Olin's adjusted EPS of 43 cents fell 9 cents short of consensus as caustic soda pricing eroded. Epoxy posted its first sequential improvement, and Winchester outperformed.
Olin Corp. missed Wall Street's second-quarter earnings estimates Thursday, hurt by a deeper-than-expected slump in caustic soda pricing that offset an early turnaround in epoxy and a better-than-forecast performance in Winchester ammunition.
The chemical maker reported adjusted earnings of 43 cents a share, 9 cents below the consensus estimate compiled by Visible Alpha. Revenue for the quarter came in at $1.55 billion, about $30 million short of the analyst target.
Todd Slater, Olin's chief financial officer, told analysts on the earnings call that caustic soda price erosion accelerated through the quarter, with sequential declines in both domestic and export markets. Chlorine demand held up better, he said. The overall chlorine-and-caustic chain saw operating rates slip as Olin ran its plants to match the weaker caustic environment.
The company's epoxy business, a drag for most of the past two years, posted its first meaningful sequential improvement. Kenneth Lane, Olin's chief executive officer, said the segment "turned positive" in the second quarter as destocking cycles in coatings and adhesives ran their course. He cautioned that the recovery is still early. End-market demand has not yet returned to pre-2024 levels.
Winchester, Olin's ammunition division, outperformed internal expectations. Revenue rose 8% year-over-year. Slater attributed the strength to continued commercial demand and a modest uptick in military orders. "The commercial market remains healthy," he said. The segment's margins improved on better product mix.
On the balance sheet, Olin generated $175 million in free cash flow during the quarter. Slater said the company used roughly $100 million to pay down debt and returned $45 million to shareholders through dividends and buybacks. Net debt-to-EBITDA finished the quarter at 2.9 times, up from 2.5 times a year ago, reflecting the earnings compression.
Olin's Alpha Score stands at 40 out of 100, a Mixed rating that reflects the tension between an improving epoxy trajectory and a caustic soda market that has not yet found a floor. The OLN stock page is available for further detail.
For the third quarter, Olin expects caustic soda pricing to remain under pressure through at least September. No sign yet of a supply-side adjustment from the broader industry, Slater said. The company plans to run its chlor-alkali plants at rates that match demand rather than chase volume. "We are not going to produce into a weak market," Lane told analysts.
The epoxy segment is expected to show further sequential improvement. The company did not offer a specific EBITDA target. Winchester should continue to benefit from commercial demand and is on track for a full year above 2025 levels, Slater said.
Olin shares fell 3.2% in morning trading Thursday. The stock has lost roughly 12% year-to-date, underperforming the broader materials sector.
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