Good morning, and welcome to the Olin Corporation Third Quarter 2017 Earnings Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Larry Kromidas. Please go ahead.

Thank you, Brian. Good morning, everyone. Before we begin this morning, 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 actual results could differ materially from those projected. Some of the factors that could cause actual results to differ from our projections are described without limitation in the Risk Factors section of our most recent Form 10-K and in our third quarter earnings press release. 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. With me this morning are John Fischer, Olin's Chairman, President and Chief Executive Officer; Pat Dawson, Executive Vice President and President, Epoxy and International; John McIntosh, Executive Vice President, Synergies and Systems; Jim Varilek, Executive Vice President and President, Chlor Alkali Products and Vinyls and Services; and Todd Slater, Vice President and Chief Financial Officer. Now, I'll turn the call over to John Fischer. John?

Thank you, Larry. Good morning and thank you for joining us today. During this morning's call, we will first discuss our third quarter results and review our outlook for the fourth quarter. If you turn to slide 3, I'll review the third quarter. Third quarter 2017 adjusted EBITDA was $265.5 million. As a result of the flooding from Hurricane Harvey, Olin was forced to reduce production at its Freeport, Texas facility from late August through mid-October due to logistics constraints, customer outages and raw material availability. Other Olin plants that supply customers in Texas were also impacted by the hurricane. Olin's third quarter 2017 adjusted EBITDA was reduced by $42.7 million as a result of Hurricane Harvey, representing $12.9 million of incremental costs to continue operation and $29.8 million of unabsorbed fixed manufacturing costs, and reduced profit from lost sales. Chlor Alkali Products, Vinyls third quarter 2017 segment earnings were reduced by $24 million and Epoxy third quarter 2017 segment earnings reduced by $18.7 million, as a result of the hurricane. Excluding the impact of the hurricane, Olin would have earned approximately $308 million of adjusted EBITDA in the third quarter of 2017. Consistent with our discussion last quarter, we experienced a $95.1 million sequential decline in maintenance turnaround and outages cost in the third quarter compared to the second quarter of 2017. In addition, the Chlor Alkali Products and Vinyls business experienced improved caustic soda pricing compared to the second quarter, which was partially offset by lower ethylene dichloride pricing. The Epoxy business improved sequentially and benefited from improved margins over hydrocarbon costs and lower turnaround in outage costs. Excluding the impact of the hurricane, the Epoxy business would have earned approximately $41 million of adjusted EBITDA in the third quarter of 2017, which is consistent with the level…

This is the operator. I have reconnected the speakers. And if they would like to begin?

Okay. This is John, again. I apologize for whatever happened here. I'm going to go back and start with the Chlor Alkali Products and Vinyls section, which is on slide 4. Third quarter 2017 sales of $881.2 million increased 13% over third quarter of 2016 sales. The increase reflects higher caustic soda pricing, partially offset by lower ethylene dichloride pricing and lower volumes resulting from Hurricane Harvey. Chlor Alkali Products and Vinyls third quarter 2017 adjusted EBITDA of $236.5 million increased 48% or $76.5 million year-over-year. The improvement in adjusted EBITDA reflects an overall improvement in pricing of approximately $112 million, partially offset by $24 million of additional costs, unabsorbed fixed manufacturing costs and reduced profit from lost sales associated with Hurricane Harvey. Electricity costs, driven by higher natural gas prices, and maintenance turnaround costs also increased from third quarter 2016 levels. The Chlor Alkali Products and Vinyls business is forecast to improve sequentially in the fourth quarter of 2017 from the third quarter, driven by improved caustic soda, chlorine, hydrochloric acid, and bleach prices and lower ethylene costs. Fourth quarter 2017 ethylene dichloride pricing is now forecast to decline compared to third quarter, although we expect ethylene dichloride pricing to begin to improve by year-end. Late in the third quarter, we made the $209.4 million payment to the Dow Chemical Company to secure a 20-year supply of ethylene at producer economics. Depending on ethane costs and market-based ethylene prices, this supply agreement is expected to generate annual savings of approximately $40 million to $50 million. Now turning to pricing, caustic soda pricing in the Olin system increased approximately 6% in the third quarter of 2017 compared to the second quarter and were 36% higher than the third quarter of 2016 levels. These improved caustic soda prices reflect strength in…

Thanks, John. Let's turn to our cash flow forecast, which is on slide 9. During 2017, we expect to generate approximately $430 million of free cash flow before dividend payments and before the $209 million ethylene investment, which was made late in the third quarter. Our expectation is that by the end of 2017, the combination of debt reduction and EBITDA growth will reduce our net debt to EBITDA leverage ratio to approximately 3.6 times. Starting with the midpoint of our full year adjusted EBITDA forecast of $945 million on the far left of the waterfall chart, we add back $10 million in taxes, reflecting proceeds from the income tax refund. In 2017, we believe that the book effective tax rate will be in the 20% to 25% range, but we do not expect to be a cash tax payer in 2017. This reflects the utilization of net operating loss carryforwards created over the last two years. We expect net operating loss carryforwards to provide a cash tax shield of approximately $70 million in 2017. Additionally, we currently expect to exit 2017 with unused net operating loss carryforwards to provide a cash tax shield in the future years of approximately $75 million to $85 million. Column three shows the capital spending we expect in 2017 of approximately $315 million. This includes annual maintenance capital spending of between $125 million and $175 million – $275 million to $225 million. During 2017, we expect a multi-year project to implement a new enterprise resource planning, manufacturing and engineering systems across the heritage Olin and the acquired Dow chlorine products businesses. The project includes the required information technology infrastructure. The objective of the project is to standardize business processes across the chemicals operation with the objective of maximizing cost effectiveness, efficiency and control across…

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

Yeah. Good morning, gentlemen. And congrats on a record quarter in Chlor Alkali. John, as I listen to you talk about where the pricing trends are and so on, if I think about normalized ex-Harvey $308 million of EBITDA in Q3, $293 of EBITDA in Q4, essentially the back half of the year, ex-Harvey, is at a $600 million run rate. Is there any reason why – if we were to annualize that for full year, is there any reason why $1.2 billion plus in EBITDA is not achievable in 2018?

The only thing I would say, Frank, is there will be a period in the first half of the year where there are some outages that will have some negative impact on that. But generally, I would say, the answer to your question is yes, because as we've said, 2018 outage costs will be meaningfully lower than they were in 2017.

All right. Terrific. And then a question on Winchester, since this was one of the – I mean, obviously, Chlor Alkali did very well, but on Winchester, can you talk about the interplay between pricing and raw materials and when you might be able to catch up your prices to the increase in your metals costs?

The problem that you have overall, right now, Frank, is you have a market that's vastly oversupplied. So, there's a lot of competition going on for market share on price. We have seen recently because of the step-up in copper prices, Winchester has announced price increases and both of their primary competitors in North America have indicated they're going to do that. I would expect to see benefit from that starting in 2018.

Terrific. Thank you so much.

Next question comes from Jason Freuchtel with SunTrust. Please go ahead.

Hey, good morning.

Morning, Jason.

Good morning.

How should we think about the proportion of your contracts that renew in late 2017? And what has been the tone of those contract discussions so far?

Jason, this Jim Varilek. I would say that the tone has been positive in that we've had a change in terms of the supply-demand dynamics, and they're more favorable to the producer side right now. So the contract discussions have been positive and we continue to make improvements on the profitability of the contracts.

And Jason, what we've said is the average duration of our costed contracts are in the three to five year range, so something in the neighborhood of 25% to 30% renew every year.

Okay, great. And then, how should we think about maybe the timing and the impact of those contract renewals to the P&L?

I think you'll see gradual improvement over a three to four year period as the contracts renew and the yield on those contracts improve.

Okay. But I guess if they renew in the fourth quarter, should we expect an impact to the P&L in the first quarter of 2018?

Yes. They renew annually, so you would see a step-up in 2018 in the first quarter that would apply throughout the year.

Okay, great. And then, I guess in terms of your expectations for 1% to 2% demand growth in caustic soda, what end markets are you expecting to see strength and weakness? And could there potentially be any upside to that forecast?

Jason, this is Jim. I would say the strongest markets right now that we're seeing are the aluminum market, pulp and paper markets on a global basis. We're not really seeing weakness in anything. The markets are generally strong around the world. So, that's what we're seeing. Could there be upside? I would say, yes, there could be upside to that and we are seeing strong demand globally.

Okay, great. Thank you.

Next question comes from Don Carson with Susquehanna Financial Group. Please go ahead.

Just a couple questions. First on Chlor Alkali, you commented how you've increased your proportion of export sales up to 20%. How high can you go on export sales? What kind of flexibility do you have there? Because we've seen that, as you show on slide 19, between the higher realizations and the faster realizations you get there, that that would be preferable to some of your domestic business.

Don, we could probably reach 25%. And that's probably the limit of our facilities and our capability.

Okay, and then a follow-up on Winchester. You used to talk about post-surge stable EBITDA outlook of $125 million. You've cut your guidance for this year from $115 million to $125 million down to right around $100 million. Any change in what you think the permanent earnings outlook for that business is? And the reduced commercial shipments we're seeing, is that a pipeline drawdown or is it reduced final demand, because I noticed that NICS data is down about 8% year-to-date? Clearly, with a more friendly administration in place, there doesn't seem to be quite the same urgency to buy firearms and ammunition.

Don, I would say, I think we do believe longer term we would be able to average $125 million of EBITDA. I think we made the comment in the remarks that the majority of our large commercial customers have sold more ammunition this year than they've bought. So that we would say there's clearly a pipeline drawdown. It's very difficult for us to know what's happening at the actual consumer level. So I would go back to there's clearly a pipeline drawdown this year.

Okay. And then final question, now that the two-year Reverse Morris Trust anniversary has passed, what are the future plans with respect to whether you retain or divest Winchester?

We have not made any comments regarding our plans with Winchester, other than I would say it continues to be a very good return on capital business and a very good cash flow business for Olin.

Okay. Thank you.

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

Great. Thanks. Good morning.

Good morning.

Just wanted to ask a question on some of your comments earlier. So, if I heard you correctly, I think you said that if third quarter pricing holds, that would add an incremental $100 million of EBITDA next year. And then, there's some more price increases on the table for Q4. I think IHS reflected $40 in the index last night. So, if all of that holds, I guess, and you're at the $1.2 billion run rate already, you take off maybe $50 million for maintenance. Is it fair to assume that the actual run rate that you're starting with next year is about $1.25 billion? Is that right or...

I think I'd leave that math to you. We agree that IHS had $40 and is forecasting another $5 in the fourth quarter. Just keep in mind we typically realize about half of index price increases.

Okay, great. And then, maybe you can just discuss the EDC market. You did say that you expect some recovery in Q4. Just curious as to what would drive that and how ethylene plays into that? Thanks.

Hi, Arun. This is Jim Varilek. The drivers of the EDC market are obviously mostly in Asia. There's some cost push, but there's also the pull on the demand. And the reason we expect fourth quarter to show a little bit of an uptick towards the end of the year is two factors. There's generally a restocking that takes place in PVC during that point in time. And so, we expect some degree of pull. And there's also dynamics in Europe associated with the mercury capacity on Chlor Alkali that will take down the Chlor Alkali capacity, but also will increase – as a result of that, will increase EDC purchases and should help bring us into a little bit better situation than we've experienced the last few months.

And then just lastly on Epoxy, you noted that you're operating rates should continue to improve and that'll allow for greater caustic soda offtake. What's your expectation for Epoxy for next year? If you think this year is maybe $80 million to $85 million, do you expect growth next year? Thanks.

We have not given any guidance. I would tell you based on our long-term view, we should expect growth in EBITDA in 2018 versus 2017 in Epoxy.

Okay. Thanks.

The next question comes from Aleksey Yefremov with Nomura Instinet. Please go ahead.

Thank you. Good morning, everyone. Caustic soda prices in Asia jumped about $150 in recent weeks. How sustainable do you think that is? How do you think it might impact your business in coming months?

Aleksey, this is Jim. I would say that the fundamentals remain in place whatever – we've talked about this for actually for the last almost two years now that the fundamentals with mercury shutdowns in Europe, with China keeping more product home, and the environmental policies that are impacting the demand, you're starting to see that show up in pricing. And we don't see anything changing in the fundamentals without any capacity additions and so forth around the world that would change that. So we think it's very sustainable.

So, I guess, just to make it clear, there were some short-term factors such as the hurricane and maybe some short-term shutdowns around the Party Congress in China. So you don't think that the price may have overshoot that trend line in the short-term.

Yeah. And I think there's going to be points of peaks that go quickly on pricing, others that go more slowly, but the trend line still going to be the same.

Thank you. And then turning to Epoxy, you mentioned that your raw materials are going up in the fourth quarter and also that you're raising prices. Does this mean that your net raw material margin is getting worse in the fourth quarter or getting better? And also, what is your outlook for the first quarter? Do you think you'll catch up with raw materials by then?

Yeah, Aleksey, this is Pat Dawson. And what we're seeing is some compression here going into the fourth quarter, since we got these unexpected spikes post Hurricane Harvey. So we do have price increases that have been announced for both October and November. And typically, what you saw this year takes about a quarter to catch up with those increased raw material costs. So I think we'll be in a good position as we go into 2018.

Thank you.

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

Thank you. Was the Shintech permitting project in line with your expectations?

I don't know that we had any expectations regarding anything like that. I think it's just a permit. And if they go through with what is in that permit, we're three to four years from anything impacting the market.

Okay. Do your ethylene costs from Dow include any effect of the hurricanes on Dow's production cost of ethylene?

No.

Okay. Thank you.

Next question comes from Kevin McCarthy with Vertical Research Partners. Please go ahead.

Yes. Good morning. John, on slide 5, you referenced the sunset of the mercury cell regulations in Europe, as well as a reference to lower Vinyls demand in China. Just wondering if you could talk about your expectations for available supply from Europe and China over the near-term directionally and what that impact will be?

Are you asking about exports from Europe and China?

Well, I guess, the available amount of Chlor Alkali coming out of those two regions of the world, obviously, the mercury sulfate that's been going on for some time now. Is there incremental restriction in supply of caustic soda that you would see there? And then, analogous question in China, do you see incremental restriction of supply there or not?

The only thing we could – way to answer that is to look at the trend that we've seen in terms of exports of caustic soda out of Europe and out of China. And we have seen exports from Europe go from between – an average of between 500,000 tons to 1 million tons a year five years ago to what is a limit approaching zero today. And occasionally, we get inquiries to ship caustic into Europe. So that's a big change. I would say there's been a very similar pattern from China. There are still nominal quantities of exports that we see coming out of China, less than 0.5 million tons. And there was something in Ecu North America this morning about a U.S. producer entering into a long-term contract to supply an aluminum producer in China. And I think that's evidence of the declining exports out of both of those two regions.

Thank you for that. And then second question, it's really a two part around on 2018 cash flow. I think you mentioned your IT project, just wondering if you could tell us what the cash impact of that is expected to be in 2018, as well as any preliminary thoughts on your capital expenditure plans in 2018.

Kevin, we would prefer to answer that in the fourth quarter when we'll be prepared to give full guidance on all the aspects of that cash flow.

Okay, fair enough. Thank you.

The next question comes from Eric Petrie with Citi. Please go ahead.

Hi, good morning.

Good morning.

What are you seeing in China due to environmental regulations in the ECU chain? How much capacity do you think is impacted and will that dynamic tighten or loosen into 2018?

I think the most – the thing we've seen that's the clearest is that we believe there's been between 4 million and 5 million tons of carbide-based EDC shutdown, which obviously spills back into an equivalent amount of chlorine that isn't being produced and therefore, caustic that isn't being produced. And that's the most concrete information we have based on information we obtained through a study we had done in China.

Okay. Question on strategy with rising export prices, how fast can you ramp up to exporting 25% of your production? And is this impacting renewals of your domestic contracts?

We can ramp that up very quickly, probably over the course of a quarter. It obviously influences how we negotiate contracts domestically by how much supply we have to sell.

Okay. Thanks.

Next question comes from Steve Byrne with Bank of America Merrill Lynch. Please go ahead.

Yes. Thank you. At current levels of profitability on Chlor Alkali, how close are you to having attractive return, say, on – in investment and in either brownfield Chlor Alkali or greenfield Chlor Alkali, your interest level in such? And if so, where would the incremental chlorine go?

I think, at the moment, we would tell you our interest in a large greenfield facility is very close to zero. I would also say, and it shouldn't surprise anybody, that we have small opportunities to debottleneck about five different plants that we have. And we obviously look at that all the time, and the big driver is if we did it, could we place the chlorine.

And just to follow on that. Your outlook for pricing for the various chlorinated products is fairly constructive, with the exception of EDC in the near-term here. How much latitude do you have to shift volumes around to reduce the quantity to EDC?

I would tell you that the biggest single benefit that Olin is deriving from the acquisition of Dow is the multiple outlets that we have for chlorine. As we've said, when we made the acquisition back in – announced it back in March of 2015, that we were going from 3 outlets to 19 outlets. And I would tell you we have a lot of flexibility to move things around. I talked earlier just about the lever from the Epoxy business being able to consume chlorine and liberate caustic soda, if you will. So, we have a lot of flexibility. The other thing I would remind you of is Olin over the last five to eight years has been able to consistently and through a strategy grow its bleach business, which is an outlet for chlorine, and has grown its on-purpose hydrochloric acid business, which is also an outlet for chlorine. That plays into this, if you don't make EDC, what do you do with the chlorine.

And just lastly on that. Do you have a view on what the EBITDA impact might be looking one year out based on pricing levels right now on the chlorine side of the business? You made a comment earlier about this $100 million EBITDA impact from caustic pricing. Do you have a similar comment on chlorine?

I would just say we've consistently said and I think there's a slide in there that says that a $10 change in the price of chlorine changes our annual EBITDA by $10 million. And I think we talked about the price increases that are in the index and the other ones that have been announced, so it's a forecast of what do you expect to be realized.

Thank you.

Next question comes from Dmitry Silversteyn with Longbow Research. Please go ahead.

Good morning. Thanks for taking my call. Can you provide – I wasn't sure, maybe I missed it. But did you talk about the volume growth or actually volume declines in year-over-year in the Chlor Alkali and Vinyls division? I'm just...

We just said in Q3...

Yeah.

... that volumes in Chlor Alkali were down because of Hurricane Harvey.

Okay, but you didn't quantify by how much.

No, we did not.

Okay. In the 20% of your business now that's exported, I think you talked about 3.5 million tons or so that you're going to be exporting this year, how much of that has gone to markets that are typically served by the EU plants that are being converted or shut down or whatever is happening there with mercury versus new opportunities and you getting into new markets? You mentioned Australia being obviously very strong for you probably because of the declines of Chinese exports into that country. But if you were looking at the EU-related businesses, how much of that 3.5 million do you think has gone into those markets?

It's my point of view, Jim can comment, that at the moment, very little of that amount that's being exported out of North America in total is going to Europe. We commented on exports were up significantly to Australia. Jim, maybe you want to?

Yeah. That's correct. I think the majority of the increases that we're seeing out of the Gulf Coast are headed towards Australia, are headed towards Latin America as well, where there is strong demand in the markets that I mentioned earlier, which are the aluminum and pulp and paper markets.

I guess what I was wondering is out of that – you mentioned that EU exports have gone from about 1 million tons down to zero. That's for the market obviously, not for you specifically. So, I was wondering of that 3.5 million how much of that million of lost EU exports you were able to pick up. That's where I was going with the question.

I would say that it's not a material amount specifically being picked up by Europe. It's more impacting the trade flows out of Europe than anything else.

Okay. So, in other words of saying that would be that all of your export growth is really driven by the declines in Chinese exports, that you're basically filling the spot the Chinese are leaving behind, not so much the European reduced production.

I would say that is correct, along with Latin America as well.

Okay. So, really, the mercury transition in the EU is a non-effect for you guys.

I'd say that's yes.

Okay, very good. And I just wanted to follow up on the Winchester guidance for the quarter. I mean, you kind of gave it directionally, but you provided earlier in the year $115 million to $125 million EBITDA guidance for Winchester. I'm assuming it's at the very low end if not below that for right now for the year.

If you do the math, we said we expected Q4 to be similar to Q3. That would put you at about $100 million of EBITDA for the year.

That's what I thought. I just wanted to make sure my math wasn't off. Okay. Thank you.

Next question comes from Matthew Blair with Tudor, Pickering, Holt. Please go ahead. Matthew Blair - Tudor, Pickering, Holt & Co. Securities, Inc.: Hey. Thanks. Good morning. You mentioned the Epoxy volumes for your system were up 8% year-over-year. What do you think the total market is growing at and what areas of Epoxy are growing?

Yeah. This is Pat Dawson. On Epoxy, I would say that there's really nothing impressive on the side of growth overall globally for Epoxy. Europe continues to grow around 4%, which was consistent with last year, a lot of that being driven by infrastructure spending in Europe. In North America, the good news there is the North American market, it contracted last year by about 4% or 5%. And this year, we're seeing improvement of positive growth, albeit very modest, most of that being due to oil and gas. Matthew Blair - Tudor, Pickering, Holt & Co. Securities, Inc.: Great. Thank you. And then also, there was a comment, the caustic demand, you're expecting it to rise 1% to 2% annually. Any thoughts on chlorine demand? Have you seen any – do you think the overall market has grown in 2017 and what do you expect going forward for chlorine? Thanks.

I think if you look at chlorine demand, it's forecast to grow at about half of what caustic is expected to grow at. So, 1%, 0.5%, and a lot of that'll ultimately be determined by what happens with things like PVC expansions that there was a comment earlier on Shintech. Matthew Blair - Tudor, Pickering, Holt & Co. Securities, Inc.: Thank you.

Next question is a follow-up from Jason Freuchtel with SunTrust. Please go ahead.

Hey. Thanks for taking my follow-ups. First, just a clarification on the impact of the EU. Would you say that your plant in Canada was previously seeing competition from imports from Europe, and now with less capacity coming out of Europe, you're facing less competition for capacity from that plant?

Generally speaking, the exports that came out of the Europe went west towards the East Coast of the United States. So your supposition is correct. And I would say that also has a marginally positive influence on the Niagara Falls plant that we have and also the Charleston, Tennessee plant that we have.

Okay. Thank you. And then also, do you believe the ban on recycled paper in China will impact the demand for caustic soda? And if so, is that impact included in your 1% to 2% demand growth? Thank you and good luck on the quarter.

Thank you. I would say that that's a level of detail we are not able to forecast.

Next question comes from Richard O'Reilly with ‎Revere Associates. Please go ahead.

Okay. Good morning, gentlemen. I'm looking at you slide 15 about the maintenance costs, the turnaround costs. And for the full year, that $212 million. Have you talked about what a normal or average year would look like or what you think 2018 would look like in terms of maintenance costs?

We've said a normal year is somewhere between 2017, which was the $212 million, and 2016, which was about $80 million.

Okay. Somewhere in between, okay. All right. Okay. That's it. Thanks a lot.

Okay. Thank you.

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

Thank you all for joining us today and we look forward very much to talking to you about our fourth quarter results in three months. Thank you.

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