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Olin Corp. (NYSE: OLN)
501 Merritt 7, P.O. Box 4500,
Norwalk 06856
203-750-3000
Chairman, President and CEO:
Donald W. Griffin
Revenues (FYE December 31, 1998):
$1.426 billion
Net Income (FYE December 31, 1998):
$78 million
Market Capitalization: $906.6 million
Employees: 7,500
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Business New Haven
1/24/2000
By: BNH
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It seems fitting to look at Olin Corp. at the dawn of the new year and new Millennium. It's not the first new century Olin has marked; it rang in the turn of the last century as a fledgling business founded in 1892. Following more than a century of operation, the company enters the new Millennium as a multinational conglomerate. In a testament to its longevity, the company's stock has been listed on the New York Stock Exchange for more than 80 years, one of only a handful of companies which can make that claim.
Olin operates in three business segments: Olin Brass, Chlor Alkali Products and Winchester. Olin's largest segment, the Olin Brass business, accounted for about 58 percent of overall revenues for the first nine months of 1999. This business produces copper and copper alloy strip and sheets, copper alloy welded tubing, rolled copper foil and stainless-steel strip. A major customer is the U.S. Mint, which Olin supplies with metal.
Through its Chlor Alkali Products business, Olin produces caustic soda, chlorine and other bleach products and sodium hydrosulfite. In 1998, the company transferred its microelectronic, water and performance chemicals to a newly created specialty chemical company called Arch Chemicals. Olin subsequently distributed Arch to its shareholders in a spinoff effective last February.
The name Winchester has endured as part of the American heritage, and Olin's Winchester business has operated for more than 130 years. Today it produces sporting ammunition, industrial cartridges, canister powder and small-caliber military ammunition. In addition, the company operates and maintains a U.S. Army production plant for small-caliber military ammunition.
The company touts its business-ethics program, which trains employees to make ethical decisions. It has also introduced a new initiative called “The Goal Is Zero” for its Chlor Alkali Products group, which is striving toward a benchmark of zero environmental incidents.
The company also strives for no manufacturing process or distribution incidents or personal injuries. Similar initiatives are under way at the company's Olin Brass and Winchester groups with the Zero Tolerance Safety program. Over the years the company has been involved in several environmental incidents, some of which remain active.
Of note is the change in Olin's asset size, from $1.577 billion on December 31, 1998 (prior to the spinoff of Arch Chemicals) to $1.033 billion as of last September 30. Net worth as of December 31, 1998 was $790 million, compared
to $324 million at the 1999 nine-month mark.
Results for the nine-month period ending September 30 showed an 11-percent reduction in sales, to $973.7 million from $1.09 billion for the comparable 1998 period due to reduced electrochemical unit (ECU) prices, lower metal values, lower gross margins and shutdown of the rod, tube and wire business.
The Chlor Alkali Products segment incurred an operating loss of $49.9 million but the Olin Brass and Winchester segments reported operating income of $55.6 million and $15.3 million, respectively. Net income for the first nine months of 1999 was $11.4 million (25 cents per diluted share), compared to $70.5 million ($1.46 per diluted share) for the comparable 1998 period.
Diluted earnings per share for continuing operations (excluding Arch) for the nine-month 1999 period was 16 cents per share, compared to 60 cents per share for the comparable 1998 period. The company expects that price increases will have a positive impact on its ECU performance in the near term.
In other news, Olin has embarked on an active share-repurchase program. As of the third quarter of 1999, it had repurchased more than 7.8 million of the 10 million shares approved for repurchase by the directors. Olin's 292nd consecutive quarterly dividend (quarterly) - 20 cents per share - was paid on December 10.
Analysts' recommendations are mixed - from hold to moderate buy to strong buy. Average earnings estimates for 1999 come in at 31 cents per share, and $1.16 per share for the present year. The stock experienced a drop in the second quarter of 1999, falling to a low of 9 1/2. However the 52-week high was 29 1/4. The stock closed on January 7 at 20 11/16.
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