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Item 7. Management’s Discussion and Analysis

2024-02-22 compared with 2023-02-23 · 208 added, 240 removed, 357 unchanged (56% 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 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.

The Epoxy segment produces and sells a full range of epoxy materials and precursors, including aromatics (acetone 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, industrial cartridges and clay targets.

RECENT DEVELOPMENTS AND HIGHLIGHTS

2023 Overview

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.

Net income was $460.2 million for 2023 compared to $1,326.9 million for 2022, a decrease of $866.7 million, or 65%.

The decrease in net income from the prior year was primarily due to lower operating results across all of our business segments.

Net income for 2023 also reflects a pretax gain of $27.0 million from the sale of our domestic private trucking fleet and operations.

Diluted net income per share was $3.57 for 2023 compared to $8.94 for 2022, a decrease of $5.37 per share, or 60%.

The decrease in diluted net income per share was positively impacted by share repurchases throughout 2023.

On October 1, 2023, Olin acquired the assets of White Flyer from Reagent for $63.9 million.

White Flyer designs, manufactures and sells recreational trap, skeet, international and sporting clay targets and has been included in our Winchester segment.

On January 10, 2023, BWA, our joint venture with Mitsui, began operations.

BWA is an independent global trader of ECU-based derivatives, focused on globally traded caustic soda and EDC.

Olin holds 51% interest and exercises control in BWA, and the joint venture is consolidated in our financial statements in our Chlor Alkali Products and Vinyls segment, with Mitsui’s 49% interest in BWA classified as noncontrolling interest.

All intercompany accounts and transactions are eliminated in consolidation.

Chlor Alkali Products and Vinyls reported segment income of $664.2 million for 2023 compared to $1,181.3 million for 2022.

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 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.

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

The Chlor Alkali Products and Vinyls 2023 segment results were also negatively impacted by the second quarter’s maintenance turnaround and related operating issues at our vinyl chloride monomer plant at the Freeport, TX facility, which resulted in higher costs and reduced profit from lost sales of $104.2 million.

The vinyl chloride monomer plant resumed normal operations in the latter half of the third quarter.

Epoxy reported segment loss of $31.0 million for 2023 compared to segment income of $388.5 million for 2022.

Epoxy segment results were lower than in the prior year primarily due to lower volumes and lower product pricing.

Epoxy segment results in 2023 have been impacted by significant exports out of Asia into the European and North American markets, negatively impacting pricing and volumes.

Partially offsetting the lower volumes and pricing were lower raw material and operating costs.

Winchester reported segment income of $255.6 million for 2023 compared to $372.9 million for 2022.

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.

Winchester segment results were lower than in the prior year primarily due to lower commercial volumes and pricing, partially offset by higher domestic and international military sales.

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.

During 2023, we repurchased and retired 13.3 million shares of common stock at a total value of $711.3 million.

As of December 31, 2023, we have $997.0 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.

During 2023, we had net borrowings of $85.9 million with $68.0 million borrowed under our Senior Revolving Credit Facility and $28.5 million borrowed under our Receivables Financing Agreement.

CONSOLIDATED RESULTS OF OPERATIONS

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Gross margin 1,165.5 2,181.9 2,294.2

Selling and administration 393.9 416.9 422.0

Selling and administrative 406.7 393.9 416.9

Restructuring charges 89.6 25.3 27.9

Goodwill impairment — — 699.8

Other operating income 42.9 16.3 1.4

Operating income (loss) 1,779.0 1,850.8 (746.7)

Operating income 712.1 1,779.0 1,850.8

Interest expense 181.1 143.9 348.0

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Non-operating pension income 24.0 38.7 35.7

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

Income tax provision (benefit) 349.1 242.0 (50.1)

Net income (loss) $ 1,326.9 $ 1,296.7 $ (969.9)

Net income (loss) per common share:

Income before taxes 559.3 1,676.0 1,538.7

Income tax provision 107.3 349.1 242.0

Net income 452.0 1,326.9 1,296.7

Net loss attributable to noncontrolling interests (8.2) — —

Net income attributable to Olin Corporation $ 460.2 $ 1,326.9 $ 1,296.7

Net income attributable to Olin Corporation per common share:

Basic $ 3.66 $ 9.16 $ 8.15

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2023 Compared to 2022

Sales for 2023 were $6,833.0 million compared to $9,376.2 million in 2022, a decrease of $2,543.2 million, or 27%.

Epoxy sales decreased by $1,361.3 million, primarily due to lower volumes, including the closure of our cumene facility and one of our bisphenol production lines, and lower product pricing.

Chlor Alkali Products and Vinyls sales decreased by $1,089.9 million, primarily due to lower volumes, partially offset by products sold by BWA.

Winchester sales decreased by $92.0 million, primarily due to lower commercial sales volumes, partially offset by higher domestic and international military sales.

Gross margin in 2023 decreased $1,016.4 million from 2022.

Chlor Alkali Products and Vinyls gross margin decreased by $483.0 million primarily due to lower volumes.

Epoxy gross margin decreased by $425.4 million primarily due to lower volumes and lower product pricing.

Winchester gross margin decreased by $112.5 million, primarily due to lower commercial volumes.

Gross margin as a percentage of sales decreased to 17% in 2023 from 23% in 2022.

Selling and administrative expenses in 2023 increased $12.8 million, or 3%, from 2022.

The increase was primarily due to higher costs associated with BWA of $23.9 million, partially offset by lower legal and legal-related settlement expenses of $7.4 million and a favorable foreign currency impact of $5.5 million.

Selling and administrative expenses as a percentage of sales increased to 6% in 2023 from 4% in 2022.

Restructuring charges for 2023 were $89.6 million compared to $25.3 million in 2022.

The increase in charges was primarily due to our actions to reconfigure our global Epoxy asset footprint to optimize the most productive and cost-effective assets to support our strategic operating model, which resulted in restructuring charges of $73.4 million for 2023.

Other operating income for 2023 included a gain of $27.0 million from the sale of our domestic private trucking fleet and operations and an insurance recovery of $15.6 million associated with a second quarter 2022 business interruption at our Plaquemine, LA Chlor Alkali Products and Vinyls facility.

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

Interest expense in 2023 increased $37.2 million from 2022, primarily due to higher average interest rates.

Interest expense for 2023 and 2022 was reduced by capitalized interest of $2.8 million and $3.1 million, respectively.

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

Non-operating pension income was lower in 2023 from the prior year primarily due to an increase in the discount rate used to determine interest costs, partially offset by lower actuarial losses recognized to income.

The effective tax rate for 2023 included benefits associated with a legal entity liquidation, prior year tax positions, stock-based compensation, remeasurement of deferred taxes due to a decrease in our state effective tax rates and foreign rate changes, and from a change in tax contingencies, and an expense from a net increase in the valuation allowance related to deferred tax assets in foreign jurisdictions.

These factors resulted in a net $29.4 million tax benefit.

Excluding these items, the effective tax rate for 2023 of 24.4% was higher than the 21.0% 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 inclusions, partially offset by foreign rate differential and favorable permanent salt depletion deductions.

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

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

Excluding these items, the effective tax rate for 2022 of 24.4% was higher than the 21.0% 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.

2022 Compared to 2021

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

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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.

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

The decrease was primarily due to the 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 administrative 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.

Partially offsetting this action, during the fourth quarter 2022, we committed and completed a plan to close down one of our bisphenol 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.

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

Interest expense in 2022 decreased by $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.

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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.

Excluding these items, the effective tax rate for 2022 of 24.4% was higher than the 21.0% U.S.

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.

Epoxy sales increased by $1,315.5 million, primarily due to higher product prices.

Winchester sales increased by $656.2 million, primarily due to increased commercial ammunition pricing and higher commercial and military sales volumes, which included ammunition produced at Lake City.

Gross margin increased $1,910.8 million from 2020.

Chlor Alkali Products and Vinyls gross margin increased by $986.1 million, primarily due to higher pricing and the effect of Winter Storm Uri.

Epoxy gross margin increased by $578.6 million, primarily due to higher product prices, partially offset by higher raw material costs and the effect of Winter Storm Uri.

Winchester gross margin increased by $336.1 million, primarily due to increased commercial ammunition pricing and higher sales volumes, which included ammunition produced at Lake City.

Gross margin as a percentage of sales increased to 26% in 2021 from 7% in 2020.

Selling and administration expenses in 2021 decreased $5.1 million, or 1%, from 2020.

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 $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 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.

Interest expense increased by $55.3 million for the year ended December 31, 2021.

Interest expense for 2020 included $14.6 million of bond redemption premiums, $5.8 million for write-off of deferred debt issuance costs and $4.0 million of accretion expense related to the 2020 ethylene payment discount.

Interest expense for 2021 and 2020 was reduced by capitalized interest of $3.2 million and $6.4 million, respectively.

Without these items, interest expense decreased by $75.7 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.

Non-operating pension income was higher for the year ended December 31, 2021 primarily due to a decrease in the discount rate used to determine interest costs.

The effective tax rate for 2021 included benefits from a net decrease in the valuation allowance related to

deferred tax assets in foreign jurisdictions, domestic tax credits, prior year tax positions, stock-based compensation, and expenses from remeasurement of deferred taxes due to an increase in our state effective tax rates and 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.

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 21.0% U.S.

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.

Excluding these items, the effective tax rate for 2021 of 22.5% was higher than the 21.0% U.S.

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

SEGMENT RESULTS

We define segment results as income (loss) before interest expense, interest income, goodwill impairment charges, other operating income (expense), non-operating pension income, other income and income taxes.

We define segment results as income (loss) before interest expense, interest income, other operating income (expense), non-operating pension income, other income and income taxes.

We have three operating segments:

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Total sales $ 6,833.0 $ 9,376.2 $ 8,910.6

Income (loss) before taxes:

Income before taxes:

Chlor Alkali Products and Vinyls $ 664.2 $ 1,181.3 $ 997.8

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Other corporate and unallocated costs (106.3) (131.5) (135.1)

(131.5) (135.1) (154.3)

Restructuring charges (89.6) (25.3) (27.9)

Goodwill impairment — — (699.8)

Other operating income (2)

42.9 16.3 1.4

Interest expense (3)

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Non-operating pension income 24.0 38.7 35.7

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

(1) Environmental expense for the years ended December 31, 2022 and 2021 included $1.0 million and $2.2 million, respectively, of insurance recoveries for environmental costs incurred and expensed in prior periods.

Income before taxes $ 559.3 $ 1,676.0 $ 1,538.7

(1) Environmental expense for the years ended December 31, 2023, 2022 and 2021, included $6.4 million, $1.0 million and $2.2 million, respectively, of insurance recoveries for environmental costs incurred and expensed in prior periods.

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

(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.

(2) Other operating income for the year ended December 31, 2023, included a gain of $27.0 million from the sale of our domestic private trucking fleet and operations and an insurance recovery of $15.6 million associated with a second quarter 2022 business interruption at our Plaquemine, LA, Chlor Alkali Products and Vinyls facility.

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

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

(3) 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 year ended 2020 included $4.0 million of accretion expense related to the ethylene payment discount.

Interest expense was reduced by capitalized interest of $2.8 million, $3.1 million and $3.2 million for the years ended December 31, 2023, 2022 and 2021, respectively.

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2023 Compared to 2022

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%.

Chlor Alkali Products and Vinyls sales for 2023 were $3,995.1 million compared to $5,085.0 million in 2022, a decrease of $1,089.9 million, or 21%.

The sales decrease was primarily due to lower volumes across all products and lower prices, primarily caustic soda and EDC, partially offset by products sold by BWA.

Chlor Alkali Products and Vinyls reported segment income of $664.2 million for 2023 compared to $1,181.3 million for 2022, a decrease of $517.1 million.

Chlor Alkali Products and Vinyls operating results were negatively impacted by lower volumes across all products ($846.4 million) and lower prices, primarily caustic soda and EDC ($51.4 million), partially offset by lower raw material and operating costs ($341.0 million), primarily lower natural gas and electrical power costs, and decreased costs associated with product purchased from other parties ($39.7 million).

The Chlor Alkali Products and Vinyls segment results were also negatively impacted by higher costs and reduced profit from lost sales associated with operating issues related to the second quarter’s maintenance turnaround at our vinyl chloride monomer plant at the Freeport, TX facility.

Chlor Alkali Products and Vinyls segment results included depreciation and amortization expense of $440.7 million and $482.2 million in 2023 and 2022, respectively.

2022 Compared to 2021

Chlor Alkali Products and Vinyls sales for 2022 were $5,085.0 million compared to $4,140.8 million in 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.

4 unchanged sentences

2023 Compared to 2022

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 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.

Chlor Alkali Products and Vinyls segment results included depreciation and amortization expense of $466.4 million and $451.4 million in 2021 and 2020, respectively.

Epoxy sales were $1,329.2 million for 2023 compared to $2,690.5 million in 2022, a decrease of $1,361.3 million, or 51%.

The sales decrease was primarily due to the closure of our cumene facility and one of our bisphenol production lines ($649.4 million), lower product prices ($419.6 million), lower volumes ($291.9 million) and an unfavorable effect of foreign currency translation ($0.4 million).

Epoxy reported segment loss of $31.0 million for 2023 compared to segment income of $388.5 million for 2022, a decrease of $419.5 million.

The decrease in segment results was due to lower product prices ($419.6 million) and lower volumes ($138.6 million), which were both impacted by significant exports out of Asia into the European and North American markets, partially offset by lower raw material costs and operating costs ($138.7 million).

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

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

Epoxy segment results included depreciation and amortization expense of $57.4 million and $83.3 million in 2023 and 2022, respectively.

2022 Compared to 2021

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2023 Compared to 2022

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.

Epoxy segment results included depreciation and amortization expense of $86.1 million and $90.7 million in 2021 and 2020, respectively.

Winchester sales were $1,508.7 million for 2023 compared to $1,600.7 million in 2022, a decrease of $92.0 million, or 6%.

The decrease was due to lower ammunition sales to commercial customers ($272.6 million) and law enforcement agencies ($7.5 million), partially offset by higher sales to domestic and international military customers ($188.1 million).

The lower commercial sales were primarily due to lower volumes, partially offset by fourth quarter 2023 sales from White Flyer.

Winchester reported segment income of $255.6 million for 2023 compared to $372.9 million for 2022, a decrease of $117.3 million.

The decrease in segment results was due to lower volumes and an unfavorable product mix ($61.4 million), lower product pricing ($40.0 million), and higher commodity and operating costs ($15.9 million).

Winchester segment results included depreciation and amortization expense of $27.2 million and $24.6 million in 2023 and 2022, respectively.

2022 Compared to 2021

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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).

Winchester reported segment income of $412.1 million for 2021 compared to $92.3 million for 2020, an increase of $319.8 million.

The increase in segment results was due to higher product pricing ($221.6 million) and increased sales volumes ($134.1 million), which includes ammunition produced at Lake City, partially offset by higher commodity and operating costs ($49.4 million).

Segment results in 2020 were also impacted by transition costs relating to the Lake City contract ($13.5 million).

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

Corporate/Other

2023 Compared to 2022

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.

For the years ended December 31, 2023 and 2022, environmental expense included $6.4 million and $1.0 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, 2023, would have been $30.1 million, compared to $24.2 million for the year ended December 31, 2022.

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For 2023, other corporate and unallocated costs were $106.3 million compared to $131.5 million for 2022, a decrease of $25.2 million, or 19%.

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).

The decrease was primarily due to lower legal and legal-related settlement expenses ($13.8 million), a favorable foreign currency impact ($5.5 million) and lower variable incentive compensation costs ($4.2 million), which includes mark-to-market adjustments on stock-based compensation expense.

2022 Compared to 2021

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.

For the years ended December 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 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).

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).

Restructurings

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.

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 were completed in the fourth quarter of 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.

As part of this review, we announced operational cessations in the fourth quarter of 2022 and the first half of 2023 (collectively, Epoxy Optimization Plan).

On June 20, 2023, we announced we had made the decision to cease all remaining operations at our Gumi, South Korea facility, reduce epoxy resin capacity at our Freeport, TX facility, and reduce our sales and support staffing across Asia.

These actions were substantially completed by December 31, 2023.

On March 21, 2023, we announced we had made the decision to cease operations at our cumene facility in Terneuzen, Netherlands and solid epoxy resin production at our facilities in Gumi, South Korea and Guaruja, Brazil.

The closures were completed in the first quarter 2023.

During the fourth quarter of 2022, we committed to and completed a plan to close down one of our bisphenol production lines at our Stade, Germany site.

For the year ended December 31, 2023 and 2022, we recorded pretax restructuring charges of $73.4 million and $8.0 million, respectively, for the write-off of equipment and facility costs, employee severance and related benefit costs, contract termination costs and facility exit costs related to these actions.

We expect to incur additional restructuring charges through 2025 of approximately $25 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.

In 2023 and 2022, Olin incurred charges of $16.2 million and $17.3 million, respectively, associated with other previously disclosed restructuring plans.

We expect to incur additional restructuring charges through 2027 of approximately $45 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.

In the fourth quarter of 2023, we executed an initiative which lowered our participation in ECU markets and adjusted our operating rates to mitigate the declining pricing environment we experienced during the second half of 2023.

We expect this initiative will continue through most of the first quarter 2024.

Our fourth quarter Chlor Alkali Products and Vinyls operating results were negatively impacted by this initiative.

We expect the first quarter 2024 operating results from our Chemicals business to be slightly higher than the fourth quarter 2023.

We also expect our Winchester business first quarter 2024 results to increase sequentially from fourth quarter 2023.

Overall, we expect Olin’s first quarter 2024 operating results to be slightly higher than the fourth quarter 2023 levels.

Other corporate and unallocated costs in 2024 are expected to be higher than the $106.3 million in 2023.

During 2024, we anticipate environmental expenses in the $25 million to $35 million range, compared to $23.7 million in 2023.

We expect non-operating pension income in 2023 to be in the $25 million to $30 million range compared to $38.7 million in 2022.

We expect non-operating pension income in 2024 to be similar to the $24.0 million in 2023.

Based on our plan assumptions and estimates, we will not be required to make any cash contributions to our domestic qualified defined benefit pension plan in 2024.

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We expect 2024 depreciation and amortization expense to be in the $500 million to $525 million 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.

We currently believe the 2024 effective tax rate will be in the 25% to 30% range and our cash tax rate to be in the 35% to 40% range as a result of previously deferred international tax payments expected to be made in 2024.

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.

We recorded an after-tax charge of $13.2 million ($18.1 million pretax) to shareholders’ equity as of December 31, 2023, for our pension and other postretirement plans.

This charge primarily reflected a 30-basis point decrease in the domestic pension plans’ discount rate and a 50-basis point decrease in the international defined benefit pension plans’ discount rate, partially offset by a favorable performance on plan assets during 2023.

In 2022, 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 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.

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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 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.

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 2024.

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2023 2022 2021

($ in millions)

Net Periodic Benefit (Income) Costs ($ in millions)

Pension benefits $ (20.7) $ (33.0) $ (27.5)

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2023 2022 2021

Cash outlays:

($ in millions)

Cash Outlays ($ in millions)

Remedial and investigatory spending (charged to reserve) $ 25.9 $ 24.6 $ 16.4

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Our liabilities for future environmental expenditures were as follows:

2022 2021 2020

Environmental Liabilities

($ in millions)

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Remedial and investigatory spending (25.9) (24.6)

Foreign currency translation adjustments (0.3) 0.3 0.1

Other 2.8 (0.3)

Ending balance $ 153.6 $ 146.6

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The establishment and implementation of national, state or provincial and local standards to regulate air, water and land quality affect substantially all of our manufacturing locations around the world.

Laws providing for regulation of the manufacture, transportation, use and disposal of hazardous and toxic substances, and remediation of contaminated sites, have imposed additional regulatory requirements on industry, particularly the chemicals industry.

Laws providing for regulation of the

manufacture, transportation, use and disposal of hazardous and toxic substances, and remediation of contaminated sites, have imposed additional regulatory requirements on industry, particularly the chemicals industry.

In addition, implementation of environmental laws has required and will continue to require new capital expenditures and will increase plant operating costs.

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2023 2022 2021

Environmental Expense

($ in millions)

Provisions charged to income $ 30.1 $ 24.2 $ 16.2

Insurance recoveries for costs incurred and expensed (1.0) (2.2) —

Insurance recoveries (1)

(6.4) (1.0) (2.2)

Environmental expense $ 23.7 $ 23.2 $ 14.0

(1) Insurance recoveries for costs incurred and expensed in prior periods.

These charges relate primarily to remedial and investigatory activities associated with past manufacturing operations and former waste disposal sites and may be material to operating results in future years.

Environmental expense for the years ended December 31, 2022 and 2021 included $1.0 million and $2.2 million, respectively, of insurance recoveries for environmental costs incurred and expensed in prior periods.

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

We have included additional information with respect to environmental matters within Note 21, “Environmental,” of our Notes to Consolidated Financial Statements.

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Capital expenditures (236.0) (236.9) (200.6)

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

Business acquired in purchase transaction, net of cash acquired (63.9) — —

Payments under other long-term supply contracts (64.5) (37.7) —

Proceeds from disposition of property, plant and equipment 28.8 14.9 3.2

Net investing activities (340.8) (259.7) (197.4)

Long-term debt (repayments) borrowings, net (201.1) (1,103.1) 520.3

Debt early redemption premium — (137.7) (14.6)

Long-term debt borrowings (repayments), net 85.9 (201.1) (1,103.1)

Debt early redemption premiums

Common stock repurchased and retired (711.3) (1,350.7) (251.9)

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Dividends paid (101.0) (116.2) (127.8)

Contributions received from noncontrolling interests 44.1 — —

Net financing activities (656.9) (1,646.7) (1,552.0)

Operating Activities

For 2023, cash provided by operating activities decreased by $947.6 million from 2022, primarily due to a decrease in operating results compared with the prior year.

For 2023, working capital decreased $68.6 million, compared to a decrease of $65.2 million in 2022.

Inventories decreased by $94.4 million from December 31, 2022, primarily due to inventory destocking efforts.

A portion of the working capital decrease in 2023 was offset by incremental working capital associated with BWA.

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.

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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.

The working capital increase primarily reflects a higher sales level.

Receivables increased by $360.0 million from December 31, 2020, primarily as a result of higher sales in the fourth quarter of 2021.

For the year ended December 31, 2021, our days sales outstanding (DSO), which was calculated by dividing period end accounts receivable by average daily sales for the period, improved from the comparable prior year period.

Inventories increased by $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.

Investing Activities

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In 2024, we expect our capital spending to be in the $225 million to $250 million range.

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.

Our capital spending forecast represents normal capital spending to maintain our current operating facilities.

On October 1, 2023, Olin acquired the assets of White Flyer from Reagent for $63.9 million.

The acquisition was financed with cash on hand.

For the year ended December 31, 2023 and 2022, payments of $64.5 million and $37.7 million, respectively, 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 $25.0 million to $50.0 million range in 2024.

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

For the year ended December 31, 2023, we received $28.5 million of cash proceeds from the sale of our domestic private trucking fleet and operations.

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

Financing Activities

During 2023 and 2022, activity of our outstanding debt included:

December 31, 2022 Year Ended

December 31, 2021

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

Long-term Debt Borrowings (Repayments) for the Year Ended December 31,

Debt Instrument ($ in millions)

Senior Revolving Credit Facility $ 375.0 $ 320.0

Senior Term Loans — 315.0

Receivables Financing Agreement 332.7 95.0

Total borrowings 707.7 415.0

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

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

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 (307.0) (320.0)

Senior Term Loans — (465.0) 2.0

Term Loan Facility (8.7) —

Receivables Financing Agreement (304.2) (95.0)

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Total repayments (621.8) (616.1)

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.

Long-term debt borrowings (repayments), net $ 85.9 $ (201.1)

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

In 2023 and 2022, we repurchased and retired 13.3 million and 25.7 million shares, respectively, of common stock with a total value of $711.3 million and $1,350.7 million, respectively.

In 2023 and 2022, we issued 1.0 million and 1.1 million shares, respectively, with a total value of $25.4 million and $25.7 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.

The percent of total debt to total capitalization increased to 54.1% as of December 31, 2023, from 50.4% as of December 31, 2022, primarily as a result of a higher level of debt outstanding and lower shareholders’ equity, primarily due to common stock repurchases partially offset by our operating results.

For the year ended December 31, 2023, we received $44.1 million of cash contributions from noncontrolling interests for BWA.

Dividends per common share were $0.80 in 2023 and 2022.

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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.

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

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:

Long-term Debt Borrowings (Repayments)

December 31, 2022

Debt Instrument ($ in millions)

Senior Revolving Credit Facility $ 320.0

Receivables Financing Agreement 95.0

Total borrowings $ 415.0

5.50% senior notes, due 2022 (200.0)

Senior Revolving Credit Facility (320.0)

Receivables Financing Agreement (95.0)

Finance leases (1.1)

Total repayments $ (616.1)

Long-term debt repayments, net $ (201.1)

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.

On October 11, 2022, we entered into a $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 Term Loan Facility requires principal amortization payments which began on 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.

At December 31, 2023, we had $1,131.6 million available under our $1,200.0 million Senior Revolving Credit Facility because we had $68.0 million borrowed under the facility and 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 December 31, 2023, 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, 2023, there were no covenants or other restrictions that limited our ability to borrow.

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.

We believe, based on current and projected levels of cash flow from our operations, together with our cash and cash equivalents on h and 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 terminated upon the purchase of $500.0 million of our common stock during the first quarter of 2022.

For the years ended December 31, 2023 and 2022, 13.3 million and 25.7 million shares, respectively, of common stock have been repurchased and retired at a total value of $711.3 million and $1,350.7 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).

As of December 31, 2023, a cumulative total of 19.2 million shares were repurchased and retired at a total value of $1,003.0 million and $997.0 million of common stock remained authorized to be repurchased under the 2022 Repurchase Authorization program.

We maintain a $425.0 million Receivables Financing Agreement (Receivables Financing Agreement) that is scheduled to mature on October 14, 2025.

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 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.

As of December 31, 2023 and 2022, we had $328.5 million and $300.0 million drawn under the agreement.

As of December 31, 2023, $456.6 million of our trade receivables were

pledged as collateral and we had $33.3 million of additional borrowing capacity under the Receivables Financing Agreement, which was limited by our borrowing base.

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 $175.5 million and certain of our foreign subsidiaries may sell their accounts receivable up to a maximum of €22.0 million.

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

The gross amount of receivables sold for the years ended December 31, 2022 and 2021 totaled $1,049.7 million and $876.4 million, respectively.

The following table summarizes the AR Facilities activity:

AR Facilities ($ in millions)

Beginning balance $ 111.8 $ 83.3

Gross receivables sold 899.0 1,049.7

Payments received from customers on sold accounts (947.5) (1,021.2)

Ending balance $ 63.3 $ 111.8

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

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The agreements are without recourse and therefore no recourse liability has been recorded as of December 31, 2023.

As of December 31, 2022 and 2021, $111.8 million and $83.3 million, respectively, of receivables qualifying for sales treatment were outstanding and will continue to be serviced by us.

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.

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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.

On June 30, 2023, Moody's affirmed Olin’s Ba1 rating and stable outlook.

On April 4, 2023, S&P affirmed Olin’s BB+ rating and positive outlook.

Contractual Obligations

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

As of December 31, 2022, we had long-term borrowings, including the current installment and finance lease obligations, of $2,580.7 million, of which $805.9 million was at variable rates.

As of December 31, 2023, we had long-term borrowings, including the current installment, of $2,670.1 million, of which $893.7 million was at variable rates.

We expect to meet our contractual obligations through our normal sources of liquidity and believe we have the financial resources to satisfy these contractual obligations.

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We fund the defined benefit pension plans based on the minimum amounts required by law plus such amounts we deem appropriate.

Given the inherent uncertainty as to actual minimum funding requirements for qualified defined benefit pension plans, no amounts are included in this table for any period beyond one year.

Given the inherent uncertainty as to actual minimum funding requirements for qualified defined benefit pension plans, no amounts are included in this table for any period beyond one year for the domestic qualified defined benefit plan.

Based on the current funding requirements, we will not be required to make any cash contributions to the domestic qualified defined benefit pension plan at least through 2024.

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Less than 1 Year 1-3 Years 3-5 Years More than 5 Years Total

($ in millions)

Debt obligations, including finance lease obligations (1)

Contractual Commitments ($ in millions)

Debt obligations (1)

$ 78.8 $ 475.0 $ 865.5 $ 1,267.6 $ 2,686.9

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All debt obligations are assumed to be held until maturity.

(2) For the purposes of this table, we have assumed for all periods presented that there are no changes in the rates from those in effect at December 31, 2022 which ranged from 4.55% to 9.5%.

(3) These amounts are only estimated payments assuming for our foreign qualified pension plans a weighted average annual expected rate of return on pension plan assets of 3.8% and a discount rate on pension plan obligations of 3.7%.

(2) For the purposes of this table, we have assumed for all periods presented that there are no changes in the interest rates from those in effect at December 31, 2023, which ranged from 5.0% to 9.5%.

(3) These amounts are only estimated payments for our foreign qualified pension plans, assuming a weighted average annual expected rate of return on pension plan assets of 4.4% and a discount rate on pension plan obligations of 3.2%.

These estimated payments are subject to significant variation and the actual payments may be more than the amounts estimated.

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Less than 1 Year 1-3 Years 3-5 Years More than 5 Years Total

($ in millions)

Lease and Purchase Commitments ($ in millions)

Lease Commitments

Operating leases $ 80.9 $ 125.8 $ 81.1 $ 132.6 $ 420.4

Purchasing commitments:

Raw materials 949.7 1,776.1 631.1 3,088.8 6,445.7

Purchase Commitments

Raw materials / utilities 516.3 864.7 738.4 2,842.5 4,961.9

Capital expenditures 10.6 0.8 — — 11.4

Long-term energy supply contracts 75.0 76.4 — — 151.4

Utilities 11.9 23.7 12.2 8.6 56.4

Total Purchasing Commitments $ 1,044.7 $ 1,876.2 $ 643.3 $ 3,097.4 $ 6,661.6

Other long-term supply contracts 37.5 80.4 — — 117.9

Total purchase commitments

$ 564.4 $ 945.9 $ 738.4 $ 2,842.5 $ 5,091.2

Other Guarantees

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.

At December 31, 2022, we had $1,199.6 million available under our Senior Revolving Credit Facility because we had issued $0.4 million of letters of credit.

We also have standby letters of credit outstanding of $120.7 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, workers compensation in surance policies, plant closure and post-closure obligations, international payment obligations and international pension funding requi rements.

CRITICAL ACCOUNTING ESTIMATES

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The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, sales and expenses, and related disclosure of contingent assets and liabilities.

Significant estimates in our consolidated financial statements include goodwill recoverability, environmental, restructuring and other unusual items, litigation, income tax reserves including deferred tax asset valuation allowances, pension, postretirement and other benefits and allowance for doubtful accounts.

allowance for doubtful accounts.

We base our estimates on prior experience, current facts and circumstances and other assumptions.

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It is our practice, at a minimum, to perform a quantitative goodwill impairment test in the fourth quarter every three years.

In the fourth quarter of 2023, we performed our triennial quantitative goodwill impairment test for our reporting units.

We use a discounted cash flow approach to develop the estimated fair value of a reporting unit when a quantitative review is performed.

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An impairment would be recorded if the carrying amount of a reporting unit exceeded the estimated fair value.

Based on the aforementioned analysis, the estimated fair value of our reporting units exceeded the carrying value of the reporting units.

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

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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 potentially responsible parties (PRPs) and our ability to obtain contributions from other parties and the lengthy time periods over which site remediation occurs.

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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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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We use cash flow hedges for certain raw material and energy costs such as copper, zinc, lead, ethane, electricity and natural gas to provide a measure of stability in managing our exposure to price fluctuations associated with forecasted purchases of raw materials and energy used in our manufacturing process.

Settlements on commodity derivative contracts resulted in gains (losses) of $58.2 million, $180.1 million, and $(14.9) million in 2022, 2021, and 2020, respectively which were included in cost of goods sold.

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

Settlements on commodity derivative contracts resulted in (losses) gains of $(72.5) million, $58.2 million, and $180.1 million in 2023, 2022, and 2021, respectively, which were included in cost of goods sold.

At December 31, 2023, we had open derivative notional contract positions through 2028 totaling $191.0 million.

If all open futures contracts had been settled on December 31, 2023, we would have recognized a pretax loss of $24.6 million.

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

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.

There were no outstanding interest rate swaps at December 31, 2023 and 2022.

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.

We enter into forward sales and purchase contracts to manage currency risk to offset our net exposures, by currency, related to the foreign currency denominated monetary assets and liabilities of our operations.

At December 31, 2022, we had outstanding forward contracts to buy foreign currency with a notional value of $275.8 million and to sell foreign currency with a notional value of $110.7 million.

All of the currency derivatives expire within one year and are for U.S.

dollar (USD) equivalents.

All of the currency derivatives expire within one year and are for USD equivalents.

The counterparties to the forward contracts are large financial institutions;

however, the risk of loss to us in the event of nonperformance by a counterparty could impact our financial position or results of operations.

At December 31, 2021, we had outstanding forward contracts to buy foreign currency with a notional value of $199.0 million and to sell foreign currency with a notional value of $124.4 million.

We had the following notional amounts of outstanding forward contracts to buy and

sell foreign currency:

Foreign Currency ($ in millions)

Buy 21.0 275.8

Sell 140.2 110.7

Our foreign currency forward contracts and certain commodity derivatives did not meet the criteria to qualify for hedge accounting.

The effect on operating results of items not qualifying for hedge accounting was a (loss) gain of $(27.3) million, $(22.0) million and $17.7 million in 2022, 2021 and 2020, respectively.

The effect on operating results of items not qualifying for hedge accounting was a loss of $15.7 million, $27.3 million and $22.0 million in 2023, 2022 and 2021, respectively.

The fair value of our derivative asset and liability balances were:

($ in millions)

Derivative Assets and Liabilities ($ in millions)

Other current assets $ 2.1 $ 1.8

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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