Olin reports Q1 net income of US$133.7M versus US$14.1M a year ago on solid chlor-alkali segment earnings, one-time gain related to its acquisition of SunBelt; sales up 20.4% to US$436M

Liling Tan

CLAYTON, Missouri , April 29, 2011 (press release) – Olin Corporation (NYSE: OLN) announced today that its first quarter 2011 net income was $133.7 million, or $1.66 per diluted share, which compares to $14.1 million, or $0.18 per diluted share in the first quarter of 2010. On February 28, we completed the acquisition of PolyOne's 50% interest in the SunBelt Partnership and as a result, first quarter 2011 net income includes a one time pretax, non-cash gain of $181.4 million, associated with the required remeasurement of the 50% of the SunBelt Partnership which Olin had previously owned. In conjunction with this remeasurement a discrete deferred tax expense of $76.0 million was recorded. Sales in the first quarter of 2011 were $436.0 million compared to $362.0 million in the first quarter of 2010.

Joseph D. Rupp, Chairman, President, and Chief Executive Officer said, "The positive pricing and volume momentum we have been experiencing in our Chlor Alkali business began accelerating in the first quarter of 2011 and should benefit the business for the balance of the year. The momentum provides us with the opportunity in 2011 to achieve the highest level of EBITDA since the spin-off of Arch Chemicals in 1999. First quarter 2011 segment earnings were $45.2 million, which is more than quadruple the first quarter 2010 Chlor Alkali segment earnings of $10.6 million. This improvement reflects significant year-over-year increases in both volumes and ECU netbacks. Year-over-year chlorine and caustic soda volumes improved approximately 8% while ECU netbacks improved approximately 19%. The first quarter 2011 Chlor Alkali results include approximately $3.7 million of incremental operating earnings associated with the SunBelt acquisition. The overall Olin results include approximately $0.8 million of SunBelt transaction costs and an additional $0.5 million of SunBelt interest expense.

"Winchester earnings declined approximately 35% compared to the first quarter of 2010 due to higher commodity metal and other material costs.

"First quarter 2011 earnings include $0.5 million of pretax recoveries from third parties of environmental costs incurred and expensed in prior periods, and an approximately $3.4 million reduction in income tax expense associated with a remeasurement of deferred taxes related to an increase in our effective state income tax rate.

"Second quarter 2011 net income is forecast to be in the $0.45 per diluted share range. Second quarter 2011 Chlor Alkali segment earnings are expected to improve compared to the first quarter of 2011 reflecting continued improvement in both pricing and volumes, and the contribution from a full quarter of 100% SunBelt ownership. Earnings in the Winchester segment are expected to decline more than 50% from the second quarter 2010 levels, reflecting lower volumes, a less favorable product mix, and higher commodity metal costs. Second quarter 2011 results are also forecast to include approximately $6 million of higher legacy environmental costs compared to the first quarter of 2011, which should be more than offset by approximately $10 million of pretax recoveries from third parties of environmental costs incurred and expensed in prior periods."

SEGMENT REPORTING

We define segment earnings as income (loss) before interest expense, interest income, other income, and income taxes and include the earnings of non-consolidated affiliates in segment results consistent with management's monitoring of the operating segments.

CHLOR ALKALI PRODUCTS

Chlor Alkali product sales for the first quarter of 2011 were $299.4 million compared to $230.6 million in the first quarter of 2010. First quarter 2011 chlorine and caustic soda volumes increased 8% compared to the first quarter 2010 levels. Bleach volumes increased 32% during the first quarter of 2011 compared to the first quarter of 2010, while volumes for hydrochloric acid in the first quarter of 2011 increased by 30% compared to the first quarter of 2010. Freight costs included in the ECU netbacks in the first quarter of 2011 were 19% higher compared to the first quarter of 2010. First quarter 2011 Chlor Alkali segment earnings of $45.2 million increased compared to the $10.6 million earned in the first quarter of 2010, due to higher volumes and higher prices.

WINCHESTER

Winchester first quarter 2011 sales were $136.6 million compared to $131.4 million in the first quarter of 2010. First quarter 2011 commercial sales increased compared to the first quarter of 2010, due to an acceleration of commercial sales in advance of the implementation of the announced second quarter price increase. First quarter 2011 military and law enforcement sales were comparable to the first quarter of 2010. Winchester's first quarter 2011 segment earnings were $12.5 million compared to $19.5 million in the first quarter of 2010. The decrease in segment earnings reflects the impact of higher commodity metals and other material costs, higher manufacturing costs, and costs associated with the relocation of the centerfire operations to Mississippi.

CORPORATE AND OTHER COSTS

Pension income included in the first quarter 2011 Corporate and Other segment was $6.7 million compared to income of $4.7 million in the first quarter of 2010. First quarter 2010 included a pretax charge of $1.3 million associated with an agreement to withdraw our Henderson, Nevada chlor alkali hourly workforce from a multi-employer defined benefit pension plan.

First quarter charges to income for environmental investigatory and remedial activities were $1.5 million in 2011, which includes the $0.5 million of pretax recoveries for costs incurred and expensed in prior periods. First quarter of 2010 credits to income of $2.0 million for environmental investigatory and remedial activities included $2.6 million of pretax recoveries for environmental costs incurred and expensed in prior periods. Without these recoveries, charges to income for environmental investigatory and remedial activities would have been $2.0 million in the first quarter of 2011 compared to $0.6 million in the first quarter of 2010. These charges relate primarily to remedial and investigatory activities associated with former waste sites and past operations.

Other corporate and unallocated costs in the first quarter of 2011 increased $1.4 million compared to the first quarter of 2010, primarily due to higher legal and legal-related expenses and SunBelt transaction costs. The legal and legal-related expenses are primarily associated with legacy environmental matters. A portion of these expenses relate to Olin's recovery of environmental costs incurred and expensed in prior periods.

DIVIDEND

Today, Olin's Board of Directors declared a dividend of $0.20 on each share of Olin common stock. The dividend is payable on June 10, 2011 to shareholders of record at the close of business on May 10, 2011. This is the 338th consecutive quarterly dividend to be paid by the Company.

CONFERENCE CALL INFORMATION

The Company's first quarter earnings conference call with securities analysts is scheduled for 11:00 A.M. Eastern Time, Friday, April 29th. The call will feature remarks by Joseph D. Rupp, Olin's Chairman, President and Chief Executive Officer; John E. Fischer, Olin's Senior Vice President and Chief Financial Officer; John L. McIntosh, Olin's Senior Vice President, Operations; and Larry P. Kromidas, Olin's Assistant Treasurer and Director, Investor Relations. Anyone wishing to listen to the call may do so via the Internet by following the instructions posted under the Conference Call icon on Olin's website, www.olin.com. Listeners should log on to the website at least 10 minutes before the call. The call will also be audio archived on the Olin website for future replay beginning at 1:00 p.m. Eastern Time. A final transcript of the conference call will be available on the website in the Investor section the following day.

COMPANY DESCRIPTION

Olin Corporation is a manufacturer concentrated in two business segments: Chlor Alkali Products and Winchester. Chlor Alkali Products manufactures chlorine and caustic soda, sodium hydrosulfite, hydrochloric acid, hydrogen, potassium hydroxide and bleach products. Winchester products include sporting ammunition, reloading components, small caliber military ammunition and components, and industrial cartridges.

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