Olin Corp. (NYSE:OLN) Q1 2018 Earnings Conference Call - Final Transcript

May 02, 2018 • 10:00 am ET

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Olin Corp. (NYSE:OLN) Q1 2018 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

[Operator Instructions] Our first question for today will be from Frank Mitsch of Wells Fargo Securities. Please go ahead.

Analyst
Unidentified Participant

Hey, good morning, this is [indecipherable] on for Frank. Just wanted to get your thoughts -- there's been several disruptions over the past couple months from [indecipherable] outage which looks like it's coming offline for up to six months. Could you talk about your outlook for caustic and any impact that has to your full year EBITDA guidance?

Executive
John E. Fischer

I'll address both of those, I the value north, I think both of those generally speaking, Alunorte has happened -- hasn't happened yet, have had the effect of just causing trade flows to be adjusted, more than anything else.

I think in the Alunorte case, we're talking about a very small quantity of caustic in an 80 million ton market. And I would characterize we expect that the Rusal event, if it occurs, is going to have less impact because of the delay than it would have had otherwise because it just occurred quickly.

But again, the total volume there isn't big enough to upset an 80 million ton market. And it will adjust some trade flows -- I think Rusal will -- there will be more supply from Europe, and then Europe will import more, and I think at the end of the day it'll all wash out. So, I don't really -- we don't really believe either of those are going to materially affect caustic pricing going forward.

Analyst
Unidentified Participant

Okay. And then on your current -- given your current leverage profile, can you walk through your thinking on the buyback versus more opportunistic debt pay-down and your timeframe to -- you envision to executing the program?

Executive
John E. Fischer

We believe that based on our outlook, we have -- keeping in mind that debt reduction still remains our top priority, we believe that having a vehicle to opportunistically repurchase shares to offset dilution is important for the shareholders. And that was our thinking.

Analyst
Unidentified Participant

Okay. Thank you.

Operator
Operator

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

Analyst
Arun Viswanathan

Great. Thank you. How you guys doing? First off, I guess, just wanted to understand the potential dynamics in your statement about more upside opportunities. How should we think about the $35 income on caustic and the $15 or so in terms of chlorine to your profitability for 2018 and 2019, are you experiencing significant inflation that would offset those amounts or should we just use the typical kind of $10 equals $30 million annual adjusted EBITDA uplift? Thanks.

Executive
John E. Fischer

I think you should use the typical $10 is $30 million of uplift, keeping in mind that on the caustic side it's anywhere from 30 to 90 days. In terms of implementation on the chlorine side, it's typically 90 days.

Analyst
Arun Viswanathan

Okay. And I guess as a follow-up, are there any of your contracts that are significantly behind the index, and said a different way, we've seen couple hundred million dollars go into the index over the last