Good morning and welcome to Olin's Second Quarter 2012 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Joseph Rupp, Chairman, President and CEO. Please go ahead.

Good morning, and thanks for joining us today. With me this morning are John Fischer, our Senior Vice President, Chief Financial Officer; John McIntosh, our Senior Vice President of Operations; and Larry Kromidas, our Assistant Treasurer and Director of Investor Relations. Last night, we announced that net income in the second quarter of 2012 was $47.6 million or $0.59 per diluted share, which compares to $42.1 million or $0.52 per diluted share in the second quarter of 2011. Second quarter 2012 net income included a $1.8 million pretax restructuring charge, primarily associated with the ongoing Winchester centerfire relocation project, and second quarter 2011 net income included a $2.4 million pretax restructuring charge associated with the Winchester centerfire relocation project and the Chlor Alkali mercury cell technology conversion projects. Sales in the second quarter of 2012 were $508.7 million compared to $529.1 million in the second quarter of 2011. During the second quarter of 2012, Olin generated adjusted EBITDA of $97.5 million, which represents the highest level of second quarter adjusted EBITDA ever. This record level of adjusted EBITDA was achieved in spite of our Chlor Alkali business experiencing a slowdown in chlorine demand that occurred during the second half of the quarter and which negatively impacted Chlor Alkali's segment earnings. As a result of this slowdown, chlorine sales volumes in the second quarter of 2012 declined when compared to the seasonally weaker first quarter. Second quarter 2012 Chlor Alkali earnings reflect increased contributions from bleach and hydrochloric acid compared to second quarter of 2011. Winchester second quarter 2012 segment earnings were in line with the second quarter of 2011 segment earnings. And second quarter 2012 results also included a $5 million favorable tax adjustments. Third quarter 2012 net income is forecasted to be in the $0.40 to $0.45 per diluted…

Thank you, Joe. Before I talk about the second quarter, I'd like to illustrate the Olin view of the economics associated with the K.A. Steel acquisition. In calculating adjusted EBITDA for K.A. Steel, Olin essentially converted S corporation financials to public company financials, primarily by addressing how owner taxes are treated. The combination of the 2011 K.A. Steel adjusted EBITDA of $31 million and the $35 million of annualized synergies we expect to realize, when compared to the purchase price of $328 million, reduced by the $60 million present value of the incremental tax benefits made available to Olin by the Section 338(h)(10) election, result in an EBITDA multiple of approximately 4x. We believe this is consistent with the type of post synergy multiples that were realized in both the Pioneer and the SunBelt acquisitions. Now turning to the quarter. I'd like to discuss a few items on the income statement. Selling and administration expenses increased $2.6 million or 6% in the second quarter of 2012 compared to the second quarter of 2011. The year-over-year increase reflects higher salary and benefit costs, a higher level of legal and legally-related settlement expenses, increased bad debt costs, partially offset by decreased relocation or recruiting charges and lower management incentive compensation which included mark-to-market adjustments on stock-based compensation. Second quarter 2012 charges to income for environmental, investigatory and remedial activities were $300,000. Second quarter 2011 credits to income for environmental investigatory and remedial activities were $1.1 million, which included $9 million of recoveries from third parties for environmental costs incurred in expense in prior periods. After giving consideration to the recoveries in 2011, year-over-year expenses related to environmental, remedial and investigatory activities decreased by $7.6 million. These charges related primarily to expected future investigatory and remedial activities associated with past manufacturing operations and…

[Operator Instructions] Our first question comes from Frank Mitsch at Wells Fargo.

This is Maggie on for Frank. You had mentioned there are 2 major outages in Q3. I was wondering if you could just tell us how long the outages will be for and how it will impact your operating rates for the quarter.

The outages are approximately a week at both of the locations. And if you looked at the quarter, including every other thing that's planned, the total capacity that will be unavailable to us for the quarter is approximately 4%.

The next question comes from Edward Yang in Oppenheimer. Edward H. Yang - Oppenheimer & Co. Inc., Research Division: Could you talk on your confidence in terms of getting the full $60 caustic soda price increase? And thinking more long-term price increases beyond that, I understand the co-product dynamics, but do you need higher operating rates in general to get additional price increases beyond that $60?

Let me just talk about the caustic price increase that's currently in the market in play right now. The operating rates that were announced for June for the industry came up significantly from the second quarter rates, which was a function really of major outages that occurred in May that were completed by other industry participants. But the overall operating rate for the industry is still in the mid-80s. That operating rate is driven by chlorine demand, which we said in our remarks, is weak and continues to be weak. The first thing that we've seen that we believe is a positive indicator for the caustic price increase occurring in the third quarter is we've seen both export prices and spot prices for caustic go up. And that's usually the process or the way it works, as you see movement in those prices first before you see movement in contract prices. I would say, though, that contract price movement, as it's being reported by industry magazines, is not consistent. Some parts of the country are showing caustic prices going up, some part of the $60 in July, some are seeing that delayed further into the quarter, into August. We're confident we're going to see caustic price increases in the quarter, which then will impact our financial performance in the fourth quarter. But I wouldn't sit here today and predict whether the number is $40 or $60 or what it is. But we believe we will see caustic pricing -- in our system, we're late on caustic shipments, and so the dynamics of serving the customers we serve indicate we should see caustic pricing movement. Edward H. Yang - Oppenheimer & Co. Inc., Research Division: John, you mentioned spot prices on caustic moving up, but they're still below contract prices. So how does that dynamic work? Does spot caustic prices have to get closer to contract prices and then go up as well to get that contract price moving?

I mean, as long as the trends of pricing are moving up and the gap gets close, that's usually, or at least historically, been an omen that says contract prices will start to move as well. Again, as we look at our system, we are late serving customers. And as we've tried to source caustic from other North American producers, we've been really unable to source significant amounts of caustic. So we believe caustic inventories, both at customer and producer locations, are low and believe that we'll see caustic pricing move up. Edward H. Yang - Oppenheimer & Co. Inc., Research Division: Okay. And maybe a question for Joe, there was another large industry merger that was announced, PPG and Georgia Gulf. Once that deal gets done, are there any other opportunities for further horizontal consolidation in the chlor-alkali industry? It’s already a fairly consolidated industry. And given that deal occurring, how does that impact or affect your thinking on dividends, stock buybacks, how much cash you want to hold on the balance sheet and maybe some additional M&A activity as well?

A long question. Let me give you quick couple answers. One is, Edward, as you know, we've consistently spoken about favorable industry dynamics in chlor-alkali. And one of the reasons we've talked about that is we've talked about the -- one of the elements of favorable industry dynamics is industry consolidation. And we believe that the PPG-Georgia Gulf industry consolidation, we see it as a positive move. We continue to believe that there's significant opportunities for us, for Olin, to strengthen and expand our core business, and we also believe that the K.A. Steel acquisition will open up several other avenues for us from an opportunity perspective. We want to affirm that, first and foremost, we don't believe that the acquisition of K.A. will have any impact on our dividend policy. And as you know, we're finishing up a pretty significant capital spending program with the conversion at Charleston, with the shutdown at Augusta, with the 3 HyPure Bleach plants and with Winchester. And that heavy capital spending will start to taper off as we get into 2013, which should position us to continue to be interested in bolt-on acquisitions within our core markets.

The next question comes from Christopher Butler of Sidoti & Company. Christopher W. Butler - Sidoti & Company, LLC: I was hoping you would be able to speak to the weak demand environment, give us a little bit more color there and what you're seeing thus far in July that gives you confidence that your utilization will get back up over that 80% threshold.

When we look at the markets that we serve, the 3 markets that were disproportionately worse in terms of weakened demand in the second half of the second quarter were the titanium dioxide business at a 20% reduction in market or in demand, the vinyls market with about a 10% reduction and urethane -- the urethanes market with a 25% reduction in demand. We have seen some marginal improvement on operating rates in the first part of the month of July. We have seen some recovery from outages and off-line, times that those customers were working through in the second quarter. It's early to tell from our perspective how much strength is in this improvement, but we have seen some marginal improvements so far. Christopher W. Butler - Sidoti & Company, LLC: And shifting gears to the Winchester business, with the unfortunate events in Colorado, can you speak to what the outcome you expect as far as ammunition sales moving into the hunting season for you? Is this something that will hurt you? Does it help you because of regulation? What are your thoughts there?

I don't think we would comment anything on the impact of Colorado because I'm not sure that we know that impact -- or it'd be appropriate for us to comment on that at this point. I think the second part, Chris, that you asked is, this is -- the third quarter is the traditional hunting season and we will see demand pick up. The other piece for us is the military piece, which was we were kind of in transition between one contract and the other contract in the second quarter. We'll see improvements from the military perspective in the third quarter. And more importantly, I'd just like to re-emphasize this, that we've got a huge part of the startup of Oxford behind us. And so we're looking -- we're sailing ahead with the ability to really start to pick up as we get into the fourth quarter and beyond, the cost savings that we had forecast down there. Christopher W. Butler - Sidoti & Company, LLC: And do you have any sense on the impact of the election? Is that continuing to help your demand at a growing pace, or is that ease off a little bit?

Well, I think what we mentioned is, is that our backlog, if you compare it June 2011 to June 2012, it's doubled. So I would -- I think there's a -- that political impact might have an impact on that.

Our next question comes from Herb Hardt at Monness. Herbert Hardt - Monness, Crespi, Hardt & Co., Inc., Research Division: Two questions actually. When will there be a result on this rebid of the Lake City contract?

The award announcement is expected sometime in the fourth quarter. Herbert Hardt - Monness, Crespi, Hardt & Co., Inc., Research Division: Okay. And secondly, what is the obligation on payout for SunBelt? How long does that go for?

The earnout was for 3 years, and we are in the middle of the second year performance against that earnout.

The next question comes from Don Carson at Susquehanna.

This is Bobby Geornas for Don Carson. You mentioned that you expect the full impact of the caustic price increase to be realized in the fourth quarter. Do you, in your projections, assume that chlorine stabilizes here, or do you believe that chlorine has further downside between now and year end?

We believe that -- and looking at the whole variety of people that are prognosticating prices, the consensus seems to be, and it's supported by our -- the review of our customer portfolio, the chlorine pricing has really stabilized. Index chlorine pricing came down in the first quarter. It's been stable since, and we really think there's not much movement either way in chlorine pricing for the balance of the year.

Okay. And just 2 questions related to the freight rate prices. Do you -- it seems that the year-over-year rate has almost moderated a little bit even though, obviously, you have seen some continued increase in the rates. Do you see that rate, on a year-over-year basis, accelerating between now and the year-end or, I guess, where do you see that moving? And just related to freight, the premium that you kept on your bleach, is that before or after considering the reduced freight -- the freight cost?

We don't expect to see much change in freight rates through the balance of the year. We believe, as we look at our system and the movement of product, we will go through to satisfy our customers that we don't expect much change in the balance of the year. The netback that -- when we talk about the premium over chlorine and caustic, we're talking about a netback compared to a netback, so the bleach premium includes the impact to freight.

Okay. And just to clarify the answer that you gave in terms of not expecting a change, are you talking about your overall freight cost that, that mix shift becomes more favorable would offset a potential increase? Or do you mean that you actually don't expect the freight rate per ton to increase or change?

We don't expect the freight -- the increases to return to double-digit kind of increases that we've seen historically.

The next question comes from Alex Yefremov, Bank of America.

First question. Could you help us understand the potential impact of Georgia Gulf and PPG combination on Olin? Do you expect any of the Olin's plants be impacted by that?

No.

Okay, great. And then a follow-up on Winchester comment that you made, that you expect $10 million to $15 million in savings be realized in 2013. Does that include lower relocation cost or not? And if not, what is your outlook for relocation cost on a year-over-year basis for next year?

It does not include lower relocation cost. We are continuing to relocate right through the end of 2015. What it represents is essentially lower wage, benefit costs and higher productivity associated with the Oxford compared to what it was when we're operating in East Alton.

So those relocation cost will not decline in '13 yet?

We don't believe so, no.

Okay. And a final question, if I may. What was your ECU netback in the second quarter and utilization rate?

$575 was the netback and 79% was the operating rate.

Next question comes from Dmitry Silversteyn at Longbow Research.

A couple of questions. First of all, I was curious on your guidance for the third quarter when you talked about seasonally weak chlorine markets. Is that just a reflection that you were sort of winding down the municipal order treatment market? Is that where the seasonal weakness come from, or is there something else to your comments?

No, it's weak. Weaker than we would expect in the third quarter.

Okay. But not seasonally? Because I thought I heard you say seasonally weak. That may have been...

If we did, we didn't mean to. It's the third quarter.

It's weak for a third quarter season.

Got it. Okay, got it. Okay. Thanks for clarifying that. And then secondly, you're going to be out of mercury production by the end of the year, converting one plant, shutting down the other. Given all the capacity that's going to come out, obviously, you don't know what the volumes are going to be like next year, but if you assume that volumes are flat, what would the utilization rates be next year compared to this year? Are you looking at kind of a 2% to 3% pickup in utilization rates at flat volumes?

I think it's actually a little bit more than that. It's more like 4%.

Okay. So your volumes sounds like even -- I'm sorry, your utilization rates even on a flat volume should be somewhere in the mid 80s, if you kind of look at this year, volumes that you're going to be delivering?

That's correct.

Okay. And then finally, you talked about the slowdown you saw at the second half of the quarter, particularly in the urethanes, I think you said vinyls and TiO2 markets, which were all down double digits. Have you seen any changes in those markets? Was that just an inventory correction that the customers have gone through, or was it sort of a rightsizing of inventory for a slow second half of the year expectation? Have you seen any change in the buying patterns of those customers so far in July?

We've seen some improvement, and anecdotally, we've heard that it was a combination of some inventory change and a combination of just weak demand in those market segments, both weak demand domestically in North America and weak demand from an export standpoint.

The next question comes from Richard O'Reilly at Revere Associates.

A couple of several quick questions. First, guidance for the third quarter, that does not exclude -- that excludes any impact on K.A. Steel, but there will be some expense related to the acquisition, you just haven't quantified it?

That's correct.

That's true.

Okay, fine. Second thing, more of an accounting question. You're going to have restructuring cost and that's usually a line item, but you also talked about start-up cost for the Chlor Alkali business, start-up cost with the new mercury cell. What point does -- is something a restructuring -- first a start-up, if that doesn't sound too simple of a question?

I think the way to look at that is the restructuring is a project that goes to the board and says, "We're going to incur these amount of expenses over a period of time." And it runs through that line. The start-up, because we technically go through start-ups regularly through the year, anytime we have a plant shutdown, there's a start-up that goes with that. It's -- we've called this out because these are obviously more significant start-ups because the plant -- the mercury cell plant's brand new and the bleach plant is brand new, but there's no provision in the accounting, as we understand, to count that separately in our financial statements. It would just go through cost of goods sold.

Okay, fine. Third question, I think you said, was the energy cost down year-over-year or up year-over-year, 5%?

Down.

Down.

Down. Okay, fine. And what was it -- and then sequentially, you think it's going to be higher in the third quarter?

Compared to the second quarter. That's correct.

Compared to the second quarter. Okay, fine. The recent rise on natural gas prices, how much does that hurt you or help you vis-a-vis the rest of the industry?

I think we would be the -- the industry has much more lever to natural gas than we are. The majority of the industry's concentrated in the Gulf Coast and they use natural gas to co-generate electricity. As we've said, we're about evenly exposed in our energy portfolio to gas, coal, nuclear and hydro, so our effect in rising natural gas prices is probably less than our competitors in the Gulf Coast.

The next question comes from Sauf Ali [ph] at Citi.

My question has been answered.

And our next question comes from Alex Yefremov at Bank of America.

Just a quick follow-up. Your Chlor Alkali earnings went up about $1 million despite lower volumes and pricing. Was it the electricity cost that helped you sequentially in the quarter?

It was the batch sales, the value-added products, bleach and HCl that went up.

Okay. And last follow-up, you will be starting up Henderson bleach plant in the fourth quarter. Could you help us understand the start-up cost for that plant?

We have -- the start-up cost for the bleach plants, and we have one in the third quarter and one in the fourth quarter, are approximately $2 million based on our best guess.

This concludes our question-and-answer session. I would like to turn the conference back over to Joseph Rupp for any closing remarks.

We want to thank you for joining us this morning, and we look forward to speaking with you in October when we announce the results of our third quarter. Thank you very much.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.