $310.3 million for the same period in 2021, an increase of $16.9 million.

The increase in segment results was due to higher product pricing ($114.0 million), partially offset by higher commodity and operating costs ($74.5 million) and lower volumes ($22.6 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.

Winchester segment income included depreciation and amortization expense of $18.2 million and $16.8 million for the nine months ended September 30, 2022 and 2021, respectively.

Corporate/Other

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.

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

For the three months ended September 30, 2022, charges to income for environmental investigatory and remedial activities were $7.4 million compared to $3.6 million for the three months ended September 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 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.

For the three months ended September 30, 2022, other corporate and unallocated costs were $27.5 million compared to $36.8 million for the three months ended September 30, 2021, a decrease of $9.3 million.

The decrease was primarily due to an lower variable incentive compensation costs ($12.8 million), which includes mark-to-market adjustments on stock-based compensation expense, partially offset by higher higher legal and legal-related settlement expenses ($1.5 million) and an unfavorable foreign currency impact ($1.1 million).

Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021

For the nine months ended September 30, 2022, charges to income for environmental investigatory and remedial activities were $18.0 million compared to $8.6 million for the nine months ended September 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 nine months ended September 30, 2021 would have been $10.8 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.

For the nine months ended September 30, 2022, other corporate and unallocated costs were $92.8 million compared to $100.7 million for the nine months ended September 30, 2021, a decrease of $7.9 million.

The decrease was primarily due to lower variable incentive compensation costs ($25.5 million), which includes mark-to-market adjustments on stock-based compensation expense, partially offset by higher legal and legal-related settlement expenses ($8.4 million) and an unfavorable foreign currency impact ($5.0 million).

We expect operating income for the fourth quarter 2022 to be sequentially lower than third quarter 2022 of $393.5 million.

We expect Chlor Alkali Products and Vinyls fourth quarter segment results to be slightly lower than third quarter 2022 levels, as we expect chlorine and caustic soda pricing to continue to improve, while vinyls intermediates pricing is likely to remain under pressure.

Epoxy and Winchester segment fourth quarter results are expected to seasonally decline from third quarter 2022 levels.

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.

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

We expect non-operating pension income in 2022 to be in the $40 million range compared to $35.7 million in 2021.

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

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

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

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

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

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Environmental expense $ 7.4 $ 3.6 $ 18.0 $ 8.6

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.

Environmental expense for the nine months ended September 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:

September 30,

($ in millions)

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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 $9.3 million at June 30, 2022.

Our accrued liabilities for unasserted claims amounted to $9.3 million at September 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 $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.

The condensed balance sheets included reserves for future environmental expenditures to investigate and remediate known sites amounting to $149.3 million, $147.3 million and $147.7 million at September 30, 2022, December 31, 2021 and September 30, 2021, respectively, of which $124.3 million, $122.3 million and $128.7 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

Six Months Ended June 30,

Nine Months Ended September 30,

Provided By (Used For) ($ in millions)

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Capital expenditures (168.4) (135.8)

Net investing activities (153.5) (135.8)

Long-term debt repayments, net (200.9) (851.1)

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Stock options exercised 21.3 58.3

Debt issuance costs — (3.1)

Net financing activities (1,369.6) (998.4)

Operating Activities

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.

For the nine months ended September 30, 2022, cash provided by operating activities increased by $258.0 million from the nine months ended September 30, 2021, primarily due to a decrease in working capital compared with the prior year.

For the nine months ended September 30, 2022, working capital increased $15.7 million compared to an increase of $212.3 million for the nine months ended September 30, 2021.

Inventories increased by $102.9 million from December 31, 2021 primarily as a result of increased raw material costs.

Income taxes payable, net of income taxes receivable, increased by $75.5 million from December 21, 2021 primarily due to timing of tax payments.

Investing Activities

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.

Capital spending of $168.4 million for the nine months ended September 30, 2022 was $32.6 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.

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

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

For the nine months ended September 30, 2022, we received proceeds of $14.9 million for the sale of two former manufacturing facilities.

Financing Activities

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.

For the nine months ended September 30, 2022 and 2021, we had long-term debt repayments, net of long-term debt borrowings of $200.9 million and $851.1 million, respectively.

During the nine months ended September 30, 2022, we repaid $200.0 million of the outstanding 5.50% senior notes (2022 Notes) which became due utilizing cash on hand.

During the nine months ended September 30, 2021, we repaid $465.0 million of the the senior term loans under the 2021 Senior Credit Facility.

During the nine months ended September 30, 2021, we repurchased, through open market transactions, a principal amount of $79.0 million of the outstanding aggregate principal amount of 5.625% senior notes due August 1, 2029 (2029 Notes) and $26.0 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 $6.6 million and $9.7 million for the three and nine months ended September 30, 2021, respectively.

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 cash on hand.

The 2025 Notes were redeemed by drawing $315.0 million of the term loans under the 2021 Senior Credit Facility 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 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.

For the nine months ended September 30, 2022 and 2021, 20.8 million and 1.5 million shares, respectively, of common stock were repurchased and retired at a total value of $1,100.6 million and $68.3 million, respectively.

We issued 0.9 million and 2.8 million shares representing stock options exercised for the nine months ended September 30, 2022 and 2021, respectively, with a total value of $21.3 million and $58.3 million, respectively.

For the nine months ended September 30, 2021, we paid debt issuance costs of $3.8 million for the amendments to our 2021 Senior Credit Facility.

The percent of total debt to total capitalization decreased to 50.3% as of September 30, 2022 from 51.2% as of December 31, 2021 as a result of a lower level of debt outstanding, partially offset by lower shareholders’ equity, primarily due to common stock repurchases partially offset by our operating results.

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

Dividends paid for the nine months ended September 30, 2022 and 2021, were $89.4 million and $95.8 million, respectively.

On October 26, 2022, our Board of Directors declared a dividend of $0.20 per share on our common stock, payable on December 9, 2022 to shareholders of record on November 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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Liquidity and Other Financing Arrangements

Our principal sources of liquidity are from cash and cash equivalents, cash flow from operations and borrowings under our Senior Revolving Credit Facility, Receivables Financing Agreement and AR Facilities.

Our principal sources of liquidity are from cash and cash equivalents, cash flow from operations and borrowings under our Senior Revolving Credit Facility, Amended Receivables Financing Agreement and AR Facilities.

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

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.

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.

During 2021, we repaid $465.0 million of the Senior Term Loans.

These repayments satisfied all future required quarterly installments of the Senior Term Loans.

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

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.

As of September 30, 2022, we maintained an existing senior credit facility (2021 Senior Credit Facility) which included outstanding senior term loans of $350.0 million and a senior revolving credit facility with aggregate commitments in an amount equal to $800.0 million (2021 Senior Revolving Credit Facility).

The maturity date for the 2021 Senior Credit Facility was July 16, 2024.

At September 30, 2022, we had $799.6 million available under our $800.0 million 2021 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 September 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 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.

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

On October 11, 2022, we entered into a new $1,550.0 million senior credit facility (Senior Credit Facility) that replaced our 2021 Senior Credit Facility.

The Senior Credit Facility includes a senior term loan facility with aggregate commitments of $350.0 million (Term Loan Facility) and a senior revolving credit facility with aggregate commitments of $1,200.0 million (Senior Revolving Credit Facility).

The Term Loan Facility was fully drawn on the closing date with the proceeds of the Term Loan Facility used to refinance the loans and commitments outstanding under the 2021 Senior Credit Facility.

The Term Loan Facility will require principal amortization amounts payable beginning March 31, 2023 at a rate of 0.625% per quarter through the end of 2024, increasing to 1.250% per quarter thereafter until maturity.

The maturity date for the Senior Credit Facility is October 11, 2027.

The overall decrease in cash for the nine months ended September 30, 2022 primarily reflects our share repurchases, debt repayments, capital spending, and dividends paid, partially offset by our operating results.

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, Amended 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 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.

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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.

This program terminated upon the purchase of $1.0 billion of our common stock during the third quarter of 2022.

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.

For the nine months ended September 30, 2022, 20.8 million shares of common stock have been repurchased and retired at a total value of $1,100.6 million.

As of September 30, 2022, 1.1 million shares of common stock have been repurchased and retired at a total value of $48.4 million under the 2022 Repurchase Authorization program, and $1,951.6 million of common stock remained authorized to be repurchased under the program.

As of September 30, 2022, we maintained a $300.0 million Receivables Financing Agreement (Receivables Financing Agreement) that was scheduled to mature on September 28, 2024.

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

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 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.

In addition, the Receivables Financing Agreement incorporated the net leverage ratio covenant that is contained in the 2021 Senior Credit Facility.

As of September 30, 2022, $655.2 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 September 30, 2021, we had $300.0 million and $150.0 million, respectively, drawn under the Receivables Financing Agreement.

On October 11, 2022, we amended the Receivables Financing Agreement which increased the facility limit to $425.0 million and extended the scheduled termination date of the Receivables Financing Agreement to October 14, 2025 (Amended Receivables Financing Agreement).

The Amended Receivables Financing Agreement incorporates the net leverage ratio covenant that is contained in the Senior Credit Facility.

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 $207.7 million and certain of our foreign subsidiaries may sell their accounts receivable up to a maximum of €42.9 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 June 30, 2022 and 2021 totaled $477.2 million and $487.3 million, respectively.

The gross amount of receivables sold for the three months ended September 30, 2022 and 2021 totaled $769.3 million and $687.5 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 $0.4 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 factoring discount was $0.9 million and $0.3 million for the three months ended September 30, 2022 and 2021, respectively, and $1.8 million and $1.0 million for the nine months ended September 30, 2022 and 2021, respectively.

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

As of September 30, 2022, December 31, 2021 and September 30, 2021, $91.3 million, $83.3 million and $90.7 million, respectively, of receivables qualifying for sales treatment were outstanding and will continue to be serviced by us.

At September 30, 2022, we had total letters of credit of $80.1 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 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.

As of September 30, 2022, we had long-term borrowings, including the current installment and finance lease obligations, of $2,581.4 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 $19.9 million as of September 30, 2022.

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

Contractual Obligations

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What changed 10-Q

Item 2. Management’s Discussion and Analysis