Why Olin Shares Are Going Down Today

Olin Corp OLN shares are trading down by over 6% after it announced lower than-previously-expected Q2 2023 adj. EBITDA outlook and additional epoxy restructuring initiatives.

The company now expects adjusted EBITDA of $350 million-$360 million compared to the earlier outlook of slightly lower than Q1 2023 adjusted EBITDA of $434.1 million.

The bearish outlook represents the expected impact of $50 million from an extended turnaround at the vinyl chloride monomer plant at the Freeport, Texas facility and a lower market participation rate amid sluggish market conditions. 

The company disclosed an extension of around seven weeks for the planned maintenance turnaround at vinyl chloride monomer plant, resulting in higher turnaround, unabsorbed fixed manufacturing expenses, and lower profit from lost sales.

Moreover, Olin plans to discontinue all operations at its South Korea facility, decrease epoxy resin and upstream capacity at its Texas facility, and downsize its sales and support staffing in Asia. 

The company expects restructuring charges of around $12 million from these plans in Q2 2023.

"The restructuring actions announced on March 21, 2023, and in this announcement will complete the rightsizing of the Epoxy business and are expected to deliver $50 million of improved annual EBITDA beginning in fourth quarter 2023 continuing our commitment to elevate our Epoxy business earnings to a more sustainable level. Through these actions, we will have configured our global Epoxy asset capability to improve profitability through future recessions," said Scott Sutton, Chairman, President, and CEO.

The company has earlier provided adjusted EBITDA guidance of $1.6 billion-$1.9 billion for 2023.

Price Action: OLN shares are trading down by 5.79% at $49.30 on the last check Tuesday.

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