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Item 7. Management’s Discussion and Analysis

2025-02-20 compared with 2024-02-22 · 173 added, 169 removed, 396 unchanged (46% 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 and phenol), allyl chloride, epichlorohydrin, liquid epoxy resins, solid epoxy resins and systems and growth 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 and phenol), allyl chloride, epichlorohydrin, liquid epoxy resins, solid epoxy resins and formulated solutions 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 $108.6 million for 2024 compared to $460.2 million for 2023, a decrease of $351.6 million, or 76%.

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Diluted net income per share was $0.91 for 2024 compared to $3.57 for 2023, a decrease of $2.66 per share, or 75%.

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 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.

Chlor Alkali Products and Vinyls repo rted segment income of $296.4 million for 2024 compared to $664.2 million for 2023.

Chlor Alkali Products and Vinyls segment results were lower than the prior year due to lower pricing, primarily caustic soda, partially offset by lower costs associated with products purchased from other parties, and lower raw material and operating costs.

The Chlor Al kali Products and Vinyls 2024 segment results were also negatively impacted by Hurricane Beryl resulting in incremental costs to restore operations, unabsorbed fixed manufacturing costs, and reduced profit from lost sales of $93.6 million.

The 2023 segment results were negatively impacted by higher costs and reduced profit from lost sales of $104.2 million associated with operating issues related to a 2023 second quarter maintenance turnaround at our vinyl chloride monomer plant at the Freeport, TX facility.

Epoxy reported segment loss of $85.0 million for 2024 compared to segment loss of $31.0 million for 2023.

Epoxy segment results were lower than in the prior year primarily due to lower product pricing and the impact of Hurricane Beryl of $32.7 million, partially offset by increased volumes, improved product mix and lower raw material and operating costs.

Winchester reported segment income of $237.9 million for 2024 compared to $255.6 million for 2023.

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.

Winchester segment results were lower than in the prior year primarily due to higher commodity and operating costs, including propellant costs, and lower pricing.

The decline was partially offset by higher sales volumes.

Higher international military sales, military project revenue, and White Flyer sales were partially offset by lower commercial ammunition sales.

Liquidity and Share Repurchases

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 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.

On December 11, 2024, our Board of Directors authorized a share repurchase program for the purchase of shares of common stock at an aggregate price of up to $1.3 billion.

During 2024, we repurchased and retired 5.9 million shares of common stock at a total value of $300.3 million under a prior authorized share repurchase program.

As of December 31, 2024, we have $2.0 billion of remaining authorized common stock to be repurchased under the 2022 and 2024 Repurchase Authorization programs.

On November 20, 2024, we entered into a $500.0 million receivables financing agreement (2024 Receivables Financing Agreement) which increased the borrowing limit of our existing $425.0 million receivables financing agreement (2022 Receivables Financing Agreement) by $75.0 million, and extended the maturity date from October 14, 2025 to November 19, 2027 (collectively, the “Receivables Financing Agreements”).

As part of the 2024 Receivables Financing Agreement, we terminated our existing trade accounts receivable factoring arrangements (AR Facilities).

During 2024, we had net borrowings of $169.7 million with $102.0 million borrowed under our Senior Revolving Credit Facility, which was partially utilized to repay $70.0 million of tax-exempt variable-rate bonds.

We also borrowed $146.5 million under our 2024 Receivables Financing Agreement, which was partially utilized to replace our AR Facilities that were terminated.

On July 10, 2024, we announced a temporary disruption of operations at our Freeport, TX, facility as a result of Hurricane Beryl.

In response to this disruption, we declared a system-wide force majeure for our Chlor Alkali Products & Vinyls products and aromatics shipments for our Epoxy segment.

This disruption was a result of hurricane-related damage to Olin facilities in Freeport, TX, impacting Olin’s normal production and logistics capabilities including access to power, raw materials, and other essential feedstocks and services.

During the third quarter, we safely returned many Freeport, TX plants to operation and on August 28, 2024, we lifted the system wide force majeure on Chlor Alkali Products and Vinyls products.

However, persistent operating limitations necessitated an additional outage, which we commenced in late September and successfully completed during October.

Our 2024 results included a negative pretax impact of $126.3 million associated with Hurricane Beryl for incremental costs to restore operations, unabsorbed fixed manufacturing costs, and reduced profit from lost sales.

The Hurricane Beryl impact included in our Chlor Alkali Products and Vinyls and Epoxy segment results was $93.6 million and $32.7 million, respectively.

Epoxy segment results in 2024 continue to be impacted by significant exports out of Asia into the European and North American markets, negatively impacting pricing and volumes.

On April 3, 2024, we announced the filing of anti-dumping and countervailing duty petitions against China, India, South Korea, Taiwan and Thailand with the U.S.

Department of Commerce and the U.S.

International Trade Commission relating to certain epoxy resins, as part of the U.S.

Epoxy Resin Producers Ad Hoc Coalition.

The petitions were filed in response to large volumes of low-priced imports of epoxy resins into the U.S.

from the subject countries over the past three years that have injured U.S.

domestic epoxy resin producers.

On July 1, 2024, we announced the initiation of an anti-dumping proceeding by the European Commission against China, the Republic of Korea, Taiwan and Thailand concerning low-priced imports of epoxy resins into the European Union (EU), as a result of a complaint lodged by the Ad Hoc Coalition of Epoxy Resin Producers.

The complaint alleges that exporting producers in the four targeted countries have injured the European epoxy resin producers by selling their products on the EU market at unfairly low prices that significantly undercut the prices of European producers.

During 2024, the U.S.

Army awarded Winchester a contract for the construction of the Next Generation Squad Weapon (NGSW) ammunition manufacturing facility at the Lake City Army Ammunition Plant.

The project will be the first new manufacturing plant built at the Lake City facility in decades.

The new manufacturing facility will provide safe, reliable, and advanced NGSW ammunition to the U.S.

Winchester will manage all aspects of the government-funded construction project, which commenced in the second quarter of 2024.

Subsequent Event

On January 21, 2025, Olin announced the signing of a definitive agreement with AMMO, Inc.

to acquire AMMO, Inc.’s small caliber ammunition manufacturing assets for $75 million, subject to customary terms, closing conditions and post-closing adjustments.

The acquisition includes AMMO Inc.’s brass shellcase capabilities and their 185,000 square foot production facility located in Manitowoc, WI.

The acquisition will be financed with cash on hand and is expected to close in the second quarter of 2025.

CONSOLIDATED RESULTS OF OPERATIONS

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Sales for 2024 were $6,540.1 million compared to $6,833.0 million in 2023, a decrease of $292.9 million, or 4%.

Chlor Alkali Products and Vinyls sales decreased by $364.9 million, primarily due to lower pricing, primarily caustic soda.

Epoxy sales decreased by $102.9 million, primarily due to lower product pricing, partially offset by increased sales volumes.

Winchester sales increased by $174.9 million, primarily due to increased sales to international military customers and military project revenue and 2024 sales from White Flyer.

Gross margin in 2024 decreased $428.0 million from 2023.

Chlor Alkali Products and Vinyls gross margin decreased by $344.1 million primarily due to lower pricing, primarily caustic soda.

Epoxy gross margin decreased by $55.1 million primarily due to lower product pricing, partially offset by increased volumes.

Winchester gross margin decreased by $21.3 million, primarily due to higher commodity and operating costs, including propellant costs, and lower product pricing, partially offset by White Flyer results.

Gross margin as a percentage of sales decreased to 11% in 2024 from 17% in 2023.

Selling and administrative expenses in 2024 increased $1.8 million from the prior year.

The increase was primarily due to higher legal and legal-related settlement expense of $23.2 million and consulting and contract services of $3.1 million, partially offset by lower stock-based compensation expense of $18.0 million, which includes mark-to-market adjustments, and a favorable foreign currency impact of $7.4 million.

Selling and administrative expenses as a percentage of sales was 6% for both 2024 and 2023.

Restructuring charges for 2024 were $33.3 million compared to $89.6 million in 2023.

The decrease was primarily due to charges associated with our 2023 actions to reconfigure our global Epoxy asset footprint to optimize the most productive and cost-effective assets to support our operating model, which resulted in pretax restructuring charges for 2024 and 2023 of $24.1 million and $73.4 million, respectively.

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.

Interest expense in 2024 increased $3.4 million from 2023, primarily due to higher average interest rates.

Interest expense for 2024 and 2023 was reduced by capitalized interest of $1.7 million and $2.8 million, respectively.

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

The effective tax rate for 2024 included benefits associated with stock-based compensation, U.S.

Federal tax credits purchased at a discount, changes in tax contingencies and remeasurement of deferred taxes due to a decrease in our state effective tax rates, partially offset by expenses from prior year tax positions and from a net increase in the valuation allowance related to deferred tax assets in foreign jurisdictions.

These factors resulted in a net $5.1 million tax benefit.

Excluding these items, the effective tax rate for 2024 of 29.5% was higher than the 21.0% U.S.

federal statutory rate primarily due to state income tax, foreign income inclusions and non-deductible exchange rate results, partially offset by favorable permanent salt depletion deductions.

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 income tax, 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.

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.

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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.

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 operating model, which resulted in restructuring charges of $73.4 million for 2023.

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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%.

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 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 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 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.

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.

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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, 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.

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.

federal statutory rate primarily due to state income tax, 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.

SEGMENT RESULTS

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Income before taxes $ 141.7 $ 559.3 $ 1,676.0

(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.

(1) Environmental expense for the years ended December 31, 2023 and 2022, included $6.4 million and $1.0 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.

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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.

(3) Interest expense was reduced by capitalized interest of $1.7 million, $2.8 million and $3.1 million for the years ended December 31, 2024, 2023 and 2022, respectively.

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Chlor Alkali Products and Vinyls sales for 2024 were $3,630.2 million compared to $3,995.1 million in 2023, a decrease of $364.9 million, or 9%.

The sales decrease was primarily due to lower pricing, primarily caustic soda, partially offset by increased sales volumes associated with products purchased from other parties.

Chlor Alkali Products and Vinyls reported segment income of $296.4 million for 2024 compared to $664.2 million for 2023, a decrease of $367.8 million.

The decrease in Chlor Alkali Products and Vinyls operating results were primarily due to lower pricing ($462.8 million), primarily caustic soda, the negative impact of Hurricane Beryl resulting in incremental costs to restore operations, unabsorbed fixed manufacturing costs, and reduced profit from lost sales ($93.6 million), and an unfavorable product mix ($42.7 million), partially offset by lower costs associated with products purchased from other parties ($123.4 million) and lower raw material and operating costs ($107.9 million).

The Chlor Alkali Products and Vinyls 2023 segment results were 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 $424.6 million and $440.7 million in 2024 and 2023, respectively.

2023 Compared to 2022

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.

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2024 Compared to 2023

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.

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.

2023 Compared to 2022

Epoxy sales were $1,226.3 million for 2024 compared to $1,329.2 million in 2023, a decrease of $102.9 million, or 8%.

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).

The sales decrease was due to lower product prices ($148.3 million) and an unfavorable effect of foreign currency translation ($4.5 million), partially offset by increased sales volumes ($49.9 million), which were negatively impacted by Hurricane Beryl.

Epoxy reported segment loss of $85.0 million for 2024 compared to $31.0 million for 2023, a decrease in segment results of $54.0 million.

The decrease was due to lower product prices ($148.3 million), which continues to be impacted by significant exports out of Asia into the European and North American markets, and the negative impact of Hurricane Beryl resulting in incremental costs to restore operations, unabsorbed fixed manufacturing costs, and reduced profit from lost sales ($32.7 million), partially offset by increased volumes and improved product mix ($76.4 million) and lower raw material and operating costs ($50.6 million).

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

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2023 Compared to 2022

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).

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%.

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.

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

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2024 Compared to 2023

Winchester sales were $1,683.6 million for 2024 compared to $1,508.7 million in 2023, an increase of $174.9 million, or 12%.

The increase was due to higher sales to domestic and international military customers ($148.9 million) and higher sales to commercial customers ($30.1 million), partially offset by lower sales to law enforcement agencies ($4.1 million).

Commercial sales were higher due to 2024 sales from White Flyer, partially offset by lower commercial ammunition sales.

Winchester reported segment income of $237.9 million for 2024 compared to $255.6 million for 2023, a decrease of $17.7 million.

The decrease in segment results was due to higher commodity and operating costs ($19.2 million), including propellant costs, and lower product pricing ($10.9 million), partially offset by higher sales volumes ($12.4 million), which includes White Flyer.

Winchester segment results included depreciation and amortization expense of $33.8 million and $27.2 million in 2024 and 2023, respectively.

2023 Compared to 2022

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%.

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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

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.

Corporate/Other

2024 Compared to 2023

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.

For the year ended December 31, 2024, charges to income for environmental investigatory and remedial activities were $30.2 million, compared to $23.7 million for the year ended December 31, 2023.

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

For the year ended December 31, 2023, environmental expense included $6.4 million of insurance recoveries for environmental costs incurred and expensed in prior periods.

For 2024, other corporate and unallocated costs were $90.1 million compared to $106.3 million for 2023, a decrease of $16.2 million, or 15%.

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.

The decrease was primarily due to lower stock-based compensation costs ($18.0 million), which includes mark-to-market adjustments and a favorable foreign currency impact ($7.4 million), partially offset by higher consulting costs ($4.9 million) and increased legal and legal-related settlement expenses ($2.9 million).

2023 Compared to 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).

Restructurings

On December 11, 2024, we announced we had made the decision to permanently close our Chlorine 3 manufacturing facility in Freeport, TX.

We expect to incur additional restructuring charges through 2030 of approximately $35 million 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.

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.

In connection with the Epoxy Optimization Plan for the years ended December 31, 2024 and 2023, we recorded pretax restructuring charges of $24.1 million and $73.4 million, respectively.

We expect to incur additional restructuring charges through 2025 of approximately $10 million 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.

In 2024 and 2023, we incurred charges of $9.2 million and $16.2 million, respectively, associated with other previously disclosed restructuring plans.

We expect to incur additional restructuring charges through 2027 of approximately $35 million related to these actions.

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.

Discussion of our restructuring activity, including a description of each plan, is referenced under Item 8, within Note 5, “Restructuring Charges.” Pretax restructuring charges related to our actions include facility exit costs, lease and other contract termination costs, employee severance and related benefits costs and the write-off of equipment and facilities.

We expect first quarter 2025 operating results from our Chemicals businesses to be lower than the fourth quarter 2024 as we expect both challenging industry conditions and our disciplined market participation to continue.

We also expect our Winchester business first quarter 2025 results to decrease sequentially from fourth quarter 2024 due to softer consumer demand compounded by continued inventory destocking efforts by our retail customers.

Overall, we expect Olin’s first quarter 2025 operating results to be lower than the fourth quarter 2024 levels.

Other corporate and unallocated costs in 2025 are expected to be higher than the $90.1 million in 2024.

During 2025, we anticipate environmental expenses in the $25 million to $35 million range, compared to $30.2 million in 2024.

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

We expect non-operating pension income in 2025 to be lower than the $26.0 million in 2024.

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 2025.

We have several international qualified defined benefit pension plans for which we anticipate cash contributions of less than $5 million in 2025.

In 2024, we currently expect our capital spending to be in the $225 million to $250 million range and we expect to make payments under other long-term supply contracts in the $25 million to $50 million range for energy modernization on the U.S.

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

In 2025, we currently expect our capital spending to be in the $225 million to $250 million range.

We expect 2025 depreciation and amortization expense to be in the $525 million range.

We currently believe the 2025 effective tax rate will be in the 25% to 30% range and our cash tax rate to be in the 60% to 70% range as a result of previously deferred international tax payments expected to be made in 2025.

PENSION AND POSTRETIREMENT BENEFITS

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.

We recorded an after-tax benefit of $21.7 million ($29.7 million pretax) to shareholders’ equity as of December 31, 2024, for our pension and other postretirement plans.

This charge primarily reflects a 50-basis point increase in the domestic pension plans’ discount rate and a 20-basis point increase in the international defined benefit pension plans’ discount rate, partially offset by unfavorable performance on plan assets during 2024.

In 2023, 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.

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

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 2025.

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The service cost component of net periodic benefit (income) costs related to employees of the operating segments are allocated to the operating segments based on their respective estimated census data.

We have included additional information with respect our defined benefit pension plans and other postretirement benefit plans within Note 13 “Pension Plans” and Note 14 “Postretirement Benefits” of our Notes to Consolidated Financial Statements.

We have included additional information with respect our defined benefit pension plans and other postretirement benefit plans within Item 8, Note 12, “Pension Plans,” and Note 13, “Postretirement Benefits,” of our notes to consolidated financial statements.

ENVIRONMENTAL MATTERS

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Our liabilities for future environmental expenditures were as follows:

Environmental Liabilities

($ in millions)

Environmental Liabilities ($ in millions)

Beginning balance $ 153.6 $ 146.6

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Remedial and investigatory spending (27.3) (25.9)

Other 2.8 (0.3)

Ending balance $ 156.5 $ 153.6

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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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2024 2023 2022

Environmental Expense

($ in millions)

Environmental Expense ($ in millions)

Provisions charged to income $ 30.2 $ 30.1 $ 24.2

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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.

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

We have included additional information with respect to environmental matters within Item 8, Note 20, “Environmental,” of our notes to consolidated financial statements.

LEGAL MATTERS AND CONTINGENCIES

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

Investments in unconsolidated affiliates (23.0) — —

Net investing activities (283.7) (340.8) (259.7)

Long-term debt borrowings (repayments), net 169.7 85.9 (201.1)

Debt early redemption premiums

Common stock repurchased and retired (300.3) (711.3) (1,350.7)

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Operating Activities

For 2024, cash provided by operating activities decreased by $471.1 million from 2023, primarily due to a decrease in operating results and increased working capital compared to the prior year.

For 2024, working capital increased $19.9 million, compared to a decrease of $68.6 million in 2023.

Receivables increased by $119.4 million, primarily as a result of the termination of our accounts receivable factoring program.

Accounts payable and accrued liabilities increased $72.8 million.

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.

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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.

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.

Investing Activities

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In 2025, we expect our capital spending to be in the $225 million to $250 million range.

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

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

For the year ended December 31, 2024 and 2023, payments of $58.6 million and $64.5 million, respectively, were made under other long-term supply contracts for energy modernization projects on the U.S.

Our payments for this project were completed in 2024.

For the year ended December 31, 2024, we contributed capital of $23.0 million in an unconsolidated affiliate, Hidrogenii, a joint venture between Plug Power, Inc.

and Olin Corporation.

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, 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

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

Debt Instrument ($ in millions)

Debt Instruments ($ in millions)

Senior Revolving Credit Facility $ 490.0 $ 375.0

Receivables Financing Agreement 332.7 95.0

Receivables Financing Agreements 591.9 332.7

Total borrowings 1,081.9 707.7

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

Variable-rate Go Zone bonds, due 2024 (50.0) —

Variable-rate Recovery Zone bonds, due 2024 (20.0) —

Senior Revolving Credit Facility (388.0) (307.0)

Term Loan Facility (8.8) (8.7)

Receivables Financing Agreement (304.2) (95.0)

Receivables Financing Agreements (445.4) (304.2)

Finance leases — (1.9)

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Long-term debt borrowings (repayments), net $ 169.7 $ 85.9

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

In 2024, we paid debt issuance costs of $1.2 million associated with the 2024 Receivables Financing Agreement.

In 2024 and 2023, we repurchased and retired 5.9 million and 13.3 million shares, respectively, of common stock with a total value of $300.3 million and $711.3 million, respectively.

In 2024 and 2023, we issued 0.9 million and 1.0 million shares, respectively, with a total value of $23.9 million and $25.4 million, respectively, representing stock options exercised.

For the year ended December 31, 2024, we withheld and paid $10.5 million for employee taxes on share-based payment arrangements.

The percent of total debt to total capitalization increased to 58.0% as of December 31, 2024, from 54.1% as of December 31, 2023, 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.

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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 (as defined below) and AR Facilities (as defined below).

Our principal sources of liquidity are from cash and cash equivalents, cash flow from operations and borrowings under our Senior Revolving Credit Facility and 2024 Receivables Financing Agreement.

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

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.

We maintain a $1,550.0 million senior credit facility (Senior Credit Facility) which 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 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.

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At December 31, 2024, we had $1,029.6 million available under our $1,200.0 million Senior Revolving Credit Facility because we had $170.0 million borrowed under the facility and issued $0.4 million of letters of credit.

During 2024, we partially utilized our Senior Revolving Credit Facility to repay $50.0 million of Go Zone and $20.0 million of Recovery Zone tax-exempt variable-rate bonds.

We were in compliance with all covenants and restrictions under all our outstanding credit agreements as of December 31, 2024, 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, 2024, there were no covenants or other restrictions that limited our ability to borrow.

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.

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 and 2024 Receivables Financing Agreement, 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 December 11, 2024, our Board of Directors authorized a share repurchase program for the purchase of shares of common stock at an aggregate price of up to $1.3 billion.

This program will terminate upon the purchase of $1.3 billion of common stock.

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.

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, 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 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.

We will continue to service the outstanding accounts sold.

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.

For the year ended December 31, 2024, 5.9 million shares of common stock have been repurchased and retired at a total value of $300.3 million.

As of December 31, 2024, a cumulative total of 25.2 million shares were repurchased and retired at a total value of $1,301.1 million under the 2022 Repurchase Authorization program.

As of December 31, 2024, $2.0 billion of common stock remained authorized to be repurchased under the 2022 and 2024 Repurchase Authorization programs.

On November 20, 2024, we entered into a $500.0 million receivables financing agreement (2024 Receivables Financing Agreement) which increased the borrowing limit of our existing $425.0 million receivables financing agreement (2022 Receivables Financing Agreement) by $75.0 million and extended the maturity date from October 14, 2025 to November 19, 2027 (collectively, the “Receivables Financing Agreements”).

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

In addition, the Receivables Financing Agreements incorporate the net leverage ratio covenant that is contained in the $1,550.0 million Senior Credit Facility.

As of December 31, 2024 and 2023, we had $475.0 million and $328.5 million drawn under the 2024 and 2022 Receivables Financing Agreements, respectively.

As of December 31, 2024, $628.3 million of our trade receivables were pledged as collateral and we had $22.1 million of additional borrowing capacity under the 2024 Receivables Financing Agreement, which was limited by our borrowing base.

We paid debt issuance costs of $1.2 million associated with the 2024 Receivables Financing Agreement.

As part of the 2024 Receivables Financing Agreement, we terminated our trade accounts receivable factoring arrangements (AR Facilities), under which certain of our domestic and international subsidiaries could sell their accounts receivable.

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

The following table summarizes the AR Facilities activity:

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Ending balance $ — $ 63.3

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

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

The factoring discount for the years ended December 31, 2024 and 2023 was $3.0 million and $4.7 million, respectively.

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

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.

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

We have registered an undetermined number 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.

Credit Ratings

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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.

Standard & Poor’s BB+ Stable

On August 8, 2024, S&P affirmed Olin’s BB+ rating and revised its outlook from positive to stable.

On June 24, 2024, Moody’s affirmed Olin’s Ba1 rating and stable outlook.

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

On March 14, 2024, Fitch affirmed Olin’s BBB- rating and stable outlook.

Contractual Obligations

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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.

We have several defined benefit pension and defined contribution plans, as described in Note 13 “Pension Plans” and Note 17 “Contributing Employee Ownership Plan” in the notes to consolidated financial statements contained in Item 8.

We have several defined benefit pension and defined contribution plans, as described in Note 12, “Pension Plans,” and Note 16, “Defined Contribution Plans,” in the notes to consolidated financial statements, contained in Item 8.

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

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We also have postretirement healthcare plans that provide health and life insurance benefits to certain retired employees and their beneficiaries, as described in Note 13, “Postretirement Benefits,” in the notes to consolidated financial statements contained in Item 8.

The defined contribution and other postretirement plans are not pre-funded, and expenses are paid by us as incurred.

The defined contribution and other postretirement plans are not prefunded, and expenses are paid by us as incurred.

Our long-term contractual commitments associated with debt, contingent tax liabilities, pension and other postretirement benefits consisted of the following:

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(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, 2024, 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%.

(3) These amounts are only estimated benefit payments for our foreign qualified pension plans, assuming a weighted average annual expected rate of return on pension plan assets of 4.3% and a discount rate on pension plan obligations of 3.4%.

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

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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 22 “Leases” are primarily for railcars, but also include logistics, manufacturing, storage, real estate, and information technology assets.

Our operating lease commitments as described in Item 8, 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.

We also have supply contracts with various third parties for certain raw materials, including ethylene, electricity, propylene and benzene.

We also have supply contracts with various third parties for certain raw materials, including ethylene, electricity, propylene and cumene.

These contracts have initial terms ranging from several to 20 years.

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Capital expenditures 44.2 — — — 44.2

Other long-term supply contracts 37.5 80.4 — — 117.9

Total purchase commitments $ 636.6 $ 966.4 $ 862.1 $ 2,490.5 $ 4,955.6

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

Other Guarantees

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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.

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.

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

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

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.

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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For derivative instruments that are designated and qualify as a cash flow hedge, the change in fair value of the derivative is recognized as a component of other comprehensive income (loss) until the hedged item is recognized in earnings.

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.

We use cash flow hedges for certain raw material and energy costs such as copper, zinc, 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 (losses) gains of $(30.6) million, $(72.5) million, and $58.2 million in 2024, 2023, and 2022, respectively, which were included in cost of goods sold.

At December 31, 2024, we had open derivative notional contract positions through 2028 totaling $204.5 million.

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

If commodity prices were to remain at December 31, 2023 levels, approximately $20.8 million of deferred losses, net of tax, would be reclassified into earnings during the next twelve months.

If all open futures contracts had been settled on December 31, 2024, we would have recognized a pretax gain of $10.2 million.

If commodity prices were to remain at December 31, 2024 levels, approximately $6.5 million of deferred gains, 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.

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

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

sell foreign currency:

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 133.7 140.2

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 of $15.7 million, $27.3 million and $22.0 million in 2023, 2022 and 2021, respectively.

The effect on operating results of items not qualifying for hedge accounting was a gain (loss) of $17.0 million, $(15.7) million and $(27.3) million in 2024, 2023 and 2022, respectively.

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

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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