Good morning, and welcome to Olin Corporation's fourth quarter 2020 earnings conference call. All participant will be in a listen-only mode. Should you need assistance, please signal conference specialist by pressing star key followed by zero. Following today's brief opening comments, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. Please note that this event is being recorded. I'd now like to turn the conference over to Steve Keenan, Olin's Director of Investor Relations. Please go ahead, Steve. Thank you, Jason. Good morning, everyone, and thank you for joining us today. Before we begin, let me remind you that this discussion, along with the associated slides and the question and answer session that follows, will include statements regarding estimates or expectations of future performance. Please note that these are forward-looking statements and that 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, the third quarter 2020 Form 10-Q, and in yesterday's fourth quarter earnings press release. A copy of today's transcript and slides will be available on our website in the Investors section under Past Events. Our earnings press release and other financial data and information are available under Press Releases. With me this morning are Scott Sutton, Olin's CEO, Pat Dawson, President, Epoxy and International, Damian Gumpel, President, Chlor- Alkali Products and Vinyls, Jim Varilek, Olin's COO, and Todd Slater, Olin's CFO. Scott will begin with some brief remarks, thereafter, we will be happy to take your questions. I'll now turn the call over to Scott Sutton. Thanks, Steve, hello to everyone. Look, I'll kick off my comments by saying just how proud I am of our entire Olin team for bucking traditional stale paradigms. Our fourth quarter results demonstrate the team's resolve and leadership. Olin people are masters of the ECU, we are prioritizing value first above all else across the entire ECU, not just in one or two products. That means we don't sell excessive volumes into poor quality markets. Instead, we withdraw supply, we generate purposeful activations on both sides of the ECU up and down our derivative chains, resulting in margin improvements on both sides of the ECU. Slide number 12 in the appendix demonstrates this activity and effect. Maybe the most important slide we have ever published is slide number 12. Our model also rejects the notion that this business must be deeply cyclical and will always have its co-products moving in opposite value directions, thus generating mediocre ECU returns over the cycle. It is not cyclical and is quite steady when Olin does not push excess volume and chase the poor quality side of the ECU down across an inflection point on slide 12 into an oversupplied swamp of poor pricing. Now, turning your attention to slide three, Olin's quarterly ECU profit contribution index chart. Even though the global chlor-alkali market configuration is in the poorest state for Olin, in other words, when strong back-integrated PVC production, which Olin does not directly participate in, pushes out lots of co-produced caustic into a weak caustic demand environment. Really the emphasis being on the weak caustic demand point here. We still sequentially lifted our ECU PCI by lifting margins across chlorine, EDC, and virtually every chlorine derivative while simultaneously not allowing Olin caustic to decline in price as much as industry indices would have anticipated. The ECU PCI shows our commitment to quality. Our adjusted EBITDA improvement shows the results of that commitment. I will also comment here that our fourth quarter adjusted EBITDA result is pure, as there are no non-recurring items included. Speaking of quality and moving to slides four and five, Winchester delivered the best quarterly performance in the business' 155-year history with even better quarters expected throughout 2021. The Olin Winchester team relishes its commitment to support both the U.S. war fighter and the more than 55 million of us who enjoy shooting sports. These themes are woven into the fabric of America. We expect that elevated shooting sport participation is here to stay. U.S. military modernization initiatives are expected to create additional opportunities for Winchester as well. Wrapping up my opening comments with slide number six. Our first half quarterly average EBITDA should be better than the fourth quarter of 2020 across every business. Note that we do have a number of turnarounds in the second quarter to contend with, and we expect a 10% improvement in the ECU PCI across the first half. Here are some key points specifically for the first quarter. Point number one, Epoxy will be the star of the show and is expected to surpass our prior quarterly EBITDA record as the team lifts the permanent earnings foundation of that business to match the value of our product offerings. Point number two, our merchant chlorine netbacks go to a multiyear high following our fourth quarter activations, which included shifting an additional 30% of our ongoing business away from arbitrary external trade indices. Point number three, our broad productivity gains start to show up as our fourth quarter project pipeline grew by 20%. We start 2021 with 633 active projects. Please see slide number 15 in the appendix for some more detail on that. Point number four, the early redemption of $120 million of the high-cost acquisition bonds this month was funded 100% with cash from operations, as was the additional $100 million of bonds repaid last October. Through a combination of improved adjusted EBITDA, disciplined capital spending, and debt reduction, we expect our net debt to adjusted EBITDA ratio to improve to roughly three times within the next 12 months. Looking out just a bit beyond 2021, we have the team, the skills, the operating model, and the assets we need to achieve at least $1.5 billion in EBITDA. Additionally, we have adjusted down our forward annual capital spend requirements to around $200 million, reflecting a better match of our physical plant assets to our model. This adjustment, in turn, enhances our levered free cash flow, and that cash flow inflection point should be clearly evident in 2021. At the same time we reach $1.5 billion in EBITDA, global ECU supply-demand fundamentals are likely to be improved, and Olin will expand our strategy to incorporate fixed asset light structural moves to take us to the next higher EBITDA level as more molecules move through our sphere of influence. Those moves are likely to be just as disruptive to conventional paradigms as is our current model. We will look forward to speaking with you in the future about the next EBITDA tranche above $1.5 billion and those supporting activities. That concludes my opening comments. Operator, we're now ready to take questions. Thank you. We will now begin the question and answer session. To ask a question you may press star then one on your touchtone phone. For any of you using speaker phone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. The first question is from Mike Leithead from Barclays. Please go ahead. Thank you, guys, and good morning. Scott, you've talked a bit about your new value first selling strategy for the past few quarters here. I was hoping you could maybe give us an update on how your customers have broadly responded to this, as well as perhaps any reactions you've seen in the market from your competitors in response to this. Yeah. Okay. Yeah. Thanks a lot, Mike. Look, we won't comment on competitor reactions, okay? What I would say about customers is, clearly this is challenging for them, and we certainly understand that. However, at the end of the day, they recognize that we're a critical part of their future growth, and they want us to be successful as well. That means we really do need to lift these materials up to reinvestment economics. Yeah, it's been challenging, but it's been progressive. Got it. That's fair. I appreciate a lot of your focus and comments are focused on kind of Olin specific actions, but curious if you could just kind of walk through what you're seeing in your key product markets in terms of kind of demand recovery. Maybe if you look across your portfolio, where you think the greatest pricing opportunity is today. I would just comment generally, and then I'll ask Damian and Pat to make some comments here. I would say that general industrial demand has still been fairly weak, and that's going to play itself out to our favor in the future. In specific areas, though, it's been quite good. With that, let me ask Pat from Epoxy to make a few comments, and then we'll ask Damian to do the same thing about CAPV. Yeah, Mike, this is Pat. I think on Epoxy, when you start out and you look at the demand side of things, we've seen sequential improvement in our demand since June, month-on-month and certainly quarter-on-quarter. The demand, quite frankly, where we sit today, and you got to remember, demand is really driven a lot around industrial coatings, automotive, electronics, wind energy. Quite frankly, we're back in a lot of those segments to pre-COVID demand levels. We're sitting here almost in February, and demand looks good. The other thing that has been encouraging on demand is the fact that China has been very robust, and I think the demand of Epoxy in China is probably as good as we've seen it for a while. Mike, going back less than 24 months ago when we had our investors day, we were showing then that the overall industry supply-demand fundamentals for epichlorohydrin, which is a major raw material going into making epoxy resin, along with epoxy resins, we're already in the mid-80% type industry operating rates. This is nothing new. It's just simply been the industry getting tighter. Now coming out of COVID, we see things very tight. It's given us pricing traction that started, quite frankly, back in September, October, and has only built in momentum through the end of the year. We see that momentum continuing here in the new year and right through the first quarter. There's increases out there that's public, in the public domain that have been announced. We're seeing good traction on that, and we see the fundamentals very good. This is Dami. Mike, thanks again here for the question. When we look across the board, across the CAPV portfolio, I can tell you that as we look here in 2021, we have a good upward momentum here across the board in all our product groups. Obviously, caustic is a big one if we look at economy starting to open up again, manufacturing activity increase, pulp and paper activity increasing some more. Alumina, aluminum by any external indicators are poised to have a rebound in 2021 over 2020. Clearly, we see signs of caustic improving over the course of the year. You look on our merchant chlorine business, you look at titanium dioxide and isocyanate demand, the polyurethanes in other areas, we continue to see exactly what Pat saw on his side. We see demand really starting to come back in the second half. We continue to see that well into 2021. We see our chlorinated organics business also showing rebounds with applications into pharma, water treatment, refrigerants all also firing back on their cylinders. Lastly, we see our bleach business continue at elevated levels for use in a disinfectant, but then you start getting into second quarter in the seasonal demand. Really, in summary, I can tell you that our view right now is that, looking ahead, the demand looks very good for both sides of the ECU for our portfolio. Great. Thank you. The next question is from Kevin McCarthy from Vertical Research Partners. Please go ahead. Yes, good morning. Couple of questions on Winchester. What is your expected contribution from the various price increases that are flowing through your business in 2021? Then secondly, if we look at history, oftentimes the year following an election is such that demand sort of softens relative to the election year itself, where there's a lot of strength. Based on your commentary, it sounds like your outlook is very positive. I was wondering if you could address each of those two things and help us to put it into context with regard to your outlook? Yeah. Sure, Kevin. The general statement is that Winchester results are going to continue to improve and continue to improve throughout 2021. The pricing, without an absolute number, we've put pricing and achieved basically 100% of that pricing on at least four occasions over the last six months or so. In terms of the profit improvement that you see in that business, it's probably the leading driving factor. The fact that we also have Lake City as part of our portfolio is also another leading driving factor. In terms of election and looking out, really the fundamentals have shifted for that business, which is different than it's ever been before. Shooting participation is way up, and we expect that to continue as a long-term trend. My point here is this is not just a 2021 phenomenon. We expect that business to do much better throughout a number of future years. Okay. That's helpful, Scott. A second question, if I may, on epoxy. Clearly there's a tremendous amount of pricing strength in recent months. I was wondering if you could help us understand how much of that is due to Olin's change in strategy around the ECU profit contribution index relative to exogenous market dynamics, such as various competitor outages in Asia. Any color around that would be really appreciated. Yeah. I think Pat will provide some color here. I would just preface it by saying in our epoxy business, it certainly is part of our strategy to first and foremost, lift value across the whole ECU first. Epoxy is a significant part of that. Epoxy has its own landscape fundamentals that Pat is exercising a lot of activities around. Pat? Kevin, I would say, first of all, we're very active around upgrading where we decide to place epoxy resin into our targeted applications and customers around the globe to drive the best returns to the ECU. I think a little bit of a different mindset change is that I've got to compete and make sure that I can get enough chlorine to put into the Epoxy chain. If I'm not improving my returns to the ECUs here internally, Damian will take that ECU and place it somewhere else. That puts a different perspective and a different color on our sense of urgency and the sharpness of which we evaluate where we're going to place that epoxy, like I say, into our targeted applications. Kevin, we've talked a number of times about the fundamentals of Epoxy and the fundamentals of epichlorohydrin, which is a key raw material. Since the reinvestment economics haven't been there in the industry for EPI or a lot of the base liquid epoxy type resin business, there hasn't been any capacity added. If you work off of this discussion we had less than 24 months ago at the investors presentation, I think you're just seeing the normal occurrence of a market that hasn't been invested in from an additional capacity standpoint. I think the other thing, Kevin, that you're seeing a little bit more color around China is, if you recall, a few years ago, they were really cracking down hard on environmental regulations, enforcing those regulations, which I think was great. I think that was good for the industry. It's good for China. I think that took some capacity out that may have not been so transparent. That's why you had probably the longest running arbitrage we've ever seen on the price of LER in China versus LER outside of China. That gives maybe a little color of what's going on here. Thanks for that, and congrats on being the star of the show. Yeah, it feels great, Kevin. Appreciate that. The next question is from Hassan Ahmed from Alembic Global. Please go ahead. Morning, Scott. Scott, as I take a look at some of the commentary near term-wise that you've given, and sort of compare and contrast that with the full year 2021 guidance that you had given, call it in early November, it seems that things have certainly improved a fair bit since then. As I take a look at the guidance you gave, it was $860 million on the low end, $1.06 billion on the high end. We're already at a run rate of $1 billion annualized in EBITDA. I was just wondering whether you'd sort of update that guidance in light of some of these sort of improvements that we've seen through the course of Q4 and some of the early indications that we're seeing of a certain degree of strength in 2021. Yeah. Thanks a lot, Hassan. I would say that we really are updating that guidance here, and we tried to be really clear that first quarter, the average of first half continues to do better, and certainly the full year. The reason that we're updating that guidance some is because our model, and just to restate it, principally it says that, look, our market participation is set by the weak side of the ECU. Translation is that we don't sell into poor quality markets. We do activations up and down our chain on both sides of the ECU. If you ever get a chance to look at that slide number 12, it just says we move our business from the green points to the blue points by running in that way. I guess my point is we're having success in doing that. There's still a lot of things that we can do to take off some of the handcuffs that we have. We see ourselves being more successful at doing that throughout 2021. That's the reason that we've updated our guidance some. Very helpful. As a follow-up, really appreciate slide 15, where obviously you're talking about sort of over 600 active projects that you guys have started in 2021. As I was going sort of down the list of projects that you guys mentioned, a series of sort of capacity closures and the like. As sort of you're thinking about all of these projects, how are you thinking about sort of potentially certain asset sales as well? I would say in terms of asset sales, right? That's not necessarily part of our near-term agenda. We're more concerned with immediate productivity and better cost performance that we can get from actually closing some assets that are underutilized. I do think Jim could probably provide some good color on the overall productivity program and how that is evolving. Sure. Hassan, one of the things that an important pillar, obviously, of our success here is productivity. We're talking about $50 million-$100 million of net savings for 2021. I think this is the epitome of controlling our own destiny. This is something that we absolutely control, is our own costs and our own productivity. We've been very active. We stepped up our activity in the fourth quarter, where we increased our project portfolio by 20% during the fourth quarter. We completed a large number of projects, over 900 projects for the year that actually work into our baseline cost for 2021. Of course, we're being aggressive with over 600 projects as we start the first quarter of this year. We're really making a concerted effort to control what we control on the cost side and help open up the margins as we're successful on the commercial side. You can see the variety of projects. This is a very broad-based program. It's virtually at every aspect of our company, whether it be structural with asset closures like you see on the list, or whether it's raw materials or rail car management, or sales tax or association costs. Every single element of the company, every person in the company is responsible for productivity, and that's really what we're stepping up. On the structural side, with some of these closures, you see the VDC and Novolak closure and our ECU plant closure that's going to happen in the second quarter that we're moving forward with are just some of the things that we're doing on the structural side. Of course, we're going to continue to look at our capacity, the ECU capacity that's underutilized, and we're going to continue to scrutinize that. As you can see, we've made decisions in the past and we'll make decisions here in the future. Very helpful. Thank you so much, gentlemen. The next question is from Aleksey Yefremov from KeyBanc. Please go ahead. Thank you. Good morning, everyone. Scott, you mentioned 10% improvement in PCI in the first half, if I understood it correctly. How should we think about margins on that? Should we just take essentially sales in the chlor-alkali and Epoxy segments and assume a 10% margin on that? Yeah. Hey, Aleksey, thanks. That's a good question. We've said this ECU PCI is not only the number one indicator of our success, but our commitment to our plan. If you think back to what I said on the third quarter earnings call, I said that that ECU PCI represents about 75% of the business that this company does. It's really only excluding our Winchester business and excluding our aromatics business. You could imagine, just as a rule of thumb, without having an exact math formula, that you can take 75% of our revenue and then think about what our contribution margins or our variable margins might be, and then you get to a 10% improvement in the ECU PCI over the first half. It averages some amount a little less than 10%, and that should be a significant chunk of improvement that happens to our profitability through the first half of this year. Thank you, Scott. That is relative to what basis? To fourth quarter or back half of 2020? I'm saying there will be a 10% improvement in it from where we finished the fourth quarter at. Understood. Thank you. You also mentioned a $1.5 billion EBITDA level. Is that something that you see as sort of near-term target, but not 2021, or something that you were thinking could be achieved in 2021 already? That wasn't our 2021 target, but that comes along really not too far after that. Therefore, that was some of my comments around, we're really looking forward to talking about what happens beyond that as well. It's a little bit after 2021. The last question, if I may. Shintech announced expansion, and it looks like it includes VCM capacity growth in excess of their PVC growth. You have a contract with them selling VCM to this company. How protected are you within your contract? Is Shintech obligated to buy volumes from you, and for how long? Yeah. I probably won't comment directly on the very specifics of that. What I would say, in general, is expansions like this, particularly this one, they're really expected and needed, especially in this timeframe, three years away. That's because of demand growing on both sides of the ECU. We certainly don't expect any negative impacts out of that. All of that is planned for. Thank you, Scott. The next question is from Mike Sison from Wells Fargo. Please go ahead. Hey, guys. Really good, nice results there. Scott, just out of curiosity, when you think about the third quarter ECU 99.6 and then the 106.2, how much of that was really you guys making the changes, and then obviously when you look at the consultants indexes, the ECU went up. I'm just trying to understand how much of that, maybe all of it, potentially was what you've done so far. Yeah. Thanks a lot, Mike. Thanks for the question. Yeah, we're all very focused on controlling our own destiny, and if you think about the way we're operating, it may certainly be disruptive compared to what has happened in the past. Certainly, we've driven our own results to this point, and when you're acting in that manner, I think opportunities present themselves that otherwise may not have come up. In other words, those happenings before that we didn't turn into opportunities, get turned into opportunities. The way to think about this business, because there's so many different markets, it's co-production, we have derivative chains, is that there's opportunities that come up every day, regardless of whether in one product area, demand characteristics are improving or declining. Now we're positioned to take advantage of those on the way up and on the way down. Got it. Just a follow-up on Winchester. When I've been to Cabela's or such, you can't really find Winchester ammo or anybody's ammo for what it's worth. Are you looking to expand capacity? When you look at the pricing at these retail stores, it's 3x November, maybe 4x in some cases. Are you locked in those type of prices for this year? Maybe just a quick reminder, how much is commercial and law enforcement that way, sort of understand the mix there. Sure. Mike, I kind of just started the back end of that. If you think about the mix of the business, it's not that far from being 50% military, 50% commercial with some law enforcement mixed into that. Those are really rough numbers though. In terms of capacity, we've just, of course, acquired a lot of capacity with the Lake City operation, but we continue to run that hard. Instead of expanding capacity, what we are doing is looking to optimize that capacity so that we do the right things for unit margin. In terms of whether we're locked into a lot of things, our government business or our military business is more steady. Commercially, even over the last 6 months, there's been certainly three or four price increases, we have the ability to change price as we need to change price. In fact, we have a February price increase that's on the table right now that really impacts nearly all of our commercial business, or a lot of it anyway. Yeah. Great. Thank you. All right. The next question is from Frank Mitsch from Fermium Research. Please go ahead. Thank you so much. Nice end to the year. If I could translate Mike's question, he was really asking you guys to ship him a couple of boxes. I think that's what the genesis was for his question. If I could stay on Winchester, obviously very impressive, $45 million of EBITDA. How do we think about the contribution from Lake City versus Heritage Winchester? We would've modeled in something like, I don't know, $12 million-$15 million at most for Lake City in the quarter. I'm just trying to understand how that played out and how do you think that's going to continue to play out? Yeah, sure. Hi, Frank. Yeah. Look, our improvement was due principally to two things, and you're right. One of them is Lake City, and the other one was certainly better commercial performance and productivity performance across Winchester. You can sort of think of those two things as sharing that improvement to get to that $45 million number. Lake City will be better than we said, but it'll really be because of our team's actions once we have Lake City. That $45 million that you referenced really becomes the low quarter in the next five quarters. Wow. Very helpful. Thank you so much. If I could just ask a question on the chlor-alkali side. Given the fact that you're not selling into poor quality markets, and indicated in the release that your volumes in chlor-alkali were lower year-over-year. I was wondering if you might be able to quantify, was it low-single digits, mid-single digits, down double-digits either sequentially or year-over-year, however you want to handle it, such that we have an appreciation for how much that business is benefiting from the PCI versus the volume side of the equation there? Yeah. Maybe Damian will answer this question. Yeah. Sure, Frank, good to talk to you. Scott, I would say that when we look at, if you look at our performance over the back half of the year, the contribution from a PCI more than outweighs any headwinds from lower volumes or cost. As I sit next to Pat and Jim here, we're working very closely together. The productivity gains that Jim has done and has led the way really creates a lot of air cover for the commercial organizations to go out and put value over volume at risk, knowing that we're constantly and deliberately working our cost down. As we look at our activations, as Scott mentioned, let me just give you a few data points here. We purposely, in Q4, against a weak caustic market, we placed less caustic soda than we otherwise maybe had the ability to do. We purposely kept caustic soda off of our participation. We did the same thing with EDC as well. We make EDC in conjunction liberating caustic soda. If caustic soda is weak, that means that we're going to play to that weak side. That also means we're going to limit our EDC. We see that our demand for EDC then more than outweighed our desire to supply, and we were purposeful in activating around that and looking to achieve ever-increasing values on EDC. Same goes for our bleach business, where we announced several off-season price increases in bleach in Q4, and we achieved those, and we've negotiated higher value contracts for us for the totality of 2021. We did that in our GCO business, where we announced price increases in Q4. Again, strong volume, purposely held some volume back as well there to activate around that. In cases when we were the only ones with a price increase on the table, we achieved the price increase and got the volume. Very purposeful set of working through our costs. Being very much in charge of our own destiny as it relates to being willing to put the value over the volume. I think our fourth quarter results show that model has some very good and positive returns. Frank- Very interesting. Yep. Frank? Yep. You should think of that price is at least three or four times, depending on what comparison you want, the penalty associated with volume. Again, it is much more about margin enhancement than the issue on volume. It well outweighs it. Got you. Very helpful. Thank you so much. The next question is from Vincent Anderson from Stifel. Please go ahead. Yeah, thanks. Good morning, everyone. You talked about Epoxy having to compete for chlorine internally, which is interesting. I don't normally think of those as an asset-light business. Without seeing anything specific to Epoxy highlighted on slide 15, I was just interested in getting some color in terms of how much more fixed cost you feel like you can get out of those to facilitate the kind of flexibility you're talking about. Yeah. Thanks a lot. I'll just take a quick shot at this. Look, we have room out of the company to take fixed cost, and that's pretty widespread. What we haven't really tried to do, at least for external purposes, is to narrow that down to business by business. I would just sort of close that point by saying, look, we're going to get $150 million - $200 million of gross productivity, which translates into that net $50 million - $100 million, and there's opportunities across all the businesses to do that. Okay. That's helpful. Thanks. Yeah. Scott, you teased out some asset-light moves, I think you called them, that if I'm interpreting it correctly, could shift the portfolio a little bit. With the improvement in base free cash flow going forward, really starting now, are there any areas in chlorine derivatives or maybe some small acquisitions could have an outsized impact on ECU optimization? Yeah. The answer is yes. It's not impossible. Of course, our principal strategy when we get above $1.5 billion of EBITDA will be to get more molecules underneath our umbrella. What that might mean, just sort of as a teaser to the future a little bit, right? It won't be just trading activities, it won't be just production activities either, and it won't be just marketing activities either. It's going to be more than any of those put together, and it's probably going to be something the industry has never seen before and may be disruptive, just like our model is disruptive to conventional thinking right now. Okay. A lot to think about there. I appreciate it. Okay. The next question is from Neel Kumar from Morgan Stanley. Please go ahead. Hi. Thanks for taking my question. In terms of the $1.5 billion of EBITDA, I know you mentioned it's not a 2021 target, but can you just provide how many years out that could be a potentially attainable goal? Can you just talk about what are some of the underlying assumptions needed to get there, and how much of the increase is under your control versus perhaps being more market driven? Yeah. Thanks a lot, Neel. It is two or three years out. We haven't put a specific timeline on that. I think the more interesting answer to your question is that we have everything that we need to get to that number. It really is all about executing this differentiated model across the company. We don't need anything else, and that's also why we can run $200 million of capital for many years, in fact, to be able to support our business model. Thanks. That's very helpful. Just for chlorine, I think it's been up to $200 per ton out there in terms of price increases. Can you just give us a sense of how much of the chlorine portfolio has seen that price increase? It seems that IHS has only recognized a portion of those increases. Why do you think that's not all been recognized so far by IHS? Yeah. Well, I would just say that I probably can't answer why IHS didn't see them. Probably a good question for them, actually. For us, we are still unwrapping ourselves from certain commitments that we have to follow through on. In terms of merchant chlorine, we still have maybe the minority, but a minority growing share that we can instantly change price on, and we're working to improve that. The next question is from Matthew Blair from Tudor, Pickering, Holt. Please go ahead. Hey, good morning. I had a few questions on epoxy. We've seen propylene and benzene costs move up quite a bit in January. Of course, LER price was also soared about $0.27. Could you just walk through the moving parts here, and all things equal, would you expect to see unit margin profitability increase in epoxy in Q1 versus Q4? Yeah. I think Pat will give you a little color on that. He'll probably just sort of cut to the chase and get to the answer on that without too many moving parts. Yeah. Matthew, the short answer is yes, we are going to expand margin Q1 versus Q4. That's the short answer. Sounds good. Pat, you previously touched on strong demand end markets in epoxy like wind and autos. I think the price gains are just pretty remarkable given that aerospace is likely still a big drag. Could you talk about how much of a headwind is aerospace today, and I guess how much upside down the road it would present if aerospace normalized? Matthew, I think you have to also throw oil and gas into that aerospace as well. While we've seen the recovery that I talked about in our demand I mentioned earlier, which we're pretty much back to where we were last year at this time. Without aerospace, to your point, and without oil and gas, and also without the full recovery in a lot of industrial coatings. You guys cover all the big coating houses, and so I think there's more upside here to the demand. The other point I didn't mention is that we really saw a lot of customers and their customers' customers take inventories down really to low levels at the end of last year, which is not uncommon. We think inventories are at pretty low levels here going into the new year as well. I think that bodes well for ongoing traction that we have seen late last year and that we're seeing here in Q1. Great. Thank you. The next question is from Eric Petrie from Citi. Please go ahead. Hey, good morning, Scott. Morning. Appreciate the comment on the 30% of merchant chlorine transitioning away from indices. Could you quantify it at all for the rest of the portfolio, including caustic soda, how that traction has made progress in the year-end? Yeah. Dami, do you want to comment on that? Yeah, sure. Good morning, Eric. We continue on a very deliberate approach here that in terms of looking for our contract openers, canceling evergreen contracts, pulling contract renegotiations forward both across chlorine and caustic soda to move away from these arbitrary, sometimes opaque third-party indices and move towards something that puts our control in our own destiny. We fully expect to continue to move along that. Every new contract moves us closer and closer to that goal that Scott has outlined, and we have achieved that. Everything that we were able to open and negotiate in contracts here in the second half of the year across all of our molecules, we achieved that. Much more to come here, but we're very active on that front. Okay. For my follow-up, U.S. Gulf Coast EDC prices have doubled to $600 per ton. Is Olin running full out or not because of lower caustic net backs? Are there any other chlorine derivatives that are ripe for debottlenecking capacity? Yeah. Eric, this is Scott. What I would say is that you have to think about how we're running our model. We said we're not going to sell into poor quality markets, and therefore, we're not selling so much into the caustic world right now. Because these things are co-produced, we go back and look at chlorine, and basically that says we're not selling as much chlorine into certain markets, and that means every derivative has to compete. Clearly, EDC is becoming more competitive for that chlorine. I just don't want to walk away from this Q&A, and people think that we're running assets hard for where we are, because we're not at the moment. Those are running more than maybe some other derivative assets might be. It's all connected together. The next question is from Jeff Zekauskas from JPMorgan. Please go ahead. Your operating cash flow in the quarter seemed pressured, and you really lifted your accounts payable, which assisted things. Can you talk about some of your operating cash flow dynamics? Yeah. Todd, do you want to take it? Yes. Jeff, consistent with what we had said throughout the year and in our call in early November, we said we were ultimately going to reduce working capital by around $150 million. It ended up being $141 million. It's hard to predict the exact timing of tax refunds, otherwise we'd hit it. Remember, that does include funding $67 million of working capital for Lake City. We had purposeful activations on our entire working capital front, and the achievement occurred was what we expected. Okay, great. Thank you very much. The next question is from Steve Byrne from Bank of America. Please go ahead. Yes, thank you. You've mentioned you have underutilized ECU capacity, and that it's under review. My question is really about what are the options you're considering? Is it likely that you'll shutter capacity and keep it, so to speak, warm until demand warrants bringing it back on stream? Or have you looked at the technical feasibility of retrofitting electrolyzers to, instead of using a salt brine, use fresh water and produce hydrogen? Or to use a lithium chloride brine and produce lithium chloride and chlorine. Have you looked at those options as an alternative? Hi, Steve. The option we're looking at, and I think highly likely, is a permanent shutdown of some ECU production capability. Just like the other shutdowns that we're doing are all permanent shutdowns. With regard to your other questions, we just have so much more value to deliver and lift in terms of our current businesses that the answer to your question is no, we're not looking at any kind of changes in chemistry at the moment. Okay. I don't know, $10 a kilo for hydrogen seems like a pretty high value option. I did want to drill into your productivity initiatives. Is this a program that you've modified since coming on board, Scott? Can you comment on these 600 projects that you have underway? How would you characterize how much of this is kind of top-down versus bottom-up? If it's coming from broadly within the employee base, what is your approach to incentivizing Olin employees to contribute to this pool of productivity ideas? Well, look, I would just say that, no, it's not me, it's the team doing this. As far as how the team is doing that, Jim's going to answer in just a minute. I think the answer to the question is why the employees would be incentivized to do this is basically because they love Olin and want to see Olin be really successful in the future. Like I said in my opening, I'm just so proud of this broader team for really jumping in and originating things. Jim, do you want to add anything? What I'll add is that what we've really done is we've broadened out the program and intensified the program. We've had productivity in the past, but now we're literally driving it down to every employee. On a weekly basis, for instance, at the end of a particular week or a shift, some of the folks that are actually operating the plants will get together and say, "What did we learn this week?" Or, "What do we think that we can do better? Lower costs. They take those ideas, and we actually follow up on those. That's an example of the kind of thing that even every operator of a plant on the shift or what we're doing, it doesn't matter whether we're closing the books or anyplace else in the company, we evaluate on a regular basis what isn't being done well, what did we see that could be done better or save money, and then we actually put it into a project, and we follow up on it. It's a grassroots, all employees based type program, and then we elevate them up, and we follow through on the projects. Very good. Thank you. The next question is from John Roberts from UBS. Please go ahead. Thank you. Scott, Olin acquired K.A. Steel a long time ago as a way to get control of more caustic molecules. Would that be an example of the type of things that you're thinking about? I know you're thinking about other things in addition to that. That's not the kind of thing you're thinking about in terms of controlling more molecules? Yeah. Thanks, John. I would just say that could be an example, right? It would be one tool of that. I think there's a lot of ways to have more molecules flowing through our sphere of influence than doing complete acquisitions, though, that probably this industry hasn't seen them added together, right? They're seen one by one. In terms of uniqueness being set up around a model where we go out and do that, which will drive growth for many years to come for Olin, it'll probably be a bit more sophisticated than one by one steps. Secondly, sequentially from third quarter to fourth quarter, your ECU index moved up about 6% and your EBITDA on relatively stable volume moved up about 13% for the segment. Is that about the right leverage that we should think about, kind of a 2: 1 move in EBITDA versus the index? Yeah, for the level we're at right now, it's probably okay. As a rule of thumb. Clearly, there's a lot of other things at play in terms of productivity and turnarounds and all those things, but it's certainly indicative. Thank you. The next question is from Arun Viswanathan from RBC Capital Markets. Please go ahead. Great. Thanks. Good morning. Congratulations on all the progress here. I wanted to ask the progress question a little differently. Last quarter, you laid out a $50 million- $200 million bucket for optimizing the ECU value. Do you feel like you've achieved maybe the midpoint of that on a quarterly run rate basis at this point, or are you leaning towards the upper end? Secondly, when you think about the move from $250 million- $375 million, say on a quarterly run rate basis of EBITDA, where do you feel like you achieved that $375 million? Is it maybe exiting Q4 2021? I know that you're not achieving the full one five in 2021, but do you think you can get to the run rate of that maybe in late 2021 or early 2022? No, I think, Arun, the answer for the first part of the question is that's a little bit of why we're showing a bias to increase what we're forecasting for next year is that we are leaning beyond the midpoint of that bucket that you referred to. Can you restate? You used the number $375 million. I'm not sure what that number is. I kind of missed it. Can you restate what you were asking? Well, I was just implying that if you say $1.5 billion on an annual run rate EBITDA basis, maybe that's $375 million a quarter or slightly above that. That's what I was referring to. Okay. That, of course, is probably two to three years out where we get to that kind of run rate consistently. Are we going to have to reach a point where we touch in the $300 million to demonstrate that we have the capability sooner than that? I think we will. Okay, great. Just lastly on leverage, there's a target to get to three or so by the end of next year. Beyond that, do you feel like that's the right level for you guys to remain at, or would you see it going even lower? If you remain there, how do you see priorities of cash use? Thanks. Yeah. Todd, do you want to answer that? Yeah, sure. Arun, we're targeting to be in that three times range within the next 12 months. From a levered free cash flow of $0.025-$0.035 a share we've talked about, that'll help us. We're going to use that cash to continue to pay the dividends and to reduce debt. We just paid $120 million this January. The next targeted debt that we have is the $500 million of the 10% bond is due in 2025. We're targeted to try to pay those off fully in 2021. That's where we're headed. As we move beyond 2021, clearly we would like to see debt come down a little bit, and then we have opportunities for cash as we continue to generate. Thanks. The next question is from Travis Edwards from Goldman Sachs. Please go ahead. Hey there. Thanks for the time. Appreciate the color on the business. Maybe we could follow up on the capital allocation side, I guess maybe at the risk of coming across a broken record from last quarter. Just on those 2025s, I think you've been clear and have proven that with the free cash flow you are allocating towards debt reduction by taking out those 2023s. We're just wondering, is there anything as far as sort of market environment, credit market support that would, I guess, change how you're thinking about allocating that cash flow, not necessarily towards the debt reduction, but maybe coming to market instead with your debt trading in the 4% range and the coupon on those being 10%? I guess, is there anything in the environment that could change that would help you rethink or lead you to rethink how you would address that debt? We obviously always look for opportunities to be mindful of ways to reduce our interest costs. However, we also balance that with the amount of free cash flow that Olin generates, and we need pre-payable debt. Clearly we are targeting prepaying that $500 million of 10% bonds if possible this year. Just to add on that, Todd's exactly right. We're going to go after that $500 million this year. A large part of that certainly comes from our operating cash flow, and then we'll do some clever things to get the rest of it. Got it. Appreciate the time. Yep. The next question is from Roger Spitz from Bank of America. Please go ahead. Thank you and good morning. For 2021, working capital, unless you had said this earlier, do you expect that to be a source of use of cash, and to what extent? Yeah, I'll just quickly answer it. We're going to use a little bit of cash for some working capital, and that's all factored into it. When we say we're going to get levered free cash flow at $2.50- $3.50 a share, that's all factored into it. It'll be a slight use of cash in 2021. Perfect. I'm wondering, back on the epoxies, with the Hexion/Pernis force majeure in Europe, how much is that driving the spike in this EPI LER versus, say, the perhaps less Chinese import pressure into Europe because of stronger demand in China and stronger demand overall? Thank you. Yeah, Roger, this is Pat. I would say that that force majeure that you referenced is more of the minor issue compared to the bigger issue I mentioned earlier around overall demand and demand out of China. Thanks very much, Pat. Appreciate it. Yep. As there are no further questions, this concludes our question and answer session. I'd like to turn the conference back over to Scott Sutton for closing comments. Thanks. I guess in closing, I'd just like to say that Olin's going to continue to win our way to a different valuation, which means we really have to lift Olin people high. You might be interested to know that we also host internal progress calls each quarter facing our own internal analysts, and it's slightly off cycle with this call, but we call them something different. We call them lifting calls, and we have three lifting business units, and the leaders of those business units report on our engagement, our drive, our initiatives and progress similar to what I do here on earnings calls. We'll look forward to discussing that topic more with you on future calls as well. Thanks a lot for joining us today. Thank you for attending today's presentation. You may now disconnect.