Olin Corp. Reports Operating Results (10-Q)
Olin Corporation is a manufacturer concentrated in chemicals metals and ammunition. The chemicals segment is divided into divisions: Chlor-Alkali Chemicals and Microelectronic Materials. Chlor-alkali includes chlor-alkali products sodium hydrosulfite and high strength bleach products. Chemicals includes pool chemicals biocides hydrazine polyols propylene glycols and surfactants and fluids. Microelectronic Materials includes image-forming and electronic interconnect materials and services. The metals and ammunition segment produces copper alloy sheet strip rod wire and ammunition. Olin Corp. has a market cap of $1.01 billion; its shares were traded at around $12.96 with a P/E ratio of 5.3 and P/S ratio of 0.5. The dividend yield of Olin Corp. stocks is 6.2%. Olin Corp. had an annual average earning growth of 20.1% over the past 5 years. Highlight of Business Operations:Chlor Alkali posted segment income of $68.7 million for the three months ended March 31, 2009 compared to $67.0 million for the same period in 2008, an increase of $1.7 million, or 3%. Chlor Alkali segment income was higher primarily because of increased selling prices ($46.7 million) and improved earnings of non-consolidated affiliates ($6.7 million) primarily related to SunBelt, partially offset by decreased volumes and higher operating costs ($51.7 million).
Sales were $132.9 million for the three months ended March 31, 2009 compared to $110.8 million for the three months ended March 31, 2008, an increase of $22.1 million, or 20%. Sales of ammunition to domestic and international commercial customers increased $22.2 million. Shipments to military customers increased $2.2 million. Shipments to law enforcement agencies remained constant for the three months ended March 31, 2009 compared to the same period in 2008, while shipments to industrial customers decreased $1.9 million.
For the three months ended March 31, 2009, other corporate and unallocated costs were $15.7 million compared with $16.5 million in 2008, a decrease of $0.8 million, or 5%. The decrease was primarily due to lower management incentive compensation costs of $2.6 million, primarily resulting from mark-to-market adjustments on stock-based compensation, partially offset by increased legal and legal-related settlement expenses of $0.8 million and higher asset retirement obligation charges of $0.8 million.
Our condensed balance sheets included liabilities for future environmental expenditures to investigate and remediate known sites amounting to $160.1 million at March 31, 2009, $158.9 million at December 31, 2008, and $154.4 million at March 31, 2008, of which $125.1 million, $123.9 million, and $119.4 million were classified as other noncurrent liabilities, respectively. These amounts do not take into account any discounting of future expenditures or any consideration of insurance recoveries or advances in technology. These liabilities are reassessed periodically to determine if environmental circumstances have changed and/or remediation efforts and our estimate of related costs have changed. As a result of these reassessments, future charges to income may be made for additional liabilities.
For the three months ended March 31, 2009, cash used for operating activities increased by $17.7 million from 2008 primarily due to increased working capital. For the three months ended March 31, 2009, working capital increased $88.7 million compared with an increase of $62.2 million in 2008. Receivables increased from December 31, 2008 by $3.4 million. Our days sales outstanding decreased by approximately one day from prior year. Inventories increased from December 31, 2008 by $35.1 million primarily due to a seasonal increase in Winchester and Chlor Alkali Products and higher caustic soda inventory. Accounts payable and accrued liabilities decreased by $46.3 million primarily due to timing of payments and a $20.6 million payment for the final settlement of working capital on the sale of the Metals business, which was consistent with the estimated working capital adjustment we anticipated from the transaction. The three months ended March 31, 2009 also included a contribution to our foreign pension plan of $1.0 million.
Capital spending of $49.8 million for the three months ended March 31, 2009 was $26.7 million higher than in the corresponding period in 2008. The higher capital spending was primarily due to an increase in spending of $19.9 million for the St. Gabriel, LA facility conversion and expansion project. For the total year, we expect our capital spending to be approximately $135 million to $140 million. We expect depreciation to be in the $80 million range for full-year 2009.
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