Good morning and welcome to the Olin Corporation's Fourth Quarter 2016 Earnings Conference Call. Please note this event is being recorded. I would now like to turn the conference over to Larry Kromidas, Director of Investor Relations. Please go ahead.

Thank you, Kate, and good morning, everyone. Before we begin, I want to remind everyone that this presentation along with the associated slides and the question-and-answer session following our prepared remarks will include statements regarding estimates of future performance. Please note that these are forward-looking statements and that results could differ materially from those projected. Some of those factors that could cause actual results to differ are described, without limitations, in the Risk Factors section of our most recent 10-K and in our fourth quarter earnings press release. Also, please note that during today's call we will reference quarter-over-quarter comparisons, as the 2015 fourth quarter results do not reflect the full quarter contribution from the chlorine products businesses that we acquired from Dow. Beginning next quarter, we will revert to traditional year-over-year comparisons. Finally, a copy of today's transcript and slides will be available on our website in the Investors section under Calendar of Events. The earnings press release and other financial data and information are available under Press Releases. Now, I'd like to turn the call over to John Fischer, Olin's President and Chief Executive Officer. John?

Good morning and thank you for joining us today. In addition to Larry, with me this morning are Pat Dawson, Executive Vice President and President of Epoxy; John McIntosh, Executive Vice President, Chemicals and Ammunition; Jim Varilek, Executive Vice President and President, Chlor Alkali Products and Vinyls; and Todd Slater, Vice President and Chief Financial Officer. I will begin with a few key highlights and then discuss our adjusted EBITDA forecast for 2017, before providing some detail on each of the businesses. Todd will then provide an update on our cash flow projections for the year and some full year modeling forecast assumptions, before we open the call to questions. On slide 3, we summarize our fourth quarter and full year 2016 results as well as our full year 2017 expectations. Last night, we announced fourth quarter 2016 adjusted EBITDA of $221.7 million which includes depreciation and amortization expense of $136.1 million, restructuring charges of $6.7 million and acquisition-related integration costs of $9.2 million. The fourth quarter saw better-than-expected results in the Chlor Alkali Products and Vinyls segment which more than offset weaker than expected results in the Epoxy segment. The favorable results in Chlor Alkali Products and Vinyls were primarily the result of favorable cost performance, while the shortfall in Epoxy results reflects softer demand from coatings customers. Winchester's fourth quarter 2016 segment earnings exceeded the 2015 earnings due to higher sales volumes and lower operating costs. The full year 2016 adjusted EBITDA of $838.5 million included some significant accomplishments. Olin realized approximately $75 million of cost-related synergies, and these contributed to our favorable fourth quarter cost performance. In the Chlor Alkali Products and Vinyls segment, we experienced a significant improvement in caustic soda pricing beginning mid-year, and we achieved a record volume of bleach sales. EBITDA in the…

Thanks, John. Let's turn to our 2017 cash flow forecast which is on slide 11. We expect to generate $295 million of free cash flow before dividend payment and after our $210 million ethylene investment we expect to make mid-year 2017. Our expectation is that by the end of 2017, a combination of debt reduction and EBITDA growth will reduce the net debt to EBITDA leverage ratio to the range of 3 to 3.2 times. Starting with the midpoint of our full year adjusted EBITDA guidance of $1 billion on the far left of the waterfall chart, we add back $10 million in taxes as we expect a tax refund in 2017. This reflects expected benefits from the utilization of net operating loss carryforwards. Column three shows capital spending and investments we expect to make in 2017. The $535 million includes the midpoint of our current forecast for capital spending of $325 million and the $210 million investment for 20 years of additional ethylene at producer economics that will be realized when the Dow Chemical Company Texas-9 cracker is completed. Last year, Olin entered into a program to accelerate the collection of receivables which created a permanent working capital reduction of $126 million in 2016. We expect that we can expand this program in 2017 and realize an additional $50 million reduction in receivables. This, when combined with an inventory reduction in Winchester, will generate $75 million cash flow from working capital in 2017. In the next column, one-time items include integration and cash restructuring costs of approximately $50 million. The next column represents an estimate of interest expense. We have approximately 60% variable rate debt in our debt profile, and we're forecasting 2017 interest rates will be higher than those we experienced in 2016. In the far right column,…

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

Good morning, gentlemen and nice end to the year.

Thank you.

John as we sit here today on February 1, where is your caustic soda pricing that you're realizing relative to the Q4 average?

It's higher.

Bigger than a bread box?

I think I'd prefer to answer that question in terms of comparing where we are right now versus where we were in 2017. We are about $30 higher right now than we were on the full year of 2017 in terms of domestic, and we're about a $100 higher which gives you about a $40 to $45 year-over-year improvement, and $30 for every $10 million that tells you what the benefit is.

All right. Terrific. And, John, as your guidance of $1 billion plus or minus 5%, that $1 billion is predicated on caustic staying similar to where it is today, or are you baking in future price increases into that $1 billion guidance?

The only thing that's in that guidance is what may come out of – our assumption of what comes out of the $40 per ton increase that was announced effective January 1.

All right. Terrific. And then, obviously, a little bit disappointing on the Epoxy front, and you did talk about benzene pricing being a headwind here in Q1. I know that you and Hexion are out there with a nickel increase – price increase announcement on the Epoxy side. What has been the receptivity to that price increase announcement? And is that enough to more than offset what you're seeing on the benzene and propylene front?

Yeah. Frank, this is Pat Dawson. We do see traction out there on pricing with the pretty significant increase since end of December to the beginning of January on benzene, especially. So I would say we're getting traction, and I would – and as we said earlier, a lot of our upstream business is tied, our pricing is on the hydrocarbon indexes, and we can offset, we think, 80% of that. But we are slightly behind on the cost curve and working to offset that with additional price increases.

All right. That's helpful. Thank you, Pat. Thank you, gentlemen.

Thank you.

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

Good morning. Thank you. Congrats on a good quarter. I guess, I just wanted to understand your comment earlier. You did say that there is potential for some further increases in 2017. Maybe you can just elaborate on your thinking there, what would drive that? You've obviously had fair amount of price (25:58) over the last couple of quarters. I know that caustic soda contract price was flat in January and it looks like it's probably going to be flat for Q1. So, how do you see the cadence of pricing kind of going through the year?

Arun, this is John McIntosh. I would just make a couple of comments on the markets. John talked about what guidance – what numbers are reflected in our guidance. But if you look out further, there are several market sources, third parties, that publish information about market direction and I'll just provide some information from IHS, that published their report yesterday – January 31. They pointed to several factors which to them – which are consistent with what we're seeing and which in total reflect, we believe, a continuing positive picture for caustic pricing. They talk about the global supply-demand balance for caustic soda being balanced to tight, driven by a lot of the things we've talked about; capacity changes in Europe, reduced output from China. But they've talked about that being a global market condition. They also reported that North American domestic demand is currently running and is forecast to continue through at least the first quarter at levels that look more like yearly average levels instead of January numbers. So, in North America, we were seeing very strong supply-demand situations relative to what we would typically see in a January or even in a first quarter. They also are reporting strong export demand out of North America. 2016 was a net export level record. They expect that to grow in 2017, potentially setting another record. So when we look at our current book of business and we compare with what other people are saying the markets look like globally, we find reason to believe the caustic market fundamentals continue strong.

Thanks. That's helpful. And then on your own contracts then, one of the issues last year was kind of a lag in realizing some of the prices and also some of the discounting, you noted 30% to 70%. So first off, I guess, will you be cycling through lot of the price increases from last year in your legacy contracts? And if so, are you again inking kind of multi-year agreements? Or and then secondly, the 30% to 70%, is that still a valid assumption on what you realized versus the index?

Arun, this is Jim Varilek. As far as the contract, there will be continued movement in the pricing that is lagged. We'll see that in the first quarter. And, yes, we continue to work on all of the contracts and to improve each one of those as we – as they come up.

And then, can you just also give us an update on the natural gas side and your costs overall? Are you seeing any pressure from higher nat gas prices and are you hedged? Thanks.

John, you want to answer that?

Yeah. Sure. Natural gas, as you know, is up year-over-year compared to this time last year. You look at Henry Hub prices were around $2 an MMBtu. And today, it was $3.20 in the first – so far in the first quarter. You're looking at three – anywhere from $3.30 to $3.40 on average. As we've said before on hedging, we are – we do have a hedging program and that provides us a risk mitigation against gas price volatility generally for one to two quarters that better matches our raw material supply costs with pricing actions that we can take.

Great. Thank you.

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

Yes. Just one additional question on caustics. So of the $128 increase in the IHS index in calendar 2016, how much of that did you realize and hence what momentum did you have coming into Q1 and first half 2017?

Yeah. I don't know that we're going to get into percentages that we realized on the pricing. But we do have significant momentum going into the first of the year. The dynamics that we've been talking about all through 2016, and John just mentioned, the dynamics are playing out (30:57). So, we do see good momentum coming into the first quarter.

Okay. And then shifting to Epoxy, almost a year ago to the day you were looking to generate to 2016 EBITDA of about $145 million. You came in around $92 million. How would you breakout that shortfall in terms of volume versus higher than expected raw material costs? And do you still see $250 million as kind of mid-cycle potential?

Yeah, Frank (sic) [Don] this is Pat. Yes, we still see that $250 million as mid-cycle potential. I would say most of the shortfall that we saw came in, in the second half of the year on lower volumes. A lot of that was coating customer related. We saw little bit deeper seasonal turndown in Q4 versus Q3. So, I would say that overall, we also think that margins are as thin as they've been since 2014, and we think they're about as low as they can go at this point in time. So, I think you'll see some variable margin improvement along with volume improvement to see a better 2017 than we did in 2016.

Okay. Thank you. And then a final question on Winchester. Obviously, the election was very good news for those of us who support the Second Amendment. But I noticed that NICS background checks were down significantly in December. So, I'm just wondering, John you talked about favorable final demand ex this inventory adjustment, but how do you see the final demand flushing out over the course of 2017 versus 2016 for your commercial ammunition business?

Yeah, one comment on NICS checks, Don. If you remember in 2015, there was this San Bernardino shooting and that December had an extraordinarily high level of NICS checks compared to any other month in 2015. So that's December versus December's probably a difficult comparison. I think one would be a lot more interested to see what happens in the first six months of this year. But we believe and we've talked about this that the number of shooters that have been created, new shooters over the last eight months support a much more robust business going forward than we saw back before the 2008 presidential election.

Okay. Thank you.

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

Hey. Good morning, guys. Great quarter.

Thank you.

I believe previously, you indicated – and this is just a follow-up to one of the previous questions, but I think you previously indicated that Olin, during 2016, has realized about 50% of the caustic soda market, accepted in the market, and about a fourth of your contracts are renewed each year. Should we assume that the contracts in 2017 are going to be maybe closer to the 70% of your – the range you quoted?

I don't want to get into specific contracts because each one's different, and each customer negotiation reacts to the conditions that are in the market. So, you have different levels of discounts and different terms that get renegotiated. I'd come back to what Jim said is, there's a lot of very positive pricing momentum working its way through our contracts as we speak.

Okay. Great. Can you comment on how much more volumes of caustic you were able to sell in 4Q 2016 relative to your expectations coming into the quarter? And with that, can you also provide your utilization rate in the quarter?

We're not going provide our utilization rate because a lot of that's internal. I would say, we were able to sell more caustic qualitatively in the fourth quarter than we had expected.

Okay. Great. Thank you.

The next question is from Aleksey Yefremov of Instinet. Please go ahead.

Good morning. Thank you. Turning back to your 2017 guidance, what price assumptions do you have for EDC and export caustic soda?

I think if you look at IHS for EDC, they provide a nice outlook for what we think because it's an export price. We think our prices will closely follow that. And I think if you look at that, you would see something in the neighborhood of a $0.02 per pound increase built in over the course of the year from where we ended 2016. And I would say the same thing about ex the IHS indexes that relates to caustic soda export pricing.

And so that price increase in EDC would translate to margin improvement? In other words, you do not forecast an increase in ethane cost in 2017 versus 2016?

Well, the entirety of our guidance takes into account both the EDC price increase and our view of ethane, purchased ethylene costs, and, obviously, the timing of acquiring the next tranche of cost-based ethylene from Dow.

Okay. Thank you. And so you referenced that your exports account for 10% to 20%. I think in the past, you were – on a normalized basis, on the low end of this range. Are you now sort of close to the middle or the high end of this range as a sort of going rate assumption?

I think that we had been at – if you looked at a quarter, of the four quarters of 2016, we're at both the high end and the low end. And I think that depends on demand patterns. I would say to you we have the opportunity constantly to optimize our sales to capture the best margin by moving it up or down.

Thank you. And final question, if I may. In the first quarter, I mean, you mentioned $15 million higher maintenance sequentially. What's some of the other puts and takes, I mean obviously higher caustic soda price, et cetera. Do you think with higher caustic and EDC, you could actually exceed absolute EBITDA amount that you achieved in Q1 2016?

Than Q1 2016?

Right. Could you be up year-over-year on total EBITDA?

I think we would feel positive about saying that.

Thank you.

And your next question is from Kevin McCarthy of Vertical Research Partners. Please go ahead.

Yes. Good morning. John, in your prepared remarks, you referenced the improving trade balances in caustic soda. With regard to Europe, specifically, would you update us on how much of the 1.0 million to 1.5 million tons per annum of capacity has come out of the market already versus how much is still on to come? Just trying to get a sense for any opportunity for incremental improvement there.

I think right now what's come out is at the low end, something between 500,000 and 700,000 tons. And I think if we were to give you our best guess, we would tell you that the end number will be 1.3 million tons, but that's Olin.

Okay. So in broad strokes, maybe halfway through that dynamic, it sounds like. That's helpful. And then second, to follow-up on your option for additional ethylene from Dow, it sounds like you intend to exercise this year at the $210 million payment. I believe looking beyond that, you have a third tranche that's available to you in late 2020, if I'm not mistaken. I realize that's a long way away, but it also takes several years to – for your ultimate customer to build assets. So, I guess my question is, sitting here today, do you – how would you characterize the potential that you would ultimately choose to exercise that final option for ethylene?

Exercising that final option of ethylene was based on Olin's ability to step into Dow's shoes and replace Dow as a supplier of – to another customer, and all of that is dependent on reaching a commercial arrangement with that customer.

Okay. And have you commenced those discussions at this stage?

What I would say is, I think at the point in time if it happens, you will read about it because it will be a material event.

All right. Fair enough. Thank you very much.

The next question is from John Roberts of UBS. Please go ahead.

Thank you. The two year anniversary of the Dow deal occurs later this year. You'll have the option to buy back stock after that, but will debt reduction likely still be the priority for a while longer?

John, it will, yes. I mean we've talked about – you've followed us over a long period of time. We're comfortable at a lot lower debt to EBITDA ratio than we are currently running.

Okay. And then how long do you think the Winchester de-stocking process will take?

Probably, our best guess would be, John, that would take into the second quarter.

Okay. Thank you.

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

Good morning. A lot of my questions have been answered. But I just want to follow-up a little bit on the Epoxy guidance that you provided. You expect volumes to be up and then obviously cost to be down a little bit and better leverage on these volumes. Sort of outside of the coating space, can you talk about what – where the confidence in growth from the Epoxy's is coming from, in other words, what market – is it just coatings or are you looking at other markets to recover to help you with Epoxy volumes?

Yeah. This is Pat Dawson again. Listen, I think, one of the perspectives is the fact that the North American market contracted in 2016 versus 2015 low percentage points, but still it was a contraction. And I don't think things will be worse in 2017 versus 2016. That's point number one. Point number two is our markets in Europe, end-use applications across a variety of coatings areas are showing improvement as you see more infrastructure spending in many parts of Europe. The other point, back on oil and gas in North America, we made that in our comments, I don't think – I think it hit absolute rock bottom. We're not counting on a big recovery there. It's way too early to be optimistic about that. But it certainly won't be worse than it was in 2016. And overall, I think the whole wind energy market is an area that we've continued to participate in, and grow our participation there. And I think you'll continue to see some modest improvement in wind as well.

Got it. And then to follow-up on your comments about the pass-through nature of your pricing on the upstream and midstream Epoxy contracts. How much does upstream and midstream represent of your Epoxy segment?

We're not going to get into the percentage breakout on that. All I can tell you is that we continue to run those upstream assets harder. We ran them harder in 2016, we did it in 2015. We'll run them harder in 2017 versus 2015, and also, that liberates more caustic soda as well, which I think is an important point. My other comments really don't have anything to add in terms of how we pretty much automatically reflect those hydrocarbon increases in our upstream contract pricing.

Okay. So let me ask this maybe a different way. What percentage of your contracts are indexed to raw material costs versus the ones we have to negotiate price increases?

Yeah. We're really not going to divulge that. That's pretty confidential information.

And then one final question on chlorine pricing. They look to be flat sequentially. I just wanted to make sure that what you were seeing is kind of what the market is seeing as far as chlorine price activity. And I would imagine your expectation for 2017, since you haven't talked about it, is for chlorine pricing to basically – chlorine supply to basically in balance with demand and chlorine pricing to stay flat. Is that the right way to think about it?

We see it as being flat and that's the right way to think about it.

Okay. Thank you, John. That's all I have.

The next question is from Charles Neivert of Cowen. Please go ahead. Charles Neivert - Cowen & Co. LLC: Just one quick question. How sensitive is the Epoxy segment to operating rate? I mean, typically, in the commodity side, we see a high sensitivity. As you get to performance, it's a little less. But I mean, if you lose 5% or gain 5% operating rate, all else being equal, no mix change or anything else, I mean, how much might that affect your earnings?

From an Olin perspective, because we're fully integrated all the way back to chlorine, the leverage on the operating rate is the highest at the upstream end and declines as we work our way through LER into converted resins. So running, as Pat said earlier, the upstream hard is where there's the most leverage, and that's a focus, as Pat said. Charles Neivert - Cowen & Co. LLC: Okay. So any – as you said, the drop-off in volumes is pretty meaningful in terms of what kind of margin you guys will get in that group?

That's correct. Charles Neivert - Cowen & Co. LLC: Okay. Thank you.

The next question is from Herb Hardt of Monness, Crespi and Hardt. Please go ahead. Herbert A. Hardt - Monness, Crespi, Hardt & Co., Inc.: Thank you. Can you give me some sense of what the operating rate was in January versus a year ago? (45:44) anything in the export market relative to Mr. Trump's commentaries.

I don't – the January operating rate for the industry has not been published. The operating rate for the industry in December was 87%, which was up from November. Herbert A. Hardt - Monness, Crespi, Hardt & Co., Inc.: Okay. And in terms of the administration policies and comments on exports?

I don't think we have anything that we could add to, so I'm not sure we know what it all means yet. Herbert A. Hardt - Monness, Crespi, Hardt & Co., Inc.: Fair enough. Thank you very much.

The next question is a follow-up from Arun Viswanathan of RBC Capital Markets. Please go ahead.

Great. Thank you. Just wanted to actually get back to the synergies. I think previously, you had noted that there were going to be $50 million in 2017. You're now talking about $50 million to $75 million. So was that a change? And then secondarily, any update on potential revenue synergies as well? Thanks.

The $50 million to $75 million is a change to the positive. We're feeling very – more optimistic about some of our projects. And in terms of the revenue, as we said in the prepared remarks, the first big step in the revenue is the first bleach plant in Freeport which comes onstream sometime in the next 90 days.

So just to be clear then, if you're saying more positive, does this still – the full capture is still expected to be $250 million on the cost side. Is that right?

That's correct, yes.

Okay. Great. Thank you.

The next question is from Richard Riley (sic) [O'Reilly] of Revere Associates. Please go ahead.

Okay. Good morning. Thank you, gentlemen. A quick question on Winchester, the inventory reduction. Is this at the retailer distributor level, or is it further down at the consumer level, so to speak?

It – at this juncture is entirely at the retail level.

Okay. So, you don't know what – okay, you don't know what the point of sales change has been yet.

We have seen a decline since the election in point of sales for ammunition.

Okay. So, would you take this as a reverse of the post-surge as we saw in the previous two elections?

We believe that what happened was that the retailers were looking at what happened after 2008 election, 2012 election, expected a similar political leaning outcome and didn't – and had built the inventory in anticipation of that, and when it didn't happen, the inventory levels were too high.

Okay. Fine. Okay. Good. Thank you, then, guys.

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

Thank you for joining us today, and we look forward to talking to you in about 90 days when we discuss our first quarter results. Thank you.

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