Good morning, and welcome to the Olin Corporation Fourth Quarter Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Joseph Rupp, Chairman and CEO. Please go ahead.

Good morning, thanks for joining us today. With me this morning are John Fischer, President and Chief Operating Officer; John McIntosh, Executive Vice President and President of Chemicals & Ammunition; Todd Slater, Vice President and Chief Financial Officer; and Larry Kromidas, our Assistant Treasurer and Director of Investor Relations. Last night, we announced that adjusted EBITDA in the fourth quarter of 2015 was $207 million. Adjusted EBITDA reflects depreciation and amortization expense of $124 million, acquisition related cost of $84.6 million and $24 million of fair value adjustment related to the purchase accounting for inventory. The fourth quarter loss from continuing operations was $59.3 million or $0.37 per diluted share. The fourth quarter loss per share includes an effective income tax rate of approximately 28%, which reflects transaction costs that are not deductible for income tax purposes. Sales in the fourth quarter of 2015 were approximately $1.3 billion. As we entered 2016, we forecast adjusted EBITDA in the range of $915 million to $985 million. Our new less cyclical portfolio includes the benefits of our long-term contracts with Dow, improved year-over-year results in epoxy in Winchester and the realization of cost synergies. Improvement in chlor-alkali product's pricing from current levels represents an upside to our 2016 forecast. To put our 2016 full year EBITDA guidance into perspective, I'll compare it to the pro forma 2014 EBITDA that was included in our Form S-4 that was filed as a part of our merger agreement. That EBITDA was $962 million. Looking at 2016, there is four significant changes that reduced expected EBITDA. In order of significance these are lower cost caustic soda prices, lower EDC prices, weaker chlorinated organic sales especially for refrigerants and weaker hydrochloric acid prices and volumes. As we look at 2016, these negatives are forecast to be offset…

Thank you, Joe. First I like to discuss our first quarter 2016 guidance and provide a description of the key changes from the actual results we experienced in the fourth quarter of 2015. At the business level we expect Winchesters first quarter 2016 earnings to improve compared to both the fourth quarter of 2015 and the first quarter of 2015. We expect earnings in the chlor-alkali products and vinyl segment to improve in the first quarter 2016 compared to the fourth quarter of 2015 and first quarter 2016 adjusted EBITDA in the epoxy business is forecast to be similar to the fourth quarter of 2015. These improved operating results will be offset by two factors. During the first quarter of 2016 cost associated with planned maintenance outages are forecast to be approximately $20 million higher than fourth quarter 2015. First quarter 2016 planned maintenance outage spending is expected to represent approximately 35% of the full-year 2016 spending and we also forecast that 65% to 70% of the total 2016 spending will occur in the first two quarters of 2016. This spending pattern is typical of the acquired Gulf Coast plants and the need to coordinate outages with our large pipeline customer Dow. First quarter 2016 corporate and other expenses are forecast to increased approximately $15 million compared to the fourth quarter 2015 level and be consistent with our full-year forecasted expense of $65 million to $85 million. The sequential increase reflects expenses and legal fees associated with the legacy Olin environmental and litigation liabilities of approximately $5 million, a lower level of pension income of approximately $2 million and the combination of employee compensation expense and contracts service expenses of approximately $8 million. These reflect the continued build-out of Olin's corporate office capabilities to service the new larger Company. These…

Thanks John. First I'd like to discuss the balance sheet and the 2015 cash flow. We ended the year with cash and cash equivalents totaling $392 million and total debt of approximately $3.9 billion. During 2015, working capital employed decrease by proximally $29.7 million. The decrease primarily reflects the change in accounts receivable and accounts payable for the acquired businesses, principally, representing converting Dow to a third-party transaction after the acquisition. Capital spending in the fourth quarter of 2015 was $51.2 million and for the full year was $130.9 million. Depreciation and amortization expense during the fourth quarter was $124 million and for the full year it was $228.9 million. Fourth quarter depreciation and amortization expense for the acquired businesses was approximately $188 million including preliminary acquisitions step up depreciation and amortization of approximately $35 million. In 2016, we forecast that capital spending will be in the $300 million to $340 million range, which includes 60 million of synergy related capital spending. We continue to believe that the annual maintenance level of capital spending for the new Olin will be in the $225 million to $275 million range. Depreciation and amortization expense in 2016 is forecast to be in the $490 million to $500 million range, including step-up acquisition depreciation and amortization expense of approximately $145 million. In conjunction with the acquisition, we should total of $2.2 billion of variable rate term-loan debt and a total of $1.2 billion in fixed rate eight and ten year bonds. The term-loans are repayable at any time without penalty. A portion of the proceeds of the new term-loans were used to repay approximately $569 million of acquired debt and to refinance 146 million of legacy term-loan debt. Olin also repaid $15 million of maturing debt in 2015. We have approximately 60% variable rate…

We will now begin the question-and-answer session [Operator Instructions] The first question comes from Frank Mitsch of Wells Fargo Securities. Please go ahead.

Hey, good morning gentlemen. Joe, nice start to the new Olin, you guys offered guidance Q4 of I think $185 million to $205 million in terms of EBITDA and you came in at 2007. Just curious as to what went right as you got into the first quarter under the new Olin?

I think a lot of things went right. Frank. I think we got results position from a synergy perspective, more importantly Winchester performed. We were able to get some pricing and caustic as we had talked about and our epoxy business continues to do better than it had prior to the acquisition. So we are pleased those are some of the positives.

All right terrific. And then -- so just after four months of operating this new Company you raised your synergy target by $50 million. Can you talk about the cadence that we should be thinking about in terms of the realization of that 250? And I do understand that that is a floor not a ceiling in terms of synergies.

That's correct. John Fischer will give you the cadence.

We expect to realize between $40 million of $60 million of synergies in 2016 and we expect to exit 2016 with a run rate of $70 million a year. So that would be the starting point for 2017. There are several projects obviously that take time and come on-stream and what we said was we expect to be at the 250 run rate by the beginning of 2019.

Okay. All right. So do we want to streamline that John or….

I think that's as good an estimate as anything at this point.

All right traffic. Thanks so much and look forward to seeing you guys next week.

Thank you, Frank.

The next question comes from Jason Freuchtel of SunTrust. Please go ahead.

Hey good morning.

Good morning.

What was your expectation for 2016 turnaround cost when you provided EBITDA bridge to potential 2016 EBITDA last quarter?

Our total expected turnaround cost for 2016 are in line with what our expectations were. What's a little bit different is the timing, more heavily loaded in the first half of the year.

Which is a little different than what we experienced as Olin, driven by the interaction between Dow and Olin, so we have to coordinate those with the Dow brands.

Okay. Do have a view on what chlor-alkali operating rates were in China last quarter? And maybe where they are today?

I think they are running in the low 74% somewhere in that range in the low 70s.

And they were -- towards the end of the year they were even lower, 71% in the last quarter.

Okay. So they are kind of trending down. Do you expect that to result in an increase in caustic soda exports in the near-term? And is that sustainable maybe in the first half of the year?

Jason, the exports from China and the United States are almost negligible. I think there were less around 70,000 tons last year total into North America. So well actually what happens is, if their operating rates would stay low, what we’d see is pricing power on the caustic side, and I think the spot prices out of China right now have bumped just a little bit, not a lot, but little bit which doesn't hurt us at all.

Okay. Will that potentially increase maybe a poll for export demand from maybe other regions that you hadn't previously exported to, which is Australia?

I don't think that's likely. I mean U.S. exports were at another record high in 2015 with net exports being 2 million plus tons. So I would say that if Chinese operating rates stay that low, than their volume available for export is going to be reduced. And there won't necessarily be new places in the Far-East that are exported to, but there will be increased quantities exported out of North America.

Okay. Great. And I think you mentioned that the epoxy business should improve on some key initiatives that are already in place. Can you expand on what those initiatives are, and what type of earnings contribution they could have on the business?

I would just say that they represent business that has been booked to be delivered in 2016. And all we've said about epoxy as is we expected to improve year-over-year which would be that should improve -- it has been improving as we talked. And we expected to improve throughout the year.

Okay. Great. Thank you.

Thank you.

The next question comes from Don Carson of Susquehanna Financial. Please go ahead.

Thank you. Just wonder what your supply/demand outlook for chlor-alkali is in the U.S. is this year, you indicated you will be at the high end of your closures of 450,000 tons that you announce previously, but we've seen some announced alumina closures as well. So how do you balance those two factors out? And were the alumina closures one of the factors that caused you to go to the high end of your range? And could you go even higher?

No. There really was no connection there. We did our -- are doing our assessment based on what makes sense for our network of plants. There have been alumina closures announced the caustic -- potential caustic reduction because of that depending upon which schedule you assumed to be correct for 2016 could be in the 225,000 tons of caustic. Our assumption is with the strength of the export market that a fair amount of that will just be exported out of the U.S. I think another thing to bear in mind that it's lost sometimes in the analysis is that exports out of Europe continue to decrease, 2015 was the lowest year in the last three years. A lot of that's being driven by capacity rationalization associated with marketing conversions over there. There is going to be in the not-too-distant future an opportunity for the U.S. to export into Europe as well as to the East. So the alumina announcements are not a particular concern to us at this point.

And then in your adjusted EBITDA guidance this year what is the caustic price assumption? I mean, you mentioned the indices were up 43 in Q4, they’re down 10 in January. Are you sort of taking January prices and assuming that holds for the year?

That's exactly what we're doing Don.

Okay. And then final question, I noticed a nice uptick in ammunition sales courtesy of increased democrat demagogue gun-control. What's the Winchester commercial backlog at year-end? And are you running into supply issues in terms of being able to satisfy all the demand out there?

The backlog was about $205 million and at the moment we are not seeing any supply issues at this point.

Okay. Okay. Thank you.

The next question comes from Aleksey Yefremov of Nomura Securities. Please go ahead.

Good morning. Thank you. Could you provide your assessment of why caustic soda prices went down in January? And why it wouldn't go down more in February and March if that's your view?

Our view is what happened at the end of the year is the vinyls sector ran harder than we had originally anticipated. So as a consequence what happened is there was more caustic that was available and put the brakes on what the momentum we had from a pricing perspective. I think as we get into more normalized first quarter, I think you'll see demand pick-up enough that we would like to think that we will be in a more stable situation in Q1.

Thank you. And turning to epoxies one of your competitors could potentially shutdown epichlorohydrin capacity. If that happens, how do you see it impacting your own Epi or epoxy business?

I think as a general rule we don't comment on that. I think the only thing we would say is we believe that we have the low cost assets for Epi in North America.

Thank you very much.

You're welcome. Operator The next question comes from John Roberts of UBS. Please go ahead.

Good morning guys. Nice start.

Hi, John. Thank you.

You picked up as a mention some of the doubt pension liabilities. Are you still immunized with those additional liabilities or is there an interest-rate sensitivity to the pension number that we are going to have to watch share?

The place we were before we acquired those assets we were well over funded for purposes, so those fit into that over funding that we had, so we are still in the place where we don't expect to have to make cash contributions. Other than we did acquire some overseas liabilities and those cash contributions are in the $1 million to $2 million per year range.

I wasn’t asking a quick cash flow question I was asking interest-rate sensitivity to the earnings effect.

Not material, John.

Okay. And then you made some comments about international. I know Winchester is all domestic, but for the chemical portfolio now what percentage of sales is international?

About 20% of Olin in total is international.

Okay.

And that would all be in the chemical or essentially all in the chemical business.

Yes.

Okay. Thank you.

You're welcome.

The next question comes from Arun Viswanathan of RBC Capital Markets. Please go ahead.

Thanks guys. Good morning. I guess just to clarify, so would it be safe to assume that your guidance includes $33 of pricing for 2016 on caustic?

Could you say the question again? I'm sorry.

You said that the indexes on caustic were up $43 in Q4 and then down $10 in January. So would it be safe to assume that your 95 range includes $33 per ton of realize caustic increases?

I think that usually a producer who is selling on index gets yields of between 60% and 70% and an index change.

Okay. And then I guess – are you saying that there is not going to be a decline in February and March and if there were, would that lead you to the low-end of your guidance? Or how should we look at that?

We are not expecting -- we think that volumes will be enough that we will be able to maintain pricing. Obviously that’s something that’s way beyond our control. If we start to see pricing decline, we wouldn't see it in the first quarter; we would start to see it in the second or third quarter.

The other thing that we did say is that over the course of the year, we expect our realizations to improve as we optimize the customer mix across the legacy Olin chlor-alkali, the legacy Olin distribution and the Dow assets. So that has the potential for us to keep us sort of where we are even if there is a decline.

Okay. And then – so then just to dig deeper here, are you – maybe can help us understand what would get you to the low-end of your guidance range and you said you had tremendous confidence in those numbers. So maybe you can just help us understand what drives that?

I would say two things. If we did see caustic pricing drop off another $20 to $40 and if we saw EDC pricing stay where it is today, that would take us to the low end.

So caustic down 20 to 40 and then EDC flat I guess what you are saying.

Yes.

Okay.

Flat with Q4.

Okay, got it. And then on the synergy side you had given an earlier target that you have 80 million in footprint rationalization. Is that still the target? And then if you are doing 40 million to 60 million in 2016, should we expect more footprint rationalization in 2017?

I think I would like to differ the answer to that until next week when we intend to provide more guidance around specific buckets of synergies.

Okay and then just lastly on Winchester, do you see upside I guess in 2016 driven from where you were in Q4?

What we said was we expect Winchester’s year-over-year results 2016 versus 2015 to be improved.

Got it. Thank you.

The next question comes from Herb Hardt of Monness, Crespi, Hardt. Please go ahead.

Hey Herb.

Good morning. Can you give us an idea of what the -- what percent of your capacity was in bleach at year-end and what it will be by the end of this year?

About 4% probably.

Yeah, Herb I would like to just do the math and get back to on that. That's not a number we have on the tip of our fingertips.

Okay. Thank you.

The next question comes from Edlain Rodriguez of UBS. Please go ahead.

Thank you. Good morning guys. Just one quick question in terms of capacity closures. I mean, clearly you are doing your part. Do think that's enough for the industry or is it time for like all the players to maybe join you in doing the same for the industry to get better?

I think what we said is that the industry has capacity additions. It began in 2013 and that came in on stream in 2014. That got us in an imbalanced and ultimately what has to happen is since there is not enough demand, we're going to have to get rebalanced. And as you mentioned, I think we're doing the leadership role in taking capacity out, to begin the process. I think there is high-cost capacity throughout North America that could be addressed. And hopefully will be.

Yeah. That makes sense. Thank you much.

Welcome.

The next question comes from Roger Spitz of Bank of America Merrill Lynch. Please go ahead.

Thank you and good morning.

Good morning.

First can you -- would you provide Dow’s DCP sales and EBITDA for the third quarter?

We don't have that information. We're not trying to be smart Alex, but we don't have it. It's through Dow. It means, once the deal – we just don't have it.

Okay. In terms of the epoxy, can you speak about how epoxy – you don't have to give the numbers, I guess, you don't have some of the numbers, but how the epoxy EBITDA probably moved over the four quarters of 2015 and what were the key drivers moving the epoxy?

The epoxy business has essentially been in a recovery mode over the past two years. And the majority of the improvement that has been seen has occurred as market share that was lost has been regained.

Taking advantage of the cost structure that we have.

Okay. Okay. We've had heard from some others that epoxies in Europe have benefited from the weak euro, which was one key driver and then raw materials following is another key driver. Have you seen that in your epoxy business either of those or other drivers?

In 2015 the epoxy business benefited from the decline in essentially benzene and propylene. That provided some tailwinds to the earnings of epoxy. I would also offer, we don't expect that to repeat itself in 2016 and in spite of that we expect to improve.

Okay. And then lastly, on HCL, can you speak about how much -- what is the current uplift in HCL over chlorine, and you mentioned that HCL EBITDA in 2015 was down -- EBITDA was 15 million year-over-year. When you make that reference are you transferring the chlorine at market or cost?

Well, essentially what we are talking about is what we sell HCL for compared to what we sell it unit of chlorine for.

Right.

So, we had a period of time in 2014 where HCL prices were up around $400 a ton, at the same time merchant chlorine was about $200 a ton. HCL has drop back to where at some places they are equivalent.

Okay. And I'd take the key driver on all this is fracking, is that right?

That's what the driver in the decline in HCL, as we've talked about in the past, there's a broad range that HCL goes into food, pharma are two big pieces in other industrial applications. But it's -- the driver right now that's cut back the demand for HCL has really been driven by oil and gas, for everybody.

Thank you very much.

You're welcome.

Thank you very much.

The next question comes from Jason Freuchtel of SunTrust. Please go ahead.

Hi, yes. Just had a follow-up on the rationalization comment that's taking place in the industry. Did you say there is already capacity coming out of Europe in 2016 for the mercury cell regulation and do you have an updated view on how much total capacity could come out of Europe to comply with that regulation?

I think close to 0.5 million tons of capacity that's been announced so its 277,000 tons that was announced up in Great Britain and on January, 20th, I think its 225,000 tons was….

In Spain -- in Spain. That's been announced that's not going -- its going to go down and not be replaced.

In the EU, the total capacity for Chlor-Alkali is a little over 12 million tons. About 2.75 tons of that was Mercury when the Sunset date of 2017 was established. The expectation is that out of that 2.7 million – 2.75 million tons of mercury cell capacity that somewhere between 1.25 million and 1.5 million tons of that will not be reinvested and will come out. And so far, we are seeing announced closures that fit that kind of an end result scenario.

Okay. And how long after an announcement would it typically take for – closer to take place and then I guess also --

Spain is occurring this year in 2016. And I'm not quite sure exactly of Olin Corp [ph] is going down. I think it’s going down this year as well.

Okay. And I am assuming it’s going to take some time for the capacity that decides to convert to take place. How long a lead time would you expect to know how much capacity is going to convert?

A typical project would be something around two years depending upon how much infrastructure out of sight was reusable, so two years or less. So we are getting to the point where the announcements of capacity that is going to be reinvested are going to have to be made or the projects will be done in time to meet the sunset date.

Okay. Great, thank you.

You're welcome.

The next question comes from Dmitry Silversteyn of Longbow Research. Please go ahead.

Good morning. This is Matts Slowinski for Dmitry. I was wondering if you could talk about pricing dynamics in the Winchester segment. It says here that it was kind of offset by lower pricing and that seems a bit counterintuitive given the demand trend that we are seeing.

The other key factor when you look at ammunition pricing is what has happened to the underlying…

Commodities.

Commodities of lead and copper. And copper as you know is trading plus or minus $2 which is actually down from something over $4 a couple of years ago. So there are select calibers where there is capacity, where there is an ability to move it if you lower the price.

Okay. All right. Perfect that's all the questions I have. Thank you.

You're welcome.

Next we have a follow-up from Arun Viswanathan of RBC Capital Markets. Please go ahead.

Thanks guys. So, I just wanted again revisit this guidance -- discussion. So, on the third quarter call, you sounded -- you said New Olin can generate $1 billion of annual adjusted EBITDA without synergies, now you are guiding to $915 million to $985 million, with this $40 million to $60 million in synergies. So what are the kind of the changes that you've witnessed in the last three months that changed your view on that? Was it mainly the maintenance or what else is going on in pricing and so on?

The maintenance is purely a timing issue as it relates to how much we expect to incur in Q1 versus later in the year. The two issues we talked about earlier are the two issues.

Caustic Plus I.

At the end of October when we last spoke when we gave out that guidance we were more bullish is it related to the caustic pricing and we have assumed maybe a more conservative stance on that. And we also saw continuing weakening of EDC prices as we move through the fourth quarter and we have a lesser -- lower outlook for that as we look at 2016 then we did that. And those are the two big drivers.

And the EDC pricing is that mainly just ethylene driven or was it something else that's driving that?

We are simply looking at what is the price that which EDC is selling in the market. And you know just as a reference if you look at IHF, they would tell you in 2014 EDC for the full year average $0.16. Right now, we're sitting between $0.09 and $0.10.

Got it. Okay. Thank you.

All right.

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

We want to thank you for joining us today and we will look forward to reporting our results at the end of April. Thank you.