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Item 7. Management’s Discussion and Analysis

2023-02-23 compared with 2022-02-24 · 202 added, 232 removed, 395 unchanged (52% of the section changed)

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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 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.

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 systems and growth products such as converted epoxy resins and additives.

The Winchester segment produces and sells sporting ammunition, reloading components, small caliber military ammunition and components, and industrial cartridges.

RECENT DEVELOPMENTS AND HIGHLIGHTS

Winter Storm Uri

Olin’s Freeport, TX facility was affected by Winter Storm Uri and was forced to halt production due to the lack of electrical power, natural gas, and other raw materials.

All of Olin’s Freeport operations were impacted.

In addition, production at Olin’s Plaquemine, LA;

and McIntosh, AL facilities were also negatively impacted.

As a result, by February 18, 2021, Olin declared Force Majeure on all chemical product shipments from North America.

Our facilities had returned to operation by March 31, 2021.

The 2021 results 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.

During 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.

2022 Overview

Net income was $1,296.7 million for the year ended 2021 compared to net loss of $969.9 million for 2020.

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

The prior year results were also impacted by a $699.8 million pretax goodwill impairment charge.

Chlor Alkali Products and Vinyls generated segment income of $997.8 million for 2021 compared to $3.5 million for 2020.

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

Net income was $1,326.9 million for 2022 compared to $1,296.7 million for 2021, an increase of $30.2 million, or 2%.

The increase in results from the prior year was primarily due to improved operating results in our Chlor Alkali Products and Vinyls segment and lower interest expense, partially offset by a decline in the operating results of our Epoxy and Winchester business segments.

Diluted net income per share was $8.94 for 2022 compared to $7.96 for 2021, an increase of $0.98 per share, or 12%.

The increase in diluted net income per share was positively impacted by share repurchases throughout 2022.

Chlor Alkali Products and Vinyls reported segment income of $1,181.3 million for 2022 compared to $997.8 million for 2021.

Chlor Alkali Products and Vinyls segment results were higher than in the prior year due to higher pricing across all products except vinyls intermediates, partially offset by higher raw materials and operating costs and lower volumes across all products.

Epoxy reported segment income of $388.5 million for 2022 compared to $616.5 million for 2021.

Epoxy segment results were higher than in the prior year primarily due to higher product prices, partially offset by higher raw materials costs, primarily benzene and propylene.

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

Winchester reported segment income of $372.9 million for 2022 compared to $412.1 million for 2021.

On October 1, 2020, Winchester assumed full management and operational control of Lake City.

Winchester segment results were higher than in the prior year primarily due to increased commercial ammunition pricing and higher volumes, which includes ammunition produced at Lake City.

Winchester segment results were also negatively impacted by higher commodity costs compared to the prior year.

During 2021, we repaid approximately $1.1 billion of long-term debt.

In connection with these financing transactions, we recognized a loss on extinguishment of debt of $152.2 million, which includes the payment of early redemption premiums of $137.7 million.

During 2021, we repurchased and retired 4.7 million shares of common stock at a cost of $251.9 million.

As of December 31, 2021, we have $52.2 million of remaining authorized common stock to be purchased under our 2018 Repurchase

Authorization program and $1.0 billion of remaining authorized common stock to be purchased under our 2021 Repurchase Authorization program.

The 2019 Novel Coronavirus (COVID-19) global pandemic, and the various governmental, business and consumer responses to this pandemic, significantly impacted our results during 2020.

We have taken measures to protect the health and safety of our employees, work with our customers and suppliers to minimize potential disruptions and support our communities during this global pandemic.

Our operations are among businesses that were considered “essential” by government and public health authorities.

We are following all federal, state and local health department guidelines and the costs associated with these safety procedures were not material.

We continue to safely maintain plant operations and focus on business continuity.

All Olin manufacturing facilities worldwide continue to operate, with the exception of those undergoing planned maintenance turnarounds.

The spread of the pandemic and the associated response has caused significant disruptions and increased volatility in the U.S.

and global economies, resulting in the disruption of the supply and demand fundamentals of our Chemicals businesses.

During 2020, the various governmental, business and consumer responses to the pandemic negatively impacted the demand for several of the products produced by our Chlor Alkali Products and Vinyls and Epoxy businesses resulting in lower volumes and pricing.

We initiated several actions during 2020 that partially mitigated the impact of economic decline on our financial performance, but also enhanced our position, financially and structurally, to take advantage of the eventual global economic recovery.

These actions were primarily focused around liquidity and specific actions to reduce our costs in 2020.

We continue to monitor the changing business environment, volatility and heightened degree of uncertainty resulting from the response to COVID-19, including compliance with certain federal, state and local governmental mandates.

At the current time, we are unable to fully determine its future impact on our business.

We continue to work with our customers, employees, suppliers and communities to address the impacts of COVID-19 and we continue to assess possible implications to our business, supply chain and customers, and to take actions in an effort to mitigate adverse consequences.

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

During 2022, Winchester experienced a transition in its commercial ammunition business from refilling depleted supply chains to filling inventories at the rate of its customers’ sales.

In some cases, customers inventories became too high so Winchester chose to preserve value by manufacturing and selling less commercial ammunition.

Liquidity and Share Repurchases

In July 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 2022, we repurchased and retired 25.7 million shares of common stock at a total value of $1,350.7 million, most of which were repurchased under prior authorized share repurchase programs.

As of December 31, 2022, we have $1,701.5 million of remaining authorized common stock to be repurchased under the 2022 Repurchase Authorization program.

During 2022, we repaid $201.1 million of long-term debt which became due utilizing cash on hand.

During 2022, we entered into a new $1,550.0 million senior credit facility (Senior Credit Facility) that replaced our existing 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 and the aggregate principal amount under our senior term loan facility remained at $350.0 million.

The Senior Credit Facility will mature in October 2027.

During 2022, we also amended our existing Receivables Financing Agreement which increased the aggregate borrowing capacity from $300.0 million to $425.0 million and extended 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.

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

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.

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

As of now, the direct impact on our operations has not been significant, but we are unable to fully determine the future impact the invasion and the corresponding global response will have on our business.

CONSOLIDATED RESULTS OF OPERATIONS

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Non-operating pension income 38.7 35.7 18.9

Other income — — 11.2

Income (loss) before taxes 1,676.0 1,538.7 (1,020.0)

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Sales for 2022 were $9,376.2 million compared to $8,910.6 million in 2021, an increase of $465.6 million, or 5%.

Chlor Alkali Products and Vinyls sales increased by $944.2 million, primarily due to higher pricing across all products, except vinyls intermediates, partially offset by lower volumes.

Winchester sales increased by $16.9 million, primarily due to increased commercial ammunition pricing partially offset by lower volumes.

Epoxy sales decreased by $495.5 million, primarily due to lower volumes partially offset by higher product prices.

Gross margin in 2022 decreased $112.3 million from 2021.

Epoxy gross margin decreased by $238.4 million and Winchester gross margin decreased by $36.2 million, primarily due to lower volumes and higher raw material and operating costs, partially offset by higher product pricing.

Chlor Alkali Products and Vinyls gross margin increased by $185.2 million, primarily due to higher pricing, partially offset by higher raw material and operating costs and lower volumes.

Gross margin as a percentage of sales decreased to 23% in 2022 from 26% in 2021.

Selling and administration expenses in 2022 decreased $23.0 million, or 6%, from 2021.

The decrease was primarily due to lower variable incentive compensation expense of $35.4 million, which includes mark-to-market adjustments on stock-based compensation expense, partially offset by higher legal and legal-related settlement expense of $7.1 million and an unfavorable foreign currency impact of $7.5 million .

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

Restructuring charges for 2022 were $25.3 million compared to $27.9 million in 2021.

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 2021.

Partially offsetting this action, during the fourth quarter 2022, we committed and completed a plan to close down one of our BisA production lines at our Stade, Germany site.

This action resulted in pretax restructuring charges of $8.0 million for 2022.

Other operating income for 2022 included $13.0 million of gains for the sale of two former manufacturing facilities.

Interest expense in 2022 decreased $204.1 million from 2021.

Interest expense for 2021 included $137.7 million of bond redemption premiums and $14.5 million for write-off of deferred debt issuance costs, write-off of bond original issue discount, and recognition of deferred fair value interest rate swap losses.

Interest expense for 2022 and 2021 was reduced by capitalized interest of $3.1 million and $3.2 million, respectively.

Without these items, interest expense decreased by $52.0 million, primarily due to a lower level of debt outstanding and lower average interest rates.

Non-operating pension income includes all components of pension and other postretirement income (costs) other than service costs.

The effective tax rate for 2022 included a benefit associated with a legal entity liquidation, prior year tax positions and stock-based compensation, a benefit from remeasurement of deferred taxes due to a decrease in our state effective tax rates, an expense associated with a net increase in the valuation allowance related to state tax credits and an expense from a change in tax contingencies.

These factors resulted in a net $60.2 million tax benefit.

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

federal statutory rate primarily due to state taxes, an increase in the valuation allowance related to losses in foreign jurisdictions and foreign income taxes, partially offset by foreign income exclusions and favorable permanent salt depletion deductions.

The effective tax rate for 2021 included benefits from a net decrease in the valuation allowance related to deferred tax assets in foreign jurisdictions and domestic tax credits, 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 $103.6 million tax benefit.

After giving consideration to these items, the effective tax rate for 2021 of 22.5% 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.

2021 Compared to 2020

Sales for 2021 were $8,910.6 million compared to $5,758.0 million in 2020, an increase of $3,152.6 million, or 55%.

Chlor Alkali Products and Vinyls sales increased by $1,180.9 million, primarily due to higher pricing across all products.

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The decrease was primarily due to the absence of $73.9 million of costs associated with a multi-year implementation of new enterprise resource planning, manufacturing and engineering systems, and related infrastructure (collectively, the Information Technology Project), which was completed in late 2020.

This decrease was partially offset by higher variable incentive compensation expense of $49.4 million, which includes mark-to-market adjustments on stock-based compensation expense, and inclusion of a full year of selling and administration expenses associated with Lake City operations of $18.6 million.

This decrease was partially offset by higher variable incentive compensation expense $49.4 million, which includes mark-to-market adjustments on stock-based compensation expense, and inclusion of a full year of selling and administration expenses associated with Lake City operations of $18.6 million.

Selling and administration expenses as a percentage of sales decreased to 5% in 2021 from 7% in 2020.

Restructuring charges for 2021 were $27.9 million compared to $9.0 million in 2020.

The increase 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, and the 2021 decisions to permanently close our diaphragm-grade chlor alkali capacity, representing 400,000 tons, at our McIntosh, AL facility.

The increase in charges were 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, and the 2021 decisions to permanently close our diaphragm-grade chlor alkali capacity, representing 400,000 tons, at our McIntosh, AL facility.

Goodwill impairment includes non-cash pretax impairment charges of $557.6 million related to the Chlor Alkali Products and Vinyls segment and $142.2 million related to the Epoxy segment recorded during the third quarter of 2020.

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federal statutory rate as foreign income taxes, foreign income inclusions and a net increase in the valuation allowance related to losses in foreign jurisdictions were offset by state taxes and favorable permanent salt depletion deductions.

2020 Compared to 2019

Sales for 2020 were $5,758.0 million compared to $6,110.0 million in 2019, a decrease of $352.0 million, or 6%.

Chlor Alkali Products and Vinyls sales decreased by $460.2 million, primarily due to lower caustic soda and EDC pricing and lower caustic soda volumes.

Epoxy sales decreased by $153.9 million, primarily due to lower product prices.

Winchester sales increased by $262.1 million, primarily due to higher commercial and military sales volumes, which included ammunition produced at Lake City, and increased commercial ammunition pricing.

Gross margin for 2020 decreased $287.4 million, or 43%, from 2019.

Chlor Alkali Products and Vinyls gross margin decreased by $327.3 million, primarily due to lower caustic soda and EDC pricing and lower caustic soda volumes, partially offset by lower costs, primarily raw materials.

Epoxy gross margin decreased $9.5 million, primarily due to lower product prices, partially offset by lower raw material costs.

Winchester gross margin increased $73.5 million, primarily due to higher sales volumes, which included ammunition produced at Lake City, and increased commercial pricing.

Gross margin as a percentage of sales decreased to 7% in 2020 from 11% in 2019.

Selling and administration expenses in 2020 increased $5.1 million, or 1%, from 2019.

The increase was primarily due to Lake City operations and higher transition costs relating to the Lake City contract of $22.4 million and higher stock-based compensation expense of $14.7 million, which includes mark-to-market adjustments.

These increases were partially offset by lower salaries and benefits of $13.9 million, consulting and contract services of $7.9 million and travel-related expenses of $8.1 million.

Selling and administration expenses for the years ended December 31, 2020 and 2019 included costs associated with the Information Technology Project of $73.9 million and $77.0 million, respectively.

Selling and administration expenses as a percentage of sales were 7% in both 2020 and 2019.

Restructuring charges in 2020 and 2019 were primarily associated with the March 2016 closure of 433,000 tons of chlor alkali capacity across three separate locations.

Restructuring charges for the years ended December 31, 2020 and 2019 were also associated with the closure of a chlor alkali plant and a VDC production facility, both in Freeport, TX, and included $58.9 million of non-cash impairment charges for equipment and facilities for the year ended December 31, 2019.

Restructuring charges for the year ended December 31, 2019 also included costs associated with permanently closing the ammunition assembly operations at our Geelong, Australia facility in December 2018.

Interest expense increased by $49.5 million for the year ended December 31, 2020, primarily due to a higher level of debt outstanding and higher interest rates.

Interest expense included $14.6 million of expense related to the 2023 Notes redemption premium and $5.8 million for write-off of deferred debt issuance costs for financing transactions during 2020.

Interest expense for the years ended December 31, 2020 and 2019 included $4.0 million and $17.0 million, respectively, of accretion expense related to the ethylene payment discount.

Interest expense was reduced by capitalized interest of $6.4 million and $10.8 million for 2020 and 2019, respectively.

Non-operating pension income includes all components of pension and other postretirement income (costs) other than service costs.

Non-operating pension income was higher for the year ended December 31, 2020, primarily due to a decrease in the amortization of actuarial losses associated with our domestic qualified defined benefit pension plan.

The effective tax rate for 2020 included expenses associated with a net increase in the valuation allowance related to foreign and domestic tax credits and deferred tax assets in foreign jurisdictions, a remeasurement of deferred taxes due to an increase in our state effective tax rates and a change in tax contingencies, and stock-based compensation, partially offset by a benefit associated with prior year tax positions.

These factors resulted in a net $27.9 million tax expense.

For 2020, a tax benefit of $10.8 million was recognized associated with the $699.8 million goodwill impairment charge.

After giving consideration to these items, including the goodwill impairment charge on Olin’s loss before taxes, the effective tax rate for 2020 of 21.0% was equal to the 21% U.S.

The effective tax rate for 2019 included benefits associated with the finalization of the IRS review of years 2013 to 2015 U.S.

income tax claims, stock-based compensation, prior year tax positions, foreign tax law changes, a remeasurement of deferred taxes due to a decrease in our state effective tax rates and a change in tax contingencies.

The effective tax rate also included expenses associated with a net increase in the valuation allowance primarily related to foreign deferred tax assets and liabilities.

These factors resulted in a net $19.4 million tax benefit.

After giving consideration to these items, the effective tax rate for 2019 of 16.8% was lower than the 21% U.S.

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

SEGMENT RESULTS

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The three operating segments reflect the organization used by our management for purposes of allocating resources and assessing performance.

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

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

Years ended December 31,

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Restructuring charges (25.3) (27.9) (9.0)

(27.9) (9.0) (76.5)

Goodwill impairment — — (699.8)

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Non-operating pension income 38.7 35.7 18.9

Other income (6)

Income (loss) before taxes $ 1,676.0 $ 1,538.7 $ (1,020.0)

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Environmental expense is included in cost of goods sold in the consolidated statements of operations.

(2) Other corporate and unallocated costs for the years ended December 31, 2020 and 2019 included costs associated with the implementation of the Information Technology Project of $73.9 million and $77.0 million, respectively.

(3) Restructuring charges for the year ended December 31, 2021 were 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, and the 2021 decisions to permanently close our diaphragm-grade chlor alkali capacity, representing 400,000 tons, at our McIntosh, AL facility.

Restructuring charges for the years ended December 31, 2020 and 2019 were primarily associated with the closure of a chlor alkali plant and a VDC production facility, both in Freeport, TX, and included $58.9 million of non-cash impairment charges for equipment and facilities for the year ended December 31, 2019.

(2) Other corporate and unallocated costs for the year ended December 31, 2020 included costs associated with the implementation of the Information Technology Project of $73.9 million.

(3) Other operating income for the year ended December 31, 2022 included $13.0 million of gains for the sale of two former manufacturing facilities.

Other operating income for the year ended December 31, 2021 included a $1.4 million gain on the sale of a terminal facility.

Other operating income for the year ended December 31, 2020 included an $0.8 million gain on the sale of land.

(4) Interest expense for the year ended December 31, 2021 included a loss on extinguishment of debt of $152.2 million which includes bond redemption premiums, write-off of deferred debt issuance costs, bond original issue discount, and recognition of deferred fair value interest rate swap losses associated with the optional prepayment of existing debt.

Interest expense for the year ended December 31, 2020 included a loss on extinguishment of debt of $20.4 million which includes bond redemption premiums and write-off of deferred debt issuance costs.

Interest expense for the years ended 2020 and 2019 included $4.0 million and $17.0 million, respectively, of accretion expense related to the ethylene

payment discount.

Interest expense for the year ended 2020 included $4.0 million of accretion expense related to the ethylene payment discount.

Interest expense was reduced by capitalized interest of $3.1 million, $3.2 million and $6.4 million for the years ended December 31, 2022, 2021 and 2020, respectively.

(6) Other income for the year ended December 31, 2019 included a gain of $11.2 million on the sale of our equity interest in a non-consolidated affiliate.

Chlor Alkali Products and Vinyls

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Chlor Alkali Products and Vinyls sales for 2022 were $5,085.0 million compared to $4,140.8 million for 2021, an increase of $944.2 million, or 23%.

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 reported segment income of $1,181.3 million for 2022 compared to $997.8 million for 2021, an increase of $183.5 million.

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 $304.9 million was due to higher prices across all products, except vinyls intermediates ($1,495.9 million), partially offset by higher raw material and operating costs ($491.4 million), primarily increased natural gas and electrical power costs, lower volumes across all products ($479.2 million) and increased costs associated with product purchased from other parties ($220.4 million).

Chlor Alkali Products and Vinyls segment results included depreciation and amortization expense of $482.2 million and $466.4 million in 2022 and 2021, respectively.

2021 Compared to 2020

Chlor Alkali Products and Vinyls sales for 2021 were $4,140.8 million compared to $2,959.9 million for 2020, an increase of $1,180.9 million, or 40%.

The sales increase was primarily due to higher pricing across all product lines.

Chlor Alkali Products and Vinyls sales increase was also due to higher VCM sales as a result of our primary VCM contract transitioning from a toll manufacturing arrangement to a direct customer sale agreement beginning on January 1, 2021.

Chlor Alkali Products and Vinyls generated segment income of $997.8 million for 2021 compared to $3.5 million for 2020, an increase of $994.3 million.

The increase in Chlor Alkali Products and Vinyls segment results was primarily due to higher product prices ($1,128.0 million) and the favorable impact of Winter Storm Uri ($121.4 million), partially offset by higher raw material and operating costs ($132.8 million) and increased costs associated with product purchased from other parties ($122.3 million).

Chlor Alkali Products and Vinyls reported segment income of $997.8 million for 2021 compared to $3.5 million for 2020, an increase of $994.3 million.

The increase in Chlor Alkali Product and Vinyls segment results was due to higher product prices ($1,128.0 million) and the favorable impact of Winter Storm Uri ($121.4 million), partially offset by higher raw material and operating costs ($132.8 million) and increased costs associated with product purchased from other parties ($122.3 million).

The impact of Winter Storm Uri 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.

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2022 Compared to 2021

Chlor Alkali Products and Vinyls sales for 2020 were $2,959.9 million compared to $3,420.1 million for 2019, a decrease of $460.2 million, or 13%.

The sales decrease was primarily due to lower caustic soda and EDC pricing and lower volumes, primarily caustic soda.

Chlor Alkali Products and Vinyls generated segment income of $3.5 million for 2020 compared to $336.7 million for 2019, a decrease of $333.2 million.

The decrease in Chlor Alkali Products and Vinyls segment results was primarily due to lower product prices ($318.5 million), primarily caustic soda and EDC, and lower volumes ($143.1 million), primarily caustic soda.

Partially offsetting these decreases were lower raw material costs ($83.8 million) and lower maintenance turnaround and operating costs ($44.6 million).

Chlor Alkali Products and Vinyls segment results included depreciation and amortization expense of $451.4 million and $470.4 million in 2020 and 2019, respectively.

2021 Compared to 2020

Epoxy sales were $3,186.0 million for 2021 compared to $1,870.5 million for 2020, an increase of $1,315.5 million, or 70%.

The sales increase was primarily due to higher product prices ($1,211.0 million), a favorable effect of foreign currency translation ($74.9 million), and higher volumes ($29.6 million).

Epoxy reported segment income of $616.5 million for 2021 compared to $40.8 million for 2020, an increase of $575.7 million.

The increase in segment results was primarily due to higher product prices ($1,211.0 million) and increased volumes ($11.5 million), partially offset by higher raw material costs ($554.4 million), primarily benzene and propylene, higher operating and maintenance turnaround costs ($70.9 million) and the unfavorable impact of Winter Storm Uri ($21.5 million).

Epoxy sales were $2,690.5 million for 2022 compared to $3,186.0 million for 2021, a decrease of $495.5 million, or 16%.

The sales decrease was due to lower volumes ($942.1 million) and an unfavorable effect of foreign currency translation ($144.1 million), partially offset by higher product prices ($590.7 million).

Epoxy reported segment income of $388.5 million for 2022 compared to $616.5 million for 2021, a decrease of $228.0 million.

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 $249.5 million was due to lower volumes ($460.5 million), higher raw material costs ($260.3 million), primarily benzene and propylene, higher operating costs ($106.5 million), primarily increased natural gas and electrical power costs, and a net unfavorable foreign currency impact ($12.9 million).

These decreases were partially offset by higher product prices ($590.7 million).

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

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2021 Compared to 2020

Epoxy sales were $1,870.5 million for 2020 compared to $2,024.4 million for 2019, a decrease of $153.9 million, or 8%.

The sales decrease was primarily due to lower product prices ($180.0 million) and an unfavorable effect of foreign currency translation ($6.1 million), partially offset by higher volumes ($32.2 million).

Epoxy reported segment income of $40.8 million for 2020 compared to $53.9 million for 2019, a decrease of $13.1 million, or 24%.

The decrease in segment results was primarily due to lower product prices ($180.0 million) and an unfavorable product mix ($24.4 million), partially offset by lower raw material costs ($162.5 million), primarily benzene and propylene, and lower operating costs ($38.8 million).

Epoxy segment results were also negatively affected by a first quarter 2020 force majeure declaration by a European phenol supplier, which reduced epoxy resin and epoxy resin precursor production, and Epoxy manufacturing plant closures and operating reductions in Asia due to COVID-19 ($10.0 million).

Epoxy sales were $3,186.0 million for 2021 compared to $1,870.5 million for 2020, an increase of $1,315.5 million, or 70%.

The sales increase was due to higher product prices ($1,211.0 million), a favorable effect of foreign currency translation ($74.9 million), and higher volumes ($29.6 million).

Epoxy reported segment income of $616.5 million for 2021 compared to $40.8 million for 2020, an increase of $575.7 million.

The increase in segment results was due to higher product prices ($1,211.0 million) and increased volumes ($11.5 million), partially offset by higher raw material costs ($554.4 million), primarily benzene and propylene, higher operating and maintenance turnaround costs ($70.9 million) and the unfavorable impact of Winter Storm Uri ($21.5 million).

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

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Winchester sales were $1,600.7 million for 2022 compared to $1,583.8 million for 2021, an increase of $16.9 million, or 1%.

The increase was due to higher sales to military customers ($23.7 million) and law enforcement agencies ($18.2 million) partially offset by lower commercial sales ($25.0 million).

The lower commercial sales were primarily due to lower volumes, partially offset by higher pricing.

During 2022, Winchester experienced a transition in its commercial ammunition business from refilling depleted supply chains to filling inventories at the rate of its customers’ sales.

In some cases, customers inventories became too high so Winchester chose to preserve value by manufacturing and selling less commercial ammunition.

Winchester reported segment income of $372.9 million for 2022 compared to $412.1 million for 2021, a decrease of $39.2 million.

The decrease in segment results was due to higher commodity and operating costs ($86.9 million) and lower volumes ($80.8 million), partially offset by higher product pricing ($128.4 million).

Winchester segment results included depreciation and amortization expense of $24.6 million and $23.3 million in 2022 and 2021, respectively.

2021 Compared to 2020

Winchester sales were $1,583.8 million for 2021 compared to $927.6 million for 2020, an increase of $656.2 million, or 71%.

The increase was due to higher ammunition sales to commercial customers ($463.6 million) and military customers ($179.2 million), both of which include ammunition produced at Lake City, and law enforcement agencies ($13.4 million).

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Winchester segment results included depreciation and amortization expense of $23.3 million and $20.1 million in 2021 and 2020, respectively.

2020 Compared to 2019

Winchester sales were $927.6 million for 2020 compared to $665.5 million for 2019, an increase of $262.1 million, or 39%.

The increase was due to higher ammunition sales to commercial customers ($199.2 million) and military customers ($51.9 million), both of which include ammunition produced at Lake City, and law enforcement agencies ($11.0 million).

Winchester reported segment income of $92.3 million for 2020 compared to $40.1 million for 2019, an increase of $52.2 million, or 130%.

The increase in segment results was due to increased sales volumes ($49.2 million), which includes ammunition produced at Lake City, and higher product pricing ($23.4 million), partially offset by higher transition costs relating to the Lake City contract ($12.9 million) and higher operating costs ($7.5 million).

Winchester segment results included depreciation and amortization expense of $20.1 million in both 2020 and 2019.

Corporate/Other

2022 Compared to 2021

For the year ended December 31, 2021, charges to income for environmental investigatory and remedial activities were $14.0 million, which includes $2.2 million of insurance recoveries for environmental costs incurred and expensed in prior periods.

For the year ended December 31, 2022 and 2021, environmental expense included $1.0 million and $2.2 million, respectively, 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 year ended December 31, 2022 would have been $24.2 million, compared to $16.2 million for the year ended December 31, 2021.

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For 2022, other corporate and unallocated costs were $131.5 million compared to $135.1 million for 2021, a decrease of $3.6 million, or 3%.

The decrease was primarily due to the absence of $73.9 million of costs associated with the implementation of the Information Technology Project, which was completed in late 2020, partially offset by higher variable

incentive compensation costs of $45.7 million, which includes mark-to-market adjustments on stock-based compensation expense, and an unfavorable foreign currency impact of $7.0 million.

The decrease was primarily due to lower variable incentive compensation costs ($27.9 million), which

includes mark-to-market adjustments on stock-based compensation expense, partially offset by higher legal and legal-related settlement expenses ($7.6 million) and an unfavorable foreign currency impact ($7.1 million).

2021 Compared to 2020

For the year ended December 31, 2020, charges to income for environmental investigatory and remedial activities were $20.9 million compared to $20.5 million for the year ended December 31, 2019.

For the year ended December 31, 2021, environmental expense were $14.0 million, which includes $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 year ended December 31, 2021 would have been $16.2 million, compared to $20.9 million for the year ended December 31, 2020.

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

The year ended December 31, 2019 includes a $4.8 million environmental insurance-related settlement gain.

For 2021, other corporate and unallocated costs were $135.1 million compared to $154.3 million for 2020, a decrease of $19.2 million, or 12%.

The decrease was primarily due to lower salary and benefit costs of $12.2 million and lower travel-related expenses of $2.1 million, partially offset by higher stock-based compensation expense of $14.8 million, which includes mark-to-market adjustments.

Other corporate and unallocated costs included costs associated with the implementation of the Information Technology Project for the year ended December 31, 2020 and 2019 of $73.9 million and $77.0 million, respectively.

The decrease was primarily due to the absence of of costs associated with the implementation of the Information Technology Project ($73.9 million), which was completed in late 2020, partially offset by higher variable incentive compensation costs ($45.7 million), which includes mark-to-market adjustments on stock-based compensation expense, and an unfavorable foreign currency impact ($7.0 million).

Restructurings

Olin committed to a productivity initiative to align the organization with our new operating model and improve efficiencies (collectively, Productivity Plan).

These actions and related activities were completed during the second quarter of 2021.

For the year ended December 31, 2021, we recorded pretax restructuring charges of $10.3 million for employee severance and related benefit costs related to these actions.

We do not expect to incur additional restructuring charges related to these actions.

On May 18, 2021, we announced that we had made the decision to permanently close approximately 20% of our diaphragm-grade chlor alkali capacity, representing 225,000 tons, at our Plaquemine, LA facility (Plaquemine Plan).

The closure was completed in the second quarter of 2021.

We do not expect to incur restructuring charges related to this action.

As a result of weak global resin demand and higher cost structures within the European region, we began a review of our global Epoxy asset footprint to optimize the most productive and cost effective assets to support our strategic operating model.

We committed to and completed a plan during the fourth quarter of 2022 to close down one of our BisA production lines at our Stade, Germany site.

For the year ended December 31, 2022, we recorded pretax restructuring charges of $8.0 million for employee severance and related benefit costs and the write-off of equipment and facility costs related to this action.

We expect to incur additional restructuring charges through 2024 of approximately $10 million related to this action.

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.

The closure was completed in the first quarter of 2021.

On October 21, 2021, we announced that we had made a decision to permanently cease operations of the remaining 50% of our diaphragm-grade chlor alkali capacity, representing an additional 200,000 tons, at our McIntosh, AL facility (collectively, McIntosh Plans).

The closure is expected to be completed by the end of the third quarter of 2022.

For the year ended December 31, 2021, we recorded pretax restructuring charges of $5.6 million for lease and other contract termination costs related to these actions.

The closure was completed during third quarter of 2022.

For the years ended December 31, 2022 and 2021, we recorded pretax restructuring charges of $8.3 million and $5.6 million, respectively, for write-off of equipment and facility costs, lease and other contract termination costs and for facility exit costs related to this action.

We expect to incur additional restructuring charges through 2027 of approximately $30 million related to these actions.

On January 18, 2021, we announced we had made the decision to permanently close our trichloroethylene and anhydrous hydrogen chloride liquefaction facilities in Freeport, TX, which was completed in the fourth quarter of 2021.

For the year ended December 31, 2021, we recorded pretax restructuring charges of $6.5 million for facility exit costs related to these actions.

We expect to incur restructuring charges through 2024 of approximately $20 million related to these actions.

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.

In early 2022, we expect sequentially higher raw material and operating costs, mainly increased natural gas and electrical power costs.

As a result, we expect the first quarter 2022 results from our Chemicals businesses to be similar to fourth quarter 2021 levels.

We expect our Winchester business first quarter 2022 results to increase sequentially from fourth quarter 2021.

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

For the years ended December 31, 2022 and 2021, we recorded pretax restructuring charges of $2.6 million and $6.5 million, respectively, for facility exit costs related to these actions.

We expect to incur additional restructuring charges through 2024 of approximately $15 million related to these actions.

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 VDC production facility, both in Freeport, TX.

The VDC facility and related chlor alkali plant were closed during the fourth quarter of 2020 and second quarter of 2021, respectively.

For the years ended December 31, 2022 and 2021, we recorded pretax restructuring charges of $6.0 million and $3.9 million, respectively, for facility exit costs related to these actions.

We expect to incur additional restructuring charges through 2026 of approximately $30 million related to these actions.

Olin committed to a productivity initiative to align the organization with our strategic operating model and improve efficiencies.

These actions and related activities were completed during the second quarter of 2021.

For the year ended December 31, 2021, we recorded pretax restructuring charges of $10.3 million for employee severance and related benefit costs related to these actions.

We do not expect to incur additional restructuring charges related to these actions.

In 2023, we expect the challenging global economic conditions to continue as we expect operating results to decline across all our business segments compared to 2022.

We expect our chemical businesses to continue to be tested by European and North American epoxy demand weakness and vinyls intermediates demand weakness.

As a result, we expect the first quarter 2023 operating results from our Chemical businesses to be slightly lower than fourth quarter 2022 levels.

We expect our Winchester business first quarter 2023 results to increase sequentially from fourth quarter 2022 but to be lower than first quarter 2022 levels due to lower commercial ammunition shipments.

Overall, we expect Olin’s first quarter 2023 operating results to slightly decline from fourth quarter 2022 levels.

Other Corporate and Unallocated costs in 2023 are expected to be comparable with the $131.5 million in 2022.

During 2023, we anticipate environmental expenses in the $25 million to $30 million range, compared to $23.2 million in 2022.

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We have several international qualified defined benefit pension plans for which we anticipate cash contributions of less than $5 million in 2023.

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

In 2023, we currently expect our capital spending to be in the $200 million to $250 million range and we expect to make payments under other long-term supply contracts in the $50 million to $100 million range for energy modernization on the U.S.

We expect 2023 depreciation and amortization expense to be in the $550 million to $575 million range.

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

We currently believe the 2023 effective tax rates will be in the 25% to 30% range and our cash tax rate to be in the 30% to 35% range as a result of previously deferred international tax payments expected to be made in 2023.

PENSION AND POSTRETIREMENT BENEFITS

We recorded an after-tax benefit of $46.8 million ($72.1 million pretax) to shareholders’ equity as of December 31, 2022 for our pension and other postretirement plans.

This benefit primarily reflected a 50-basis point increase in the domestic pension plans’ discount rate and favorable performance on plan assets during 2021.

This benefit primarily reflected a 260-basis point increase in the domestic pension plans’ discount rate and a 230-basis point increase in the international defined benefit pension plans’ discount rate, partially offset by unfavorable performance on plan assets during 2022.

In 2021, we recorded an after-tax benefit of $188.5 million ($249.7 million pretax) to shareholders’ equity as of December 31, 2021 for our pension and other postretirement plans.

This benefit primarily reflected favorable performance on plan assets during 2020, partially offset by an 80-basis point decrease in the domestic pension plans’ discount rate.

This benefit primarily reflected a 50-basis point increase in the domestic pension plans’ discount rate and favorable performance on plan assets during 2021.

In 2020, we recorded an after-tax charge of $14.8 million ($26.6 million pretax) to shareholders’ equity as of December 31, 2020 for our pension and other postretirement plans.

This charge primarily reflected a 100-basis point decrease in the domestic pension plans’ discount rate, partially offset by favorable performance on plan assets during 2019.

This benefit primarily reflected favorable performance on plan assets during 2020, partially offset by an 80-basis point decrease in the domestic pension plans’ discount rate.

These non-cash charges to shareholders’ equity do not affect our ability to borrow under our senior credit facility.

During 2019, we made a discretionary cash contribution to our domestic qualified defined benefit pension plan of $12.5 million.

Based on our plan assumptions and estimates, we will not be required to make any cash contributions to the domestic qualified defined benefit pension plan at least through 2023.

In connection with international qualified defined benefit pension plans, we made cash contributions of $1.3 million, $1.1 million and $2.1 million in 2022, 2021 and 2020, respectively, and we anticipate less than $5 million of cash contributions to international qualified defined benefit pension plans in 2023.

At December 31, 2021, the projected benefit obligation of $2,883.0 million exceeded the market value of assets in our qualified defined benefit pension plans by $377.3 million, as calculated under ASC 715.

At December 31, 2022, the projected benefit obligation of $2,115.3 million exceeded the market value of assets in our qualified defined benefit pension plans by $227.1 million, as calculated under Accounting Standards Codification (ASC) 715 “Compensation—Retirement Benefits”.

Components of net periodic benefit (income) costs were:

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Cash outlays for remedial and investigatory activities associated with former waste sites and past operations were not charged to income but instead were charged to reserves established for such costs identified and expensed to income in prior years.

Cash outlays for normal plant operations for the disposal of waste and the operation and maintenance of pollution

control equipment and facilities to ensure compliance with mandated and voluntarily imposed environmental quality standards were charged to income.

Total environmental-related cash outlays for 2022 are estimated to be approximately $215 million, of which approximately $25 million is expected to be spent on investigatory and remedial efforts, approximately $5 million on capital projects and approximately $185 million on normal plant operations.

Remedial and investigatory spending is anticipated to be higher in 2022 than 2021 due to the timing of continuing remedial action plans and investigations.

Cash outlays for normal plant operations for the disposal of waste and the operation and maintenance of pollution control equipment and facilities to ensure compliance with mandated and voluntarily imposed environmental quality standards were charged to income.

Total environmental-related cash outlays for 2023 are estimated to be approximately $215 million, of which approximately $25 million to $30 million is expected to be spent on investigatory and remedial efforts, approximately $5 million on capital projects and approximately $185 million on normal plant operations.

Historically, we have funded our environmental capital expenditures through cash flow from operations and expect to do so in the future.

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Payments under long-term supply contracts (37.7) — (536.8)

Proceeds from disposition of non-consolidated affiliate — — 20.0

Net investing activities (259.7) (197.4) (835.7)

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Debt early redemption premium — (137.7) (14.6)

Stock options exercised 72.4 1.9 1.7

Common stock repurchased and retired (1,350.7) (251.9) —

Stock options exercised 25.7 72.4 1.9

Dividends paid (116.2) (127.8) (126.3)

Net financing activities (1,646.7) (1,552.0) 371.0

Operating Activities

For 2021, cash provided by operating activities increased by $1,308.0 million from 2020, primarily due to an increase in operating results, partially offset by working capital increases to support operations.

For 2022, cash provided by operating activities increased by $180.9 million from 2021, primarily due to a decrease in working capital compared with the prior year.

For 2022, working capital decreased $65.2 million, compared to an increase of $243.1 million in 2021.

Receivables decreased by $160.8 million from December 31, 2021, primarily as a result of lower sales in the fourth quarter of 2022 compared to fourth quarter of 2021.

Inventories increased by $86.3 million from December 31, 2021 primarily as a result of increased raw material costs and increased inventory quantities within our Winchester and Epoxy businesses.

For 2021, cash provided by operating activities increased by $1,308.0 million from 2020, primarily due to a increase in operating results, partially offset by working capital increases to support operations.

For 2021, working capital increased $243.1 million, compared to a decrease of $141.6 million in 2020.

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Inventories increased by $206.0 million from December 31, 2020 and accounts payable and accrued liabilities increased $240.1 million, which were both primarily as a result of increased raw material costs.

For 2020, cash provided by operating activities decreased by $184.3 million from 2019, primarily due to a decrease in operating results, partially offset by a decrease in the investment in working capital from the prior year.

During 2020, we executed a strategy to improve our working capital and manage our balance sheet to maximize our financial flexibility.

For 2020, working capital decreased $141.6 million, which included an approximately $67 million investment in working capital to support Lake City operations, compared to a decrease of $11.0 million in 2019.

In 2020, inventories decreased by $28.6 million, primarily as a result of lower raw material costs and lower Winchester inventory due to improved commercial ammunition demand, partially offset by the investment in Lake City inventory.

Accounts payable and accrued liabilities increased by $149.3 million as a result of specific actions taken by management to improve Olin’s working capital.

Investing Activities

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In 2023, we expect our capital spending to be in the $200 million to $250 million range.

In 2017, we began a multi-year implementation of the Information Technology Project.

The project standardized business processes across the chemicals businesses with the objective of maximizing cost effectiveness, efficiency and control across our global operations.

The project was completed in 2020.

Our results for the years ended December 31, 2020 and 2019 include $41.0 million and $56.0 million, respectively, of capital spending and $73.9 million and $77.0 million, respectively, of expenses associated with this project.

For the year ended December 31, 2020, a payment of $461.0 million was made associated with long-term supply contracts to reserve additional ethylene at producer economics and a payment of $75.8 million was made associated with the resolution of a dispute over the allocation to Olin of certain capital costs incurred at our Plaquemine, LA site.

For the year ended December 31, 2022, payments of $37.7 million were made under other long-term supply contracts for energy modernization projects on the U.S.

Gulf Coast and we expect to make payments in the $50 million to $100 million range in 2023.

For the year ended December 31, 2022, we received proceeds of $14.9 million for the sale of two former manufacturing facilities.

Financing Activities

During 2022 and 2021, activity of our outstanding debt included:

Long-term Debt Borrowings (Repayments) Debt Early Redemption Premiums Paid Long-term Debt Borrowings (Repayments) Debt Early Redemption Premiums Paid

December 31, 2022 Year Ended

December 31, 2021

Long-term Debt Borrowings (Repayments) Long-term Debt Borrowings (Repayments) Debt Early Redemption Premiums Paid

Debt Instrument ($ in millions)

Senior Revolving Credit Facility $ 320.0 $ —

Senior Term Loans — 315.0

Receivables Financing Agreement 95.0 225.0

9.50% senior notes due 2025 — 497.5

Total borrowings $ 415.0 $ 540.0

10.00% senior notes due 2025 $ (500.0) $ 25.0 $ — $ —

9.50% senior notes due 2025 (391.4) 99.4 — —

9.75% senior notes due 2023 (120.0) 2.9 (600.0) 14.6

5.625% senior notes due 2029 (80.7) 8.0 — —

5.00% senior notes due 2030 (34.7) 2.4 — —

10.00% senior notes, due 2025 (Blue Cube 2025 Notes) $ — $ (500.0) $ 25.0

9.50% senior notes, due 2025 (2025 Notes) — (391.4) 99.4

9.75% senior notes, due 2023 (2023 Notes) — (120.0) 2.9

5.625% senior notes, due 2029 (2029 Notes) — (80.7) 8.0

5.00% senior notes, due 2030 (2030 Notes) — (34.7) 2.4

5.50% senior notes, due 2022 (2022 Notes) (200.0) — —

Senior Revolving Credit Facility (320.0) — —

Senior Term Loans — (465.0) 2.0

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Total repayments $ (616.1) $ (1,643.1) $ 137.7

Long-term debt (repayments) borrowings, net $ (1,103.1) $ 520.3

In 2021, we paid debt issuance costs of $3.9 million, primarily for the amendments to our Senior Credit Facility.

In 2020, we paid debt issuance costs of $10.3 million, primarily for the issuance of the 2025 Notes and amendments to our Senior Credit Facility and Receivables Financing Agreement.

In 2021, we repurchased and retired 4.7 million shares of common stock with a total value of $251.9 million.

In 2020, no shares were repurchased.

We issued 3.4 million and 0.1 million shares representing stock options exercised for the year ended December 31, 2021 and 2020, respectively, with a total value of $72.4 million and $1.9 million, respectively.

The percent of total debt to total capitalization decreased to 51.2% at December 31, 2021 compared to 72.7% at December 31, 2020, as a result of a lower level of debt outstanding and higher shareholders’ equity primarily resulting from our operating results.

Long-term debt repayments, net $ (201.1) $ (1,103.1)

In 2022 and 2021, we paid debt issuance costs of $4.4 million and $3.9 million, respectively, primarily for the refinancing of our senior credit facilities.

In 2022 and 2021, we repurchased and retired 25.7 million and 4.7 million shares, respectively, of common stock with a total value of $1,350.7 million and $251.9 million, respectively.

In 2022 and 2021, we issued 1.1 million and 3.4 million shares, respectively, with a total value of $25.7 million and $72.4 million, respectively, representing stock options exercised.

The percent of total debt to total capitalization decreased to 50.4% at December 31, 2022 compared to 51.2% at 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.

Dividends per common share were $0.80 in 2022 and 2021.

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

In 2021, we repaid approximately $1.1 billion of our outstanding debt using cash generated from operations.

In 2022, we repaid approximately $201.1 million of our outstanding debt using cash generated from operations.

During 2022, activity of our outstanding debt included:

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Debt Instrument ($ in millions)

Senior Term Loans $ 315.0

Senior Revolving Credit Facility $ 320.0

Receivables Financing Agreement 95.0

Total borrowings $ 415.0

10.00% senior notes due 2025 (Blue Cube 2025 Notes) $ (500.0)

9.50% senior notes due 2025 (2025 Notes) (391.4)

9.75% senior notes due 2023 (2023 Notes) (120.0)

5.625% senior notes due 2029 (2029 Notes) (80.7)

5.00% senior notes due 2030 (2030 Notes) (34.7)

Senior Term Loans (465.0)

5.50% senior notes, due 2022 (200.0)

Senior Revolving Credit Facility (320.0)

Receivables Financing Agreement (95.0)

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Long-term debt repayments, net $ (201.1)

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).

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 10.00% senior notes due October 15, 2025.

During the year ended December 31, 2021, we repaid $465.0 million of the Senior Term Loans.

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

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

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

At December 31, 2022, we had $1,199.6 million available under our $1,200.0 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 December 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.

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

The overall cash decrease of $9.2 million in 2021 primarily reflects our debt repayments, capital spending, dividends paid and share repurchases funded primarily through our operating results.

The overall cash increase of $13.5 million in 2022 primarily reflects our operating results, partially offset by our share repurchases, capital spending, debt repayments 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 capital expenditure requirements and comply with the financial ratios in our debt agreements.

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 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 will terminate 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.

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

For the year ended December 31, 2021, 4.7 million shares have been repurchased and retired at a cost of $251.9 million.

For the year ended December 31, 2020, there were no shares repurchased.

As of December 31, 2021, a total of 14.7 million shares were repurchased and retired at a cost of $447.8 million under the 2018 Repurchase Authorization program and $52.2 million of common stock remained authorized to be repurchased under this plan.

As of December 31, 2021, there have been no repurchases under the 2021 Repurchase Authorization program and $1.0 billion of common stock remained authorized to be repurchased under this plan.

During 2021, we amended our existing $250.0 million Receivables Financing Agreement which expanded the borrowing capacity to $300.0 million (Receivables Financing Agreement) and extended the maturity to 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.

The administrative agent for our Receivables Financing Agreement is PNC Bank, National Association.

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

For the years ended December 31, 2022 and 2021, 25.7 million and 4.7 million shares, respectively, of common stock have been repurchased and retired at a total value of $1,350.7 million and $251.9 million, respectively.

As of December 31, 2022, a cumulative total of 5.9 million shares were repurchased and retired at a cost of $298.5 million and $1,701.5 million of common stock remained authorized to be repurchased under the 2022 Repurchase Authorization program.

On October 11, 2022, we amended our existing $300 million Receivables Financing Agreement which increased the facility limit to $425.0 million and extended the maturity to October 14, 2025 (Receivables Financing Agreement).

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 leverage covenant that is contained in the Senior Credit Facility.

As of December 31, 2021 and 2020, we had $300.0 million and $125.0 million, respectively, drawn under the agreement.

As of December 31, 2021, $556.2 million of our trade receivables were pledged as collateral and we had no additional borrowing capacity under the Receivables Financing Agreement.

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

As of both December 31, 2022 and 2021, we had $300.0 million drawn under the agreement.

As of December 31, 2022, $654.0 million of our trade receivables were pledged as collateral and we had $125.0 million additional borrowing capacity 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 $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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We have registered an undetermined amount of securities with the SEC, so that, from time-to-time, we may issue debt securities, preferred stock and/or common stock and associated warrants in the public market under that registration statement.

Supplemental Guarantor Financial Information

On May 14, 2021, following the redemption of the remaining Blue Cube 2025 Notes, all subsidiary guarantees of the 2025 Notes, 5.125% senior notes due 2027, 2029 Notes and 2030 Notes (collectively, the Senior Notes) were released in accordance with the terms of the indentures governing the Senior Notes.

Our obligations under the Senior Notes are no longer

guaranteed by any of Olin’s subsidiaries and there are no outstanding debt securities issued by any of Olin’s subsidiaries that are guaranteed by Olin or any other of Olin’s subsidiaries.

Credit Ratings

We receive ratings from three independent credit rating agencies:

Fitch Ratings (Fitch), Moody's Investor Service (Moody's) and Standard & Poor's (S&P).

The following table summarizes our credit ratings as of January 31, 2023:

Credit Ratings Long-term Rating Outlook

Fitch Ratings BBB- Stable

Moody’s Investors Service Ba1 Stable

Standard & Poor’s BB+ Positive

On January 12, 2023, Fitch assigned a first-time inaugural rating of BBB- and a stable outlook.

On June 10, 2022, Moody's upgraded Olin to Ba1 from Ba2, and changed its outlook from Positive to Stable.

On March 31, 2022, S&P affirmed Olin’s BB+ rating, and revised its outlook from stable to positive.

Contractual Obligations

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Contingent tax liability 18.3 14.9 14.0 4.4 51.6

International qualified pension plan contributions (3)

International qualified pension plan payments (3)

6.4 8.9 11.9 158.5 185.7

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Non-cancelable operating leases and purchasing commitments are utilized in our normal course of business for our projected needs.

Our operating lease commitments as described in Note 21 “Leases” are primarily for railroad cars, but also include logistics, manufacturing, office and storage facilities and equipment, information technology equipment and land.

Our operating lease commitments as described in Note 21 “Leases” are primarily for railcars, but also include logistics, manufacturing, storage, real estate, and information technology assets.

Virtually none of our lease agreements contain escalation clauses or step rent provisions.

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Capital expenditures 8.1 — — — 8.1

Long-term energy supply contracts 75.0 76.4 — — 151.4

Utilities 11.9 23.7 12.2 8.6 56.4

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Other Guarantees

We also have standby letters of credit of $81.1 million of which $0.4 million have been issued through our Senior Revolving Credit Facility.

We also have standby letters of credit of $89.8 million of which $0.4 million have been issued under our Senior Revolving Credit Facility.

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

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Goodwill is not amortized, but is reviewed for impairment annually in the fourth quarter and/or when circumstances or other events indicate that impairment may have occurred.

ASC 350 “Intangibles—Goodwill and Other” (ASC 350) permits entities to make a qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount before applying the goodwill impairment test.

ASC 350 “Intangibles—Goodwill and Other” permits entities to make a qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount before applying a quantitative goodwill impairment test.

Circumstances that are considered as part of the qualitative assessment and could trigger a quantitative impairment test include, but are not limited to:

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Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions, estimates and market factors.

The discount rate, profitability assumptions and terminal growth rate of our reporting units and

the supply and demand fundamentals of the chlor alkali industry were the material assumptions utilized in the discounted cash flow model used to estimate the fair value of each reporting unit.

The discount rate, profitability assumptions and terminal growth rate of our reporting units and the supply and demand fundamentals of the chlor alkali industry are material assumptions utilized in the discounted cash flow model used to estimate the fair value of each reporting unit.

The discount rate reflects a weighted-average cost of capital, which is calculated, in part based on observable market data.

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Other data (such as the equity risk premium) are based upon market data over time for a peer group of companies in the chemical manufacturing or distribution industries with a market capitalization premium added, as applicable.

Also factoring into the discount rate was a market participant’s perceived risk (such as the company specific risk premium) in the valuation implied by the sustained reduction in our stock price.

Also factoring into the discount rate is a market participant’s perceived risk (such as the company specific risk premium) in the valuation implied by the sustained reduction in our stock price.

The discounted cash flow analysis requires estimates, assumptions and judgments about future events.

Our analysis uses our internally generated long-range plan.

Specifically, the assumptions in our long-range plan about terminal growth rates, forecasted capital expenditures and changes in future working capital requirements are used to determine the implied fair value of each reporting unit.

The long-range plan reflects management judgment, supplemented by independent chemical industry analyses which provide multi-year chlor alkali industry operating and pricing forecasts.

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Environmental

Accruals (charges to income) for environmental matters are recorded when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated, based upon current law and existing technologies.

These amounts, which are not discounted and are exclusive of claims against third parties, are adjusted periodically as assessments and remediation efforts progress or additional technical or legal information becomes available.

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Environmental costs and recoveries are included in costs of goods sold.

Environmental exposures are difficult to assess for numerous reasons, including the identification of new sites, developments at sites resulting from investigatory studies, advances in technology, changes in environmental laws and regulations and their application, changes in regulatory authorities, the scarcity of reliable data pertaining to identified sites, the difficulty in assessing the involvement and financial capability of other PRPs and our ability to obtain contributions from other parties and the lengthy time periods over which site remediation occurs.

Environmental exposures are difficult to assess for numerous reasons, including the identification of new sites, developments at sites resulting from investigatory studies, advances in technology, changes in environmental laws and regulations and their application, changes in regulatory authorities, the scarcity of reliable data pertaining to identified sites, the difficulty in assessing the involvement and financial capability of other potentially responsible parties (PRPs) and our ability to obtain contributions from other parties and the lengthy time periods over which site remediation occurs.

It is possible that some of these matters (the outcomes of which are subject to various uncertainties) may be resolved unfavorably to us, which could materially adversely affect our financial position, cash flows or results of operations.

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We have established policies and procedures governing our management of market risks and the use of financial instruments to manage exposure to such risks.

ASC 815 requires an entity to recognize all derivatives as either assets or liabilities in the consolidated balance sheets and measure those instruments at fair value.

ASC 815 “Derivatives and Hedging” (ASC 815) requires an entity to recognize all derivatives as either assets or liabilities in the consolidated balance sheets and measure those instruments at fair value.

In accordance with ASC 815, we designate derivative contracts as cash flow hedges of forecasted purchases of commodities and forecasted interest payments related to variable-rate borrowings and designate certain interest rate swaps as fair value hedges of fixed-rate borrowings.

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Energy costs, including electricity and natural gas, and certain raw materials used in our production processes are subject to price volatility.

Depending on market conditions, we may enter into futures contracts, forward contracts, commodity swaps and put and call option contracts in order to reduce the impact of commodity price fluctuations.

Depending on market conditions, we may enter into futures contracts, forward contracts, commodity swaps

and put and call option contracts in order to reduce the impact of commodity price fluctuations.

The majority of our commodity derivatives expire within one year.

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At December 31, 2022, we had open derivative notional contract positions through 2027 totaling $261.2 million (2021—$224.3 million).

If all open futures contracts had been settled on December 31, 2021, we would have recognized a pretax gain of $30.3 million.

If commodity prices were to remain at December 31, 2021 levels, approximately $17.3 million of deferred gains, net of tax, would be reclassified into earnings during the next twelve months.

If all open futures contracts had been settled on December 31, 2022, we would have recognized a pretax loss of $43.5 million.

If commodity prices were to remain at December 31, 2022 levels, approximately $30.5 million of deferred losses, net of tax, would be reclassified into earnings during the next twelve months.

The actual effect on earnings will be dependent on actual commodity prices when the forecasted transactions occur.

We use interest rate swaps as a means of minimizing cash flow fluctuations that may arise from volatility in interest rates of our variable-rate borrowings.

For the year ended December 31, 2019, $4.3 million of income was recorded to interest expense on the accompanying consolidated statements of operations related to these swap agreements.

We also use interest rate swaps as a means of managing interest expense and floating interest rate exposure to optimal levels.

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We include the gain or loss on the hedged items (fixed-rate borrowings) in the same line item, interest expense, as the offsetting loss or gain on the related interest rate swaps.

In August 2019, we terminated the interest rate swaps designated as fair value hedges which resulted in a loss of $2.3 million that was deferred as an offset to the carrying value of the related debt and was subsequently recognized to interest expense.

In 2021, we redeemed the 2025 Notes which resulted in recognition of the outstanding deferred swap loss.

For the years ended December 31, 2021, 2019 and 2018, $1.8 million, $0.4 million and $2.6 million, respectively, of expense was recorded to interest expense on the accompanying consolidated statements of operations related to these swap agreements.

For the year ended December 31, 2021, $1.8 million of expense was recorded to interest expense on the accompanying consolidated statements of operations related to these swap agreements.

We actively manage currency exposures that are associated with net monetary asset positions, currency purchases and sales commitments denominated in foreign currencies and foreign currency denominated assets and liabilities created in the normal course of business.

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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-K

Item 7. Management’s Discussion and Analysis