Good day everyone, and welcome to the Olin Corporation’s Second Quarter Earnings Conference Call. All participants will be in a listed-only mode. [Operator Instructions]. After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions]. Please also note that today’s event is being recorded. This time I’d like to turn the conference call over to Mr. Joseph Rupp, Chairman and CEO. Mr. Rupp, please go ahead.

Good morning and thanks for joining us today. With me this morning are John Fischer, our President and Chief Operating Officer; John McIntosh, Senior Vice President of Chemicals; Todd Slater, Vice President and Chief Financial Officer and Larry Kromidas, our Assistant Treasurer and Director of Investor Relations. Last night, we announced that net income from continuing operations in the second quarter of 2015 was $42.3 million or $0.54 per diluted share, which compares to $36.6 million, or $0.46 per diluted share, in the second quarter of 2014. Sales in the second quarter of 2015 were $535 million, compared to $570 million in the second quarter of 2014. Second quarter 2015 results included a pre-tax gain of $52.2 million associated with property damage and business interruption insurance recoveries resulting from June 2014 incident at one of our two chlor alkali production units in Becancour, Canada. Second quarter 2015 results also included pre-tax acquisition related financing and other costs of $22.1 million, increased legacy environmental costs of $3.9 million and pre-tax restructuring cost of $700,000. Earlier this year we said, we expected improved pricing on the ECU driven by improved demand for both chlorine and caustic soda molecules. While we have seen some improvement in chlorine prices, these have been offset by weaker cost caustic soda pricing and weaker than expected demand. As a result, we now expect chlor alkali segment earnings to decline in 2015 when compared 2014. We continue to forecast that earnings in the chemical distribution at Winchester segments made forecast to improve in 2015 when compared to 2014. Without giving consideration to the impact of the Dow acquisition in the fourth quarter, we now expect our full year adjusted EBITDA to be in the $330 million to $360 million range. We continue to focus significant effort preparing for…

Thank you Joe. Let me begin with our third quarter outlook. Third quarter 2015 net income is forecasted to be in the $0.05 to $0.10 per diluted share range which includes pretax acquisition related costs of approximately $17 million, financing expenses related to the Dow transaction of approximately $8 million. Chlor alkali third quarter earnings are expected to be lower than the third quarter of 2014 segment earnings primarily due to lower caustic soda volumes. Third quarter 2015 chemical distribution earnings are expected to be higher than the third quarter of 2014 due to improved caustic soda margin and increased earnings from Olin produced bleach, hydrochloric acid, and potassium hydroxide. In the Winchester business, third quarter 2015 earnings are expected to be comparable to third quarter 2014 levels. Third quarter 2015 results are also forecast to include approximately $6 million of higher legacy environmental cost compared to the third quarter of 2014. And finally third quarter 2015 earnings are expected to include restructuring charges of approximately $1 million. Turning to the individual businesses, beginning with chlor alkali. Overall chlor alkali industry demand in the first half of 2015 has not improved from 2014 levels as we had originally anticipated. This is reflected by the industry operating rates which have averaged 82% for the first half of 2015 compared to the 84% during the first half of 2014. Olin daily 3% operating rate during the first six months of 2015 has been comparable to the first six months of 2014. During 2015 there have been two chlorine price increases announced the last of which was a $40 per ton increase announced in May. As a result the chlorine price indices increased $35 per ton during the first half of 2015 which is the first increase in the chlorine price indices since…

Thanks John. First I would like to discuss the balance sheet in the 2015 cash flows. Cash and cash equivalents at June 30, 2015 totaled $232.4 million compared to $245.6 million at June 2014. During the first half of 2015 working capital employed increased by approximately $52 million, this is consistent with our normal pattern. Olin typically experienced a seasonal working capital growth during the first two quarters of the year of between $50 million and $100 million followed by decreases in the second half of the year. During the first half of 2014 working capital increase was approximately $93 million. Capital spending in the second quarter of 2015 was $27.8 million. Depreciation and amortization expense during the second quarter was $34.7 million. We have reduced our expectations for the full year 2015 capital spending and are now forecasting the full year capital spending will be in the $105 million to $115 million range. We continue to forecast the full year 2015 depreciation and amortization expense will be in the $140 million range. During the second quarter Olin repaid 1.1 million primarily for term loan debt that matured under the amortization schedule. During 2015 there will be $16.4 million of payments on maturing debt. Now turning to the income statement. The second quarter of 2015 resulted included a pretax gain of $52.2 million related to property damage and business interruption insurance recoveries resulting from the June 2014 incident at one of the two chlor alkali production units at our Becancour, Canada facility. A portion of insurance recovery related to reimbursement of direct expenses incurred by chlor alkali and was included in a segment results and totaled $9.9 million. Remainder of the gain was recognized as other operating income. The second quarter of 2015 include acquisition related cost of $10.5 million…

Ladies and gentlemen, at this time we’ll begin the question-and-answer session. [Operator Instructions] Our first question today comes from Frank Mitsch from Wells Fargo Securities. Please go ahead with your question.

John I am not sure if you're taking ideas for a new company name, but I think you can do worse than Nilo. A couple of questions on transaction, when do you think the timing, what’s your guesstimated timing of the shareholder vote? And did you guys have an estimate from the Dow side as to what that business generated in the second quarter in terms of EBITDA. I know the first quarter was tempered somewhat by a turnaround. So just curious if you guys had, what that second quarter number, EBITDA number was?

We do not have that number from them at this point in time that will come out when we revise full, Frank and our attention right now is we're anticipating the shareholder meeting in early to mid September.

Early to mid September and then it will be a couple of weeks after that in terms of when you could close the transaction is that correct?

That is correct. We are -- want to be as early in the fourth quarter as possible.

And Joe this is -- this transaction is obviously yet another of the consolidation that we’ve seen happening chlor alkali. And I am just curious from your perspective in terms of looking at the regulatory agencies et cetera. There has been some speculation about another possible move in the chlor alkali space in terms of a combination. Do you have a sense as to how favorably or not favorably the regulatory agencies might look at this. Is this something that we might be able to see some more consolidation take place even after you get together with Dow?

I think, actually Frank it depends upon who it is, but I think there is always, there is still significantly number of clorine, chlor alkali producers and I think that the proper guys put together, there is room for -- we always said one more, but there is room for another one that would be great.

And then lastly, since we last spoke from the last conference call, Mitsui did put its option and appears like you guys picked up their part of the JV at a reasonable multiple, any insights as to what happen there and what are your thoughts now that you have the entirety of that operation?

I am not totally sure exactly what happened because that was a deal between Dow and between Mitsui. I do know though that they had the opportunity to exercise it and chose to do it, from our perspective we -- while we hold Mitsui in high regard and hope to continue relationship in some way with them. We think having control of the most modern cost effective membrane facility in the world is an advantage to us.

Our next question comes from Jason Freuchtel from SunTrust. Please go ahead with your question.

I know you don’t have the an estimate for Dow’s EBITDA yet, but based on the data you've seen so far, do you know if there is also been better or worse, and you would have expected given the current demand and supply environment?

Obviously we can’t comment because we don’t know, what we would say is that we could comment on the first quarter results which in the S4 indicate where they ended up and they did have an outage which effected their first quarter and if you take that into account the first quarter is exactly where we’d expected them to be.

And do you have a sense of what the seasonality is for the earnings of the chlor alkali, chlorinated organics and epoxy businesses for Dow?

We actually think there is very little seasonality in their business compared to ours.

And can you clarify what amount of debt liabilities you are adding to your balance sheet from the transaction?

As of -- we’re going to -- we’re going to assume approximately with after the Matsui tag approximately $600 million of debt we’re also going to assume pension liabilities of approximately $400 million and on top of that we’re going to little over $2 billion of additional cash and will be required to closing to fund this transaction.

And I believe because of your refunded pension status there is a possibility you may not have to assume all of the $400 million is that still your understanding?

The total pension liabilities that we’re assuming domestically is $400 million there is another 130 some odd million, we have to assume internationally. We believe there is a better than 50% probability that the 400 million we’re assuming will require no funding on our part going forward. So we’re assuming $400 million of liability, we don't believe it will cost us anywhere near 400 million.

And lastly was the $52 million of insurance gains, was that included in our previous guidance?

No, it was not.

Our next question comes from Don Carson from Susquehanna Financial. Please go ahead with your question.

Just question on near-term. You see your fundamentals we've had pretty low operating rates which normally would help support cost to cure. So what is the issue with cost, is it weak domestic demand, weak export demand, or just more importantly the strong dollar or some combination of the three?

It's probably combination of the three Don. For us mostly as we look our -- and as we look at the other domestic players that’s demand driven, there is just not robust demand and we look just at the second quarter of our results we had significant weakness in several of the key segments that are major cost to consumer namely pulp and paper which is to some extent was driven really strong.

I think there overall market if you look at is flat, is really what is, and we’re still digesting some additional capacity that came on a year-ago, we’re not getting the growth that we need to get to absorb that.

And then post the Dow deal, what kind of shutdowns do you see in some of your stranded assets in order to reduce chlorine shipments by rail, thinking of up in Quebec as well as Macintosh? And then will that capacity be shut down permanently or you will just do some deep bottlenecks within the existing Gulf Coast system?

Don obviously we can't talk about that until we close, but after we close we’ll be able to layout where our plan of action is. I think the couple of things we would say as certainly the Gulf Coast is the lowest cost manufacturing location in the world, and there is opportunities for us, and we’ll make that clear after we get chance to close.

Our next question comes from Christopher Butler from Sidoti & Company. Please go ahead with your question.

If we look at some of the metrics out of the housing market after a tough spring, things seem to pick up into the summer. Could you talk about why we are not seeing that translate into chlorine demand for your third-quarter guidance?

When we look at our exposure to housing, we really have limited exposure to the vinyl segment today as Olin exists today. Probably our biggest exposure is urethanes. We do see some improvement in urethanes demand from our customers going into the third quarter and we've reflected some of that. They were off significantly in their second quarter consumption of chlorine based outages at their plants in the different companies networks. So we do reflect some improvement in that. And for us it will show up in urethanes and TIO2 predominantly.

Could you talk to us about the bleach and 2% growth year-over-year in your seasonally strongest quarter? Was that below expectation? Is there a reason for that?

The second quarter is not the strongest, the third quarter is. Typically July, August has encompassed that. I think we would say that the second quarter was really not as robust as we would have expected just based on overall weather.

Totally, we had a slow start, very slow start to bleach season and did not have what we had anticipated.

And the environmental cost picking up here in the second and then third quarter, is this a structural change or just a temporary increase to environmental costs?

We had a very low environmental cost last year. I think they were about $10 million compared to a run rate that was more or like 20 over prior several years and we exceeded that, we’re going to be closer to the normal run rate in 2015 than we were in 2014.

And just one more if you let me -- as the transaction nears to you and taking on significant debt with deal. Do you anticipate any change to your dividend policy post deal?

What I would say is the right answer for me to say is that the Board considers that every quarter based upon all the elements. But our -- what we like to say Chris is we’ve paid a dividend for 355 consecutive quarters. We understand the importance of it and we fully intend to continue it.

Our next question comes from Edlain Rodriguez from UBS. Please go ahead with your question.

Just one question. Just trying to pick your thoughts on how do you see the dynamics of chlor alkali changing in the medium-term? I mean like what needs to happen over the next year for the market to pick up? Because China is decelerating, so it doesn't look like the global economy is improving. So essentially like what needs to be -- what's going to be the key driver for improvement in the chlor alkali market over the next year?

Supply and demand has to be more in alignment and that’s what’s going to have to happen, hopefully there will be a little bit more demand and people will address the supply situation.

So you think it's going to be a combination of both, like somebody has to shut down capacity?

I do.

As the biggest player in industry now, obviously it's not going to be you because you have the lowest cost so -- okay, somebody else has to do it. Quick question on Winchester, it's performing extremely well, probably above normal, so what do you see a normalized EBITDA for that business? I think in the past you mentioned a number, so is it still near that? And is that going to be 2016 or 2017 where we get to that level?

The number we've given out in the past as we see Winchester being able to generate at least a $125 million of EBITDA in every period. I would think looking as we look at just where we are today, I think 2016 optimistically will be above that. I mean we’ve still got tailwinds coming from the cost reductions from Oxford and that’s going to be able to put us in a position to offset any kind of volume declines we experience.

I think that’s fair, we got 125 plus EBITDA.

Our next question comes from Arun Viswanathan from RBC Capital Markets. Please go ahead with your question.

I guess I just wanted to understand the statement you made earlier in the call regarding the S4. So you said that you will be issuing an updated statement proxy but did you also say that manufacturing cost savings would offset any ECU weakness or can you just clarify why you think that the pro forma projections are still valid?

What we talked about was the first quarter, if you look at the first quarter and took into account what the EBITDA that was reported and took into account the statement and the MD&A from Dow about the outage they had, if you took a look at their first quarter they would be right on our expectation what have been.

Right, no, but earlier, I guess, in your prepared remarks you noted that there is significant cost savings on the manufacturing side, but you would be issuing a new S4, so what would the new S4 I guess have as far as updated projections?

I think we’re combining a two statements, those cost savings on the side when we take over the S4, there is another S4 that has to be filed that will incorporate our second quarter and Dow's second quarter and that’s what we think we try to…

But we shouldn't expect any changes I guess to the future projections and fairness opinion and so on?

No.

And then you characterized Dow's chlorine products business as the lowest cost amongst your competitors. How would you characterize your own system and where do you see opportunities to bring those costs down?

Our system has some plants that are competitive and some plants that are not as competitive and what we have to take bear in mind is that while our plants are not in the Gulf Coast, they are regional and while they may have some manufacturing cost disadvantages often times they have logistics advantages. So what we have to do is look at and we are as you can imagine we know what we need to do and we’ll be in a position to be able to talk about that after we close.

And then I guess I also wanted to delve back into the caustic dynamics. Some of your competitors have had a tougher go of it, given their export position. Has that affected your own operations in your own netbacks and what do you see I guess in the next two to three quarters on the export side?

We don’t participate in the export market, Olin doesn’t. We do know that export caustic numbers through April were higher significantly higher net exports than they were through April of last year. Having said that, that's not a market we participate in. So it doesn't directly impact us.

Right, no, I'm aware that it doesn't directly impact you but obviously you do good to see some of it through your KA Steel business and it looks like domestic netbacks do ultimately get affected when exports are weak and supply builds back up here but are you seeing any of that on the domestic side as far as increased supply? And what you expect for the next two to three quarters on domestic supply?

The market is over supplied today, and we expect that it'll take some time for the supply-demand balances to come more in line. So we don't expect resolution for that problem in the very short-term. We do know that export caustic indices -- pricing indices continue to show weakness continue to go down mostly month-after-month. So that’s a really a reflection on the markets current supply demand imbalance.

And we did say we expect that our netback in the third quarter will be comparable to the second quarter reflecting better chlorine pricing and a little bit weaker caustic pricing.

But today to get back on what John talked about. If the index is in the -- those who forecast the industry they do not show any further decline in caustic -- domestic caustic pricing. That’s right for contract business.

That's fair. Last question if I may, you talked a lot about changing the footprint into derivative products. When all is said and done, do you expect your own merchant capacity on caustic to be much lower than where it is now or minorly lower or how would you characterize that?

Our total merchant capacity post the Dow transaction in absolute terms will go up. But it will go down significantly as a percentage of the total business.

Our next question comes from Herb Hardt from Monness. Please go ahead with your question.

Can you give us some sense of what your blended interest rate will be once you completed the transaction?

The information that we've disclosed in the S4 the average is 4%.

And environmental liabilities?

They are going to be unchanged from where we’re today as Olin.

Our next question comes from John Roberts from UBS. Please go ahead with your question.

Could the problem with caustic be high ethylene prices so that the integrated vinyl players look at caustic as a loss leader to move ethylene, so chlorine is just not as linked to caustic anymore like it used to be?

I think there is some validity to that. If you look historically, if you go back far enough, there was enough relationship between chlorine and caustic consumers that you had really ease a class of customers that were ECU customers that took both, a lot of things have happened in the years since that point in time, including regulatory change, including increases in global caustic trade, including the phenomenon you just mentioned that I think continue to decouple chlorine and caustic from each other. And think that decoupling is near complete now.

I was thinking chlorine used to be the dominant part of the vinyl molecule and so whether chlorine or vinyl went up or down it would affect caustic but now that chlorine is the minority value in the vinyl molecule, maybe those guys don't care where caustic goes anymore.

I think it's worth considering your premise, but I do think that they care a little bit about more about the caustic there is a floor in caustic that’s important to them especially those guys who invested in chlor alkali assets.

Our next question comes from Dmitry Silversteyn from Longbow Research. Please go ahead with your question.

All my questions have been answered but I would like to follow up on a couple of things. You mentioned $35 a ton increase in chlorine pricing in the first half of the year. What was the decline in caustic prices over the same time period?

Approximately $50 on contract price indices.

And are the spot pricing in the second quarter for caustic are down enough for you to believe that we're going to see down contract pricing in the second half of the year as well on caustic?

Forecast for contract pricing indices for the second half of the year is actually flat to slightly up.

So we should see a stabilization -- it sounds like in the second half of the year at these levels?

If we look at our system as just an indicator of what’s going to happen in the caustic market we've seen significant firming of demand across our system in both grades of caustic membrane and diaphragm in the last six weeks.

So we can look forward to hopefully better utilization rates it sounds like in the third quarter than we saw certainly in the first half of the year but even in the second quarter?

We would hope to be the case.

And one final question on distribution business. You talked about volumes for bleach and potassium hydroxide and hydrochloric acid being up, but then overall distribution volumes, I think you said, were down. So was it just the caustic shipments that were down that much and chlorine shipments that they offset these downstream product shipment improvements?

I think our comment was more specific, we just said caustic soda shipments were down, the others were all up. We didn’t drive an overall volume comparison.

So the decline in distribution revenues that on a year-over-year basis, is that a function of just lower pricing in hydrochloric acid and caustic?

That’s exactly right.

And are you seeing hydrochloric acid pricing stabilizing? I know a big market for that was fracking but that's been sort of a dead market for long enough, I would think, that price reactions associated with that should've been washed out by now. Is there anything going on with hydrochloric acid pricing that makes you more confident than better performance in the second half of the year, both in your chlor alkali business and the distribution business?

I think the pricing on the hydrochloric acid is more or less reach to bottom but it's half of what it was three quarters ago and our volumes as we said in the second quarter were off and we think volumes and price right now were sort of stable, but low.

Our next question comes from Alex Yefremov from Nomura. Please go ahead with your question.

Could you tell us what is embedded in your second half 2015 guidance for chlor alkali's segment in terms of caustic soda price? Is it consistent with the index forecast that is out there? That caustic will stabilize or do you have a more pessimistic forecast?

The guidance that we’ve given for Q3 is that the ECU will be flat relative to Q2 and we talked about where we think the indices are and that’s reflected in the guidance going forward. And remember some of the chlorine and caustic price moves in the indices lag in our system. So the declines in Q2 on caustic were usually reflected in Q3 and the reverse is true -- the increases we saw in chlorine, we said we expect to get some benefit in chlorine in Q3.

Makes sense. So is all of Q3 price benefit in chlorine a function of prior price increases? And if so, do you expect any more additional chlorine price hikes?

Typically at this time of the year with some of the seasonal demands for chlorine with not much room in front of them for the balance of the year, it would be a typical to see a chlorine price increase. But there is the industry is facing margin lots across on the ECU and we continue to explore ways to try to improve or add back to the margin we’ve lost because of the current pricing environment.

And a final question if I may, have you been able to assess the reliability history of Dow's chlor alkali assets that you're buying and how does that history compare to Olin's system and also to the industry in general?

What I would say is that we have been extremely impressed with the reliability, the engineering and state of all the assets that Dow -- we're buying from Dow. So we believe that we are buying into a very reliable system.

And our next question is a follow-up from Jason Freuchtel from SunTrust. Please go ahead with your follow-up.

In addition to seeing some firming demand in caustic in your system, did you indicate that there could be a few planned outages in the industry that could impact caustic supply?

We don’t have any outages scheduled in our system for the third quarter and I am not aware of any major outages scheduled in the third quarter around the industry, typically in the fourth quarter there are outages scheduled and we do have some outages scheduled in the fourth quarter.

I know you will be expanding in the 16 new derivative products but do you have an estimate for what the percentage of overlap and Dow's chlor alkali EBITDA would be with your legacy chlor alkali EBITDA?

I am not sure, I understand the question.

I guess just how much overlap there is in the two end markets between your business and Dow's in the earnings streams?

On anything that’s chlorine related there is no overlap at all. And they sell caustic and we sell caustic and that’s about the over laps.

And our next question is also a follow-up from Alex Yefremov from Nomura.

Just wanted to make sure, did I hear that correctly that you expect caustic soda volumes to decline year-over-year in the third quarter and if that is correct what is driving that it looks like you expect higher utilization on the year-over-year basis?

I don't remember, caustic demand in second quarter to third quarter I believe is relatively flat.

I guess I was thinking more year-over-year. Is caustic soda demand also flat or up or is it down? If it's not part of your prepared remarks then I apologize.

For us it's flat for the industry it's…

Ladies and gentlemen at this time I'm showing no additional questions. This will conclude our question-and-answer session. I would like to turn the conference call back over to Mr. Ruppp for any closing remarks.

I want to thank you for joining us today. And we look forward to talking to you in October when we report our third quarter and hopefully successfully report on the closing of our Dow transaction. Thank you.

Ladies and gentlemen that does conclude today's conference call. We do thank you for attending. You may now disconnect your telephone lines.