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Olin Corp. Reports Operating Results (10-Q)

October 29, 2012 | About:
10qk

10qk

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Olin Corp. (OLN) filed Quarterly Report for the period ended 2012-09-30.

Olin Corporation has a market cap of $1.67 billion; its shares were traded at around $20.89 with a P/E ratio of 11.2 and P/S ratio of 0.9. The dividend yield of Olin Corporation stocks is 3.8%. Olin Corporation had an annual average earning growth of 4.7% over the past 10 years.

Highlight of Business Operations:

Sales for the three months ended September 30, 2012 were $581.2 million compared to $550.2 million in the same period last year, an increase of $31.0 million, or 6%. Sales of the newly acquired Chemical Distribution segment were $47.6 million. Chlor Alkali Products sales decreased $21.3 million, or 6%, primarily due to decreased chlorine and caustic soda volumes and lower ECU prices. Our ECU netbacks decreased 6% compared to the same period in the prior year. Winchester sales increased by $4.7 million, or 3%, from the three months ended September 30, 2011 primarily due to higher selling prices and increased shipments to domestic commercial customers, partially offset by lower shipments to law enforcement agencies and military customers.

The effective tax rate for the three months ended September 30, 2012 included a $0.7 million expense associated with previously undistributed earnings from our Winchester Australia Limited subsidiary, a $0.3 million expense associated with the finalization of prior year's income tax returns and $0.2 million expense associated with the remeasurement of deferred taxes. After giving consideration to these three items of $1.2 million, the effective tax rate for the three months ended September 30, 2012 of 36.0% was higher than the 35% U.S. federal statutory rate, primarily due to state income taxes, which were partially offset by favorable permanent tax deduction items and the utilization of certain state tax credits. The effective tax rate for the three months ended September 30, 2011 included a $3.6 million reduction in expense associated with the expiration of statutes of limitation in domestic jurisdictions and a $1.4 million expense associated with the finalization of our 2010 domestic income tax returns. After giving consideration to these two items of $2.2 million, the effective tax rate for the three months ended September 30, 2011 of 35.2% was higher than the 35% U.S. federal statutory rate primarily due to state income taxes, which were partially offset by favorable permanent tax deduction items and the utilization of certain state tax credits.

The effective tax rate for the nine months ended September 30, 2012 included a $6.3 million benefit related to the Section 45O credits and a $1.4 million benefit related to a valuation allowance release related to our state tax credits, partially offset by a $1.4 million expense associated with the remeasurement of deferred taxes, a $1.3 million expense associated with changes in tax contingencies, and a $0.7 million expense associated with previously undistributed earnings from our Winchester Australia Limited subsidiary. After giving consideration to these five items of $4.3 million, the effective tax rate for the nine months ended September 30, 2012 of 35.1% was slightly higher than the 35% U.S. federal statutory rate, primarily due to the effect of state income taxes, which were partially offset by favorable permanent tax deductions and the utilization of certain state tax credits. The effective tax rate for the nine months ended September 30, 2011 included a $3.5 million reduction in expense associated with the expiration of statutes of limitation in domestic jurisdictions, a $4.9 million reduction in expense associated with the remeasurement of deferred taxes due to an increase in state effective tax rates, a $2.1 million expense associated with the finalization of our 2010 domestic and Canadian tax returns and a $76.0 million increase in expense associated with the remeasurement of our SunBelt investment. After giving consideration to these four items of $69.7 million, and the SunBelt pretax gain of $181.4 million, for the nine months ended September 30, 2011, the effective tax rate of 35.1% was slightly higher than the 35% U.S. federal statutory rate, primarily due to the effect of state income taxes which were partially offset by favorable permanent tax deduction items and the utilization of certain state tax credits.

Chlor Alkali Products sales for the three months ended September 30, 2012 were $364.8 million compared to $386.1 million for the three months ended September 30, 2011, a decrease of $21.3 million, or 6%. The sales decrease was primarily due to lower chlorine and caustic soda volumes of 5% and lower ECU pricing, which decreased 6% from the three months ended September 30, 2011. The decreases were partially offset by increased bleach volumes of 9% for the three months ended September 30, 2012 compared to the same period last year. Our ECU netback, including SunBelt, was approximately $560 for the three months ended September 30, 2012 compared to approximately $595 for the three months ended September 30, 2011. Freight costs included in the ECU netback decreased 2% for the three months ended September 30, 2012, compared to the same period last year. Our operating rate for the three months ended September 30, 2012 was 83%, compared to the operating rate of 85% for the three months ended September 30, 2011. The lower operating rate for 2012 resulted from lower chlorine demand.

Chlor Alkali Products sales for the nine months ended September 30, 2012 were $1,087.7 million compared to $1,065.8 million for the nine months ended September 30, 2011, an increase of $21.9 million, or 2%. The sales increase was primarily due to higher ECU pricing, which increased 3% from the nine months ended September 30, 2011, and increased SunBelt sales of $33.1 million for the additional two months of our ownership. Bleach volumes increased 9% for the nine months ended September 30, 2012 compared to the same period last year, while hydrochloric acid volumes also increased 6% compared to the nine months ended September 30, 2011. Our ECU netback, including SunBelt, was approximately $575 for the nine months ended September 30, 2012 compared to approximately $560 for the nine months ended September 30, 2011. Freight costs included in the ECU netback increased 3% for the nine months ended September 30, 2012, compared to the same period last year, primarily due to higher railroad freight rates. Our operating rate for the nine months ended September 30, 2012 was 81%, compared to the operating rate of 83% for the nine months ended September 30, 2011.

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