Good morning, welcome to the Olin Corporation's Q4 2022 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a 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 touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Steve Keenan, Olin's Director of Investor Relations. Please go ahead, Steve. Thank you, Anthony. Good morning, everyone, and thank you for joining us again 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 limitations in the Risk Factors section of our most recent Form 10-K and in yesterday's Q4 earnings press release. A copy of today's transcripts and slides will be available in 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; Damian Gumpel, President, Epoxy; Patrick Schumacher, President, Chlor Alkali; Brett Flaugher, President, Winchester; and Todd Slater, Olin's CFO. The leadership team will make some brief remarks, after which we'll be happy to take your questions. I'll now turn the call over to Scott Sutton. Yeah, thanks, Steve, and good morning to everyone. In 2022, Olin generated $12 per share of levered free cash flow, repurchased more than 25 million shares, and reduced our net debt by $200 million. It was a massive team effort after generating $9 per share of levered free cash flow in 2021. As we head into 2023, our markets are not healthy, yet our focus on levered free cash flow remains the same, and we expect to generate approximately $7 per share of levered free cash flow in this recession year. From an EBITDA perspective, we worked in the $2.4 billion-$2.5 billion range the last two years, and we expect to generate at least two-thirds of that average in the trough that is 2023. For Olin, the key features of early 2023 include continuing to idle our complete global Epoxy resin business due to suspended demand in the largest consuming regions of China and Europe, rectifying a transient fat supply channel in commercial ammunition via a lower Olin participation rate, kicking off the operation of the Blue Water. Please hold as I try to reconnect the main speaker line. Thank you. Please wait to continue. All right. Thank you. Look, sorry, I understand that we dropped. I won't repeat the first part of my comments, but I'll start where I think we dropped off. You know, for Olin, the key features of early 2023 include continuing to idle our complete global Epoxy resin business due to suspended demand in the largest consuming regions of China and Europe, rectifying a transient fat supply channel in commercial ammunition via a lower Olin participation rate. Kicking off the operation of the Blue Water Alliance with Mitsui to manage much more of the world's liquidity in chlor-alkali, and recognizing another solid pricing lift in our merchant chlorine business. While some of these features of the Q1 of 2023 are already impactful in a slightly negative way, it is still possible that we may have to take more drastic action in a subsequent quarter to recoil further and preserve product values for the rebound toward the latter part of the year. In 2023, expect us to hold our current net debt position, keep buying shares throughout the year, gain an investment-grade rating, complete our asset footprint adjustment decisions, and prepare for a quality growth story in 2024. We've also updated our 2022 ESG scorecard progress on page 10 of the presentation. This is a growing theme for Olin. We look forward to showing the results from our focus in this area. Damian, Patrick Schumacher, and Brett Flaugher will each make a few brief comments on both the situation and our initiatives across all three businesses, and then Todd Slater will follow with additional commentary on our 2022 accomplishments and 2023 outlook. Thank you, Scott, and good morning. On slide four, Epoxy Q4 results are partly a reflection of seasonal demand, but principally our disciplined approach to weather the most challenging landscape in 14 years, which led us to deeply pull back resin production that would have otherwise harmed the landscape. While anticipating improvement in the back half of 2023, we focus today on productivity, optimizing our asset base, enhancing our sustainability profile, and positioning for value-based growth. On this last point, we supercharged the business during Q4 of 2022, putting our differentiated systems product portfolio under seasoned leadership in new product commercialization. I look forward to sharing on future calls the role Olin Epoxy plays in addressing global energy, mobility, and infrastructure challenges in a sustainable way, and how that translates into shareholder value growth. I'll now turn it over to Patrick Schumacher for Chlor Alkali. Thanks, Damian. Even though 2022 was an all-time record year, the second half of 2022 brought significant challenges which we are likely to continue into the first half of 2023. Pricing in the vinyls chain remains weak and continues to necessitate lower Olin operating rates. On the positive side, our merchant chlorine ratchet continues to turn only one way. Chlorine pricing is expected to step up through 2023 as legacy contracts end. Bleach has been another success story, and we expect both products to show substantial earnings growth again in 2023. Our Blue Water Alliance is now one of the world's largest traders of EDC and caustic, and will be an important part of the Olin value equation for years to come. I'll now turn it over to Brett for an update on Winchester. Thanks, Patrick. The Winchester team continued to maximize value throughout 2022. During the second half of the year, we started to experience a transition in our commercial ammunition business from refilling depleted inventories to filling inventories to the rate of our customer sales. In some cases, especially small caliber rifle, inventories became high. We decided to manufacture and sell less to preserve value for both Olin and our customers. With nearly 15 million new participants entering the recreational shooting sports over the past few years, we believe demand for our leading Winchester ammunition products will remain stronger than historical levels. We continue to see opportunities within our military segment with demand increases from current and new international military customers, as well as increased government funding to modernize the Army Lake City facility. As we manage through this commercial ammunition transition, our focus will be on growing and preserving value for the number one brand in the ammunition industry. I will turn it over to you, Todd. Thanks, Brett. Throughout the last two years, Olin has generated $3.1 billion of levered free cash flow. Our capital allocation was initially focused on the balance sheet, whereby we reduced outstanding debt by $1.3 billion over the two-year period. With our investment-grade balance sheet set, we primarily deployed our remaining levered free cash flow towards share repurchases, totaling $1.6 billion over the last two years. In fact, during 2022, we reduced our outstanding shares by approximately 16%, all from cash flow. In 2023, despite the challenging global economic conditions, we're forecasting to generate recessionary trough-level levered free cash flow of approximately $1 billion, which equates to about a 13% free cash flow yield. Our 2023 cash flow includes a couple of unusual items. Our cash tax rate is expected to be higher than normal due to deferred international tax. Approximately $80 million that are forecast to be paid this year. We are expecting a peak payment level under our long-term energy supply contracts of approximately $75 million. Our investment grade balance sheet and cash flow should enable Olin to continue to deploy a substantial portion of our 2023 levered free cash flow towards share repurchases. That concludes our prepared remarks, and Anthony, we are now ready to take questions. We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we'll pause momentarily to stumble our roster. Our first question will come from Hassan Ahmed with Alembic Global. You may now go ahead. Morning, Scott. Morning. Scott, a question around, you know, the 2023 guidance you guys gave, obviously sort of in line with sort of the trough range that you guys have been talking about, the $1.5 billion to $2 billion. Look, I mean, I take a look at the Q4 adjusted EBITDA, you know, $442 million. I annualize that, and I get to $1.77 billion, which is squarely sort of, you know, the midpoint of the trough and 2023 guidance that you guys have given. You guys obviously achieved this, sort of these Q4, the Q4 EBITDA in the face of extreme adversity, right? I mean, a massive destock, you know, most of your end markets being as weak as they were, the Epoxy business doing what it was doing. On top of that, obviously, you know, Q4 being a seasonally weak quarter. I guess the only tailwind you guys have had in the quarter, and it seems on a go-forward basis, is Chlor-Alkali pricing, right? As I sort of sit there and talk to investors, you know, some of the cynics may turn around and say, "Hey, look, you know, one of the things that has been propping up EBITDA, and, you know, is Chlor-Alkali pricing, and it just can't go on, you know, rising forever, so it may crack." Again, I'm not in that camp, but, you know, what could you tell us to sort of give us a little more confidence that even with the macro looking the way it's looking, you're not really gonna see any cracks in Chlor-Alkali price? Yeah. Yeah. Thanks, Hassan. I mean, that's a good summary. I mean, I would also urge you to think about what's the cause and effect here, right? I mean, Olin is absolutely the leader here and is setting the value equation. It's no doubt that pricing in chloralkali, especially in some of the derivatives, can go up from here, and they can go down from here as well. We have some very solid footing there, and I'll ask Patrick to add a little color on Olin's footing. Sure. Yeah, Hassan, thanks for the question. You know, it's definitely possible, as Scott said, that you could see lower prices. You know, maybe caustic goes down from records. Other, you know, we're gonna run to the weak side. We've baked in or locked in a lift in chlorine prices for this year over last year of at least $100 million. Vinyls prices have been very, very weak for at least half the year. You know, there's been, you know, recent uptick in prices there, so maybe those prices start to tick up. You know, we expect a mixture this coming year of maybe some higher prices and maybe some lower prices. Fair enough. Fair enough. As a follow-up, just, sort of, you know, trying to get a lay of the land with regards to inventory. I mean, you know, you guys obviously on the Chlorovinyl side, you know, pointed towards certain end markets being sort of particularly weak, you know, be it TiO2, be it the urethane side, you know, be it the vinyl side. I mean, as I'm sort of sitting there and looking at, you know, call it, you know, certain TiO2 producers, they're talking about volume declines as high as 30%, right? I'm just trying to get a sense of, you know, if you could sort of give us a sense of where inventories are for you guys, for the industry, and if at all there is a restock, how sort of, impressive could that snapback and demand be? Yeah, sure. You know, 30%, you know, I'll take your word for that. You know, if you look at our chlorine business year-over-year, you know, volumes are definitely down, you know, but net backs are definitely way up. You know, chlorine and, you know, the chlorine side of the ECU has been the weak side of the ECU as we've been talking to you guys. Well, this would be the Q3. We're running to that weaker side, and we're managing rates to that weaker chlorine side of the ECU. That is lifting net backs, which is offsetting those lower volumes. Very helpful. Thank you so much, guys. Our next question will come from Mike Sison with Wells Fargo. You may now go ahead. Hey, guys. Just curious on your outlook for chlorine, particularly as we get in the second half of the year. Did a couple-- one big paint company who sees the second half weaker in housing. Just your thoughts on how that would affect, you know, that part of the ECU? Yeah. Yeah. Hey, Mike, it's Scott Sutton. Yeah. I mean, we see the same thing. I mean, the trend in U.S. housing isn't great. It's not impossible that, you know, trends like that change which side of the ECU has the better fundamental conditions. Again, we'll set our market participation according to that weak side. When you go all the way to merchant chlorine, just as Patrick Schumacher said, Mike, I mean, that's something that, you know, we've had contract resets. Patrick Schumacher already mentioned $100 million a year. Even looking beyond 2023, we would expect additional resets as well. Chlorine has a very nice runway. Got it. I guess when you think about your operating rates for the rest of the year, do they sort of stay at these levels for most of the year? Or is there an assumption that they would improve a little bit, you know, as the year unfolds? Pardon me a moment as I reconnect the main speaker line. Okay, I've reconnected the main speaker line. Mike, your line is open as well. Yeah. Hey, guys. I guess the question was, you know, where are your operating rates now? Do you think they will, you know, based on your guidance, stay similar through the rest of the year, given the outlook for demand? Yeah. Well, look, I would say overall, I mean, we're, you know, certainly running lower operating rates. I mean, the highlights of those lows really are that, you know, if you went all the way down into our epoxy resin, you know, you'd find that we're running below 50% capacity. You know, that situation is certainly gonna continue because we're just not gonna sell too much volume into an undervalued marketplace. You know, in the Q4, we had to adjust Winchester's rates quite a bit as well because, you know, the supply channel got a bit fat. That's trending the right way, and that's why we've said in the Q1, you know, that business will improve over the Q4. Got it. Thank you. Sure. Thanks, Mike. Our next question will come from Arun Viswanathan with RBC. You may now go ahead. Great. Thanks for taking my questions. First off, you know, on that note of operating rates, it says you can run at 50% for one year. I think we've been, you know, at these low rates now for a little while. Are we? How long does that year last? I mean, how much time do we have left in that? I had a couple of questions on Blue Water and Hydrogen as well. Thanks. Sure. Hey, Arun. I mean, that, you know, 50% rate was, you know, across effectively the whole company for a whole year. You know, if we ran at the pricing levels established in the middle of last year, you know, that would still deliver our recession case. Against that standard, you know, there's still quite a bit of room left, Arun. Okay. On Blue Water, is there any way we can, you know, quantify the impact, you know, financial impact and benefit to you? You know, I know that you noted that you'll control a greater amount of the industry supply, or at least, you know, be in a position to manage it. How does that translate to EBITDA benefit, and when do you start seeing that? Yeah, sure. I mean, keep in mind, that's a consolidated, you know, joint venture for Olin. You know, Todd will make a couple of comments on the direct impact that you'll see. Yeah. Yeah. Thanks, Arun. You know, it will be consolidated, and our results will come up into the Chlor Alkali Products and Vinyls segment. In the first year, you should expect overall revenue to increase $500 million-$700 million. As it is the first year, you should expect from that joint venture, you know, minimal EBITDA impact. Got it. Similarly for Hydrogen, you know, with the third unit starting up, is that, you know, in commercial operation, you know, and similarly, when do you expect to get any EBITDA benefit? from your sustainable activities there. How should we think about how that contribution flows into Olin? Yeah. Yeah. I mean, you know, this is Scott. I mean, we only have one hydrogen arrangement into the fuel cell application operating today. The second one is our venture at St. Gabriel, and that one is, you know, under design and under construction, and it'll take us to the end of this year to get that started up. The point we wanted to make that I think you saw in the slides is that we're starting discussions around a third venture, you know, as we try to get our hydrogen out into these new sectors. Even the first two are only about 5% of our hydrogen. Thanks. Okay. Our next question will come from Vincent Anderson with Stifel. You may now go ahead. Yeah, thanks and good morning, everyone. I just wanted to clarify your comments on Epoxy, just so I had it clear. You said a global idling, but naming just Europe and Asia markets as the reason. I ask only because U.S. resin prices are still holding up fairly well. Is this really all Epoxy resin assets are going down in the Q1? Well, I would say we've been running those at a lower level. I'll let Damian give a little more color on where we are right now. Sure. Thanks, Scott. Good morning, Vincent. On Epoxy, you know, what we said is that, you know, this is a globally challenged situation, the worst that we've seen in, you know, 14 years since the financial crisis. You know, most of Epoxy consumption does take place in China and in Europe. That's where we've seen the greatest impact to the landscape. As a result, we've been, you know, for over a year now, we've been adjusting our production and our market participation in order to preserve value. That's led us to continue to, you know, successfully challenge ourselves to operate at lower rates across our portfolio. You know, we're gonna continue to do that, and, you know, as long as it takes. Frankly, you know, we can still go further. It's, for us, it's a question of, you know, taking this opportunity to right-size our global Epoxy portfolio to, you know, focus on the assets that our customers value the most. We've done a lot of that already, but we still have a lot more that we are going to do here under this challenging environment. Okay. That's helpful. Thanks. And then just kinda returning to Blue Water Alliance. I always had kind of penciled Olin in as already the largest participant in the globally traded merchant markets for caustic and EDC. Is there any more details you'd be willing to give around what that looks like now with Mitsui at the table? I would just say that, you know, we've expanded our capability there. Remember, you know, the way that joint venture was formed was a merger of the two, you know, international businesses in caustic and EDC. We've just enhanced our capability there further. Okay. And then, you know, as I think about, you know, the market share expansion benefit is pretty self-explanatory. If I think about your partner not being a producer the way you are, you know, can you talk about how that might change your approach to the international market so that you're not caught in a position where you'd otherwise be looking, you know, having to run your assets even lighter than you would want to? You know, does that involve, you know, a more significant investment in storage capacity, dedicating balance sheet capital to, you know, inventory builds in the right situation? Can you just talk through that? Well, I would just say that, look, it's not a market share, you know, gain there. If you think about what's going on, you're merging two existing businesses, the merged business is essentially going out and expanding its trading capability. While the joint venture will be managing more molecules in the future than it does today, those molecules are already produced and sold today. It's just that they end up under a different umbrella in the future. Okay. All right. That's, that's fine. I can work with that. Just one quick one. Todd, you said $500 million-$700 million of revenue, minimal EBITDA impact in year one specifically. This isn't some kind of big fixed cost asset that we're ramping up into. What turns that to EBITDA positive? You should expect that, you know, this business, as it continues to grow and gets more molecules under its umbrella, that revenue will continue to grow, and then we would expect that EBITDA performance would improve. Okay. All right. Best of luck on the rest of the year. Thanks. Thanks. Our next question will come from Kevin McCarthy with Vertical Research Partners. You may now go ahead. Yes, good morning. Scott, natural gas prices have plummeted perhaps 65% or 70% over the last six months in the U.S. Would you talk about the impact that you would expect that to have on your Chlor Alkali and Vinyls business or the overall company for that matter, you know, taking into account any hedge positions that you may have? Yeah. Yeah, sure. I mean, I would just say, look, I mean, the impact is a bit muted, right? We do hedge, and we always have hedged, so, you know, we moderate that. We don't necessarily see the peaks, and because of that, we don't necessarily see the value, I mean, the valleys either. For us, it's really generally moderated. Okay. for the Winchester business, what sort of volume trends would you anticipate in 2023 for commercial versus military? Yeah. Yeah. Yeah. Well, I mean, Brett's gonna add a good bit of color because we have a lot of actions there, you know, particularly in the military business. You know, we're gonna start out slow in commercial as adjustments, you know, are taking place. You know, military is off to a good start. Brett? Sure. Well, Scott's correct that we'll start off slow from a commercial standpoint. It probably will look a little bit better in the Q1 versus the Q4, but still slow. From a military standpoint, the one benefit that we have from the military, we get a long runway, visibility on demand from the military, from our U.S. military customer, and we have that visibility, and it's very consistent from what we've experienced in the past. The big change is that we are starting to see some of our international military customers acquire about some needs that they haven't had in a long time. Okay. Thank you, guys. Perfect. Our next question will come from Steve Byrne with Bank of America. You may now go ahead. Yes, just wanted to drill into the hydrogen project at St. Gabriel. I assume that you'll have to consume more natural gas just because that hydrogen presumably was previously being used for power production. Just curious whether you can alter the operations of your ECU units to increase hydrogen production, i.e., from changing the brine concentration running into the, into the units. Yeah. Yeah. Hi. I mean, look, not all of that hydrogen is necessarily used for our own energy production. We have a lot of large offtake arrangements with, you know, the gas companies, we're working our way out of those. We also just vented a lot as well, absolutely no use. What's happening in St. Gabriel, for the most part, is we're taking hydrogen into a new application, there's no real meaningful offset anywhere in our system. This is, you know, CO2 offsets without a corresponding penalty. That's generally the way these first projects are set up. Maybe another question on Winchester. Is it fair to assume that, you know, your EBITDA margins between military and commercial are significantly different, and you may have a volume shift more towards military, just given what's going on in the world, but it's not a EBITDA benefit. Is that fair? Well, I think when you look at the overall position of the Winchester business, certainly, you know, we gain something on the military side. There are some challenges on the commercial side right now. You know, you may have noticed that we did improve overall pricing in that business in the Q4 relative to the Q3. In fact, we expect to do the same thing in the Q1. You know... Please give me a moment as I reconnect the main speaker line. Okay. Hey, sorry. You know, apologies to everybody. I mean, for some reason, you know, our line keeps dropping. I'll just repeat the answer to that last Winchester, you know, question on pricing. You know, we were able to lift overall pricing in the Q4 versus the Q3, and we expect to do the same thing in the Q1. You know, import ammunition pricing has are always been less, but, you know, at the moment, we face the additional challenge that the major domestic brands are actually pricing lower than the imports. Still, Winchester is the leader there, and our trend will continue. Thank you. Sure. Our next question will come from Josh Spector with UBS. You may now go ahead. Yeah. Hi. Thanks. Just to follow up on the chlorine pricing side of the equation. When you talk about more pricing through this year, I mean, how much of that has already been negotiated and it's gonna flow through, versus you need to renegotiate those contracts? Just as we look at your mix of portfolio today, how much of it still has room for renegotiation versus one, two years ago? Yeah. I mean, you know, Patrick will give the right answer here. He gave the summary, right? We've implemented a $100 million run rate more in 2023 versus 2022. What's the rest of it? Yeah. That $100 million is locked in, that's not, you know, a hope. That's locked in, already negotiated lift. There's gonna be more to come this year, as Scott said in his opening, that will flow through in 2024. You know, order of magnitude, probably, you know, I'm not gonna peg it, but it's another substantial lift in 2024 for new stuff to negotiate in 2023. Thanks. Just on cash deployment, I mean, given the step up in interest in some of your variable rates, has any of the calculus changed on buybacks versus debt paydown? Josh, thanks for the question. Our... We would expect interest expense in 2023 to be between $150 million and $160 million. We do have 30% of our debt is variable rates. We will continue for our free cash flow to prioritize share repurchase. Got it. Thanks, guys. Our next question will come from Frank Mitsch with Fermium Research. You may now go ahead. Hey, good morning. I wanted to follow up on Winchester. You know, obviously, Russia came out of the market as a supplier, midyear, so I would've thought that the supply side wouldn't have been an issue, but you've obviously been making adjustments there. What has been the impact of Russia coming out of the market that you've seen so far? Obviously, the expectation is they'll be out of the market for a while as well. Wouldn't that bode well down the line? Hey, Frank Mitsch. This is Brett Flaugher. You're correct. It should. What we're seeing right now is I think it's been since May of last year that we saw any imports come into the country from Russia. However, we continue to see some inventory that's out in the marketplace across a couple different calibers of ammunition. We do anticipate that to sell through. It's taken a little bit longer than we expected, but we should benefit when that gets all the way sold through. Gotcha. Gotcha. Okay. Then if I follow up on Chlor Alkali, obviously, it was impressive that you kept the Q4 relatively flat profitability-wise in the Q3. There seems to be a bit of a disconnect in terms of profitability between the upstream, you know, doing pretty well and the downstream not doing so well. I was wondering if you could kinda walk through the Q3 to the Q4 in terms of upstream versus downstream profitability and what your near-term outlook is if you could parse the Chlor Alkali segment in that fashion. Yeah. Yeah. Yeah. I mean, this is Scott, and Patrick may add to it. I mean, we assume when you say upstream, you mean close to the ECU, and downstream, you mean some of the derivative chains like chlorinated organics and vinyls. Is that right? Correct. Correct. Okay. Yeah. Okay. so when you asked the question, I was thinking you were talking about Epoxy as the downstream because we don't, you know, we don't really use that terminology within our Chlor-Alkali business. Can you just reframe your question? Now that I kind of know what direction you're heading. I assume that there's some analysis of the profitability of caustic soda and the profitability of EDC and the profitability of chlorinated organics, profitability of merchant chlorine, and so on, that you're doing internally. Although I do understand that you're probably moving molecules up and down. So can you speak to, you know, the strength? I, my assumption is that the ECU chlorine and caustic was the more stable and the bigger part of the profitability than the downstream. I'm just curious as to how you would parse that. Sure. Yes. As we've been talking about for, I think, three quarters now, you know, that downstream, you know, chlorine chain, specifically through vinyls, you know, EDC and VCM has been weak. You know, that's weaker, you know, downstream in that vinyls chain, and that has overall, you know, set the caused us to set our run rates or operating rates to the chlorine side of the ECU because of weakness downstream in those PVC, you know, in that PVC chain. We continue to do that today, and we're gonna do that until, you know, things Stream within chlorine, we've talked about elemental chlorine. That ratchet goes one way. Those prices, you know, remain very strong. Terrific. Thank you. Our next question will come from Jeffrey Zekauskas with JPMorgan. You may now go ahead. Thanks very much. When you look at public data for caustic prices, maybe caustic prices were $950 a short ton in November. It's a little hard to see where they are today. Are they at $800? What's been the move in caustic prices from, say, November to today? And can you account for the reasons for the movement? Yeah. Yeah, I mean, this is Scott, Jeff. I mean, you know, in general, it's been, you know, fairly flat. You know, it's not impossible that you see some product lines like caustic drift off in the future. Again, remember, we make value out of imbalances between the two sides of the ECU. When you see that drifting, it's likely because of value coming somewhat somewhere else. Will it go down? You know, I don't know. It almost doesn't matter whether it goes up or down, right? We have a position to take in either case. In fact, I would sort of remind everybody that we actually delivered a higher level of quarterly EBITDA in our Chlor-Alkali business when caustic pricing was much lower than it is today. Okay. Secondly, Scott, can you remind me, when do the contracts with Dow expire? Is it the beginning of 25 or the end of 25? Is that a big event for the company? Yeah. you know, Jeff, we really weren't gonna comment on any specific, you know, customer or supplier arrangements. Okay. I'll ask a different question. With Winchester, is the oversupply in ammunition because demand was weaker than expected or because the competition just simply ramped up their volumes? Yeah. Brett, do you wanna jump in? You know, we did see in the second half of the year some lower demand, but yet much higher than what our historical outlook or preview has been. You know, as I mentioned in my opening comments, we were actually shipping more to our customers than they were selling as we were filling up a pipeline. Mm-hmm. When that pipeline got full, you know, we decided to pull back, reduce our run rates, and not oversupply the market. As far as others, you know, you'd have to take a look at what they're saying about their business. As far as we're concerned, making those adjustments in the market going forward were necessary to preserve value. Okay, great. Thank you so much. Thanks. Our next question will come from Mike Leithead with Barclays. You may now go ahead. Great. Thanks. Good morning, guys. First question, can you just talk through your full year EBITDA guidance framework? It looks like we can basically annualize 1Q levels to get to the midpoint. Is that roughly what you're assuming that 1Q conditions hold for the year? Just flesh out how you're thinking about that. Yeah. Yeah, no, I mean, I would, I would say that we're expecting, you know, slightly lower performance in the early part of 2023. That's the way we called it out for our chemicals business a little bit better in Winchester. Look, I think when you look at, you know, a 12-month basis, you know, that's our target. I would say that we, you know, really reserve the right to take any actions that we need to make sure that we keep that whole 12-month trough as high as possible. You know, that may mean that we need to have one quarter that's not as good as the one that we just printed. I don't know when that quarter might come, but it certainly could be in the next 12 months. Got it. Makes sense. Second for Todd, just two quick ones on cash flow. First, I think in the prepared remarks, it sounds like there's about $150 million or so of abnormal cash uses this year. Is that correct? Second on the $1 billion of free cash, I know it can be difficult to predict how or when some of these JV opportunities come through, but just how much of that $1 billion would you expect gets returned to shareholders this year? Thanks for the question, Mike. You're right on the one-time items. They're basically $80 million of cash taxes that are inflating our the tax number on that slide. More normalized is in that 25%-ish range. There is a, you know, a peak level of payments for some power supply contracts this year. You're right on the one-timers. When we think of those joint ventures, the investments during 2023 probably are less than $50 million. Therefore, when you think about that cash flow, you know, it can really be deployed for share repurchases. Great. Thank you. Our next question will come from Matthew Blair with TPH. You may now go ahead. Hey, good morning. Your EBITDA in Q4 was down by about $100 million. Do you have a breakout on, like, just the moving parts here? Like, how much would you attribute to destocking? How much to seasonality? I think you had some turnaround activity too. Was that material? Well, yeah. Hi. I mean, you know, we've quit calling out, you know, turnaround activity as we sort of leveled that across quarters. It's really a non-issue in any variability of our earnings, you know, going forward. I mean, look, you know, most of that decline, you know, you called it out well. It was a big decline. Most of that decline is, you know, from our own actions to make sure that, you know, we get set up to have the right, you know, shoulder coming out of this recession and make sure that we have the highest 12-month trough result that we can going forward. The other things that you mentioned are really just drivers of that. Yes, there's, you know, some level of destocking, but yes, you know, demand still doesn't look great. In fact, there's really suspended demand still in China and still in Europe. Matt, if you think about it, all three businesses year-over-year in the Q4, volumes were down significantly. I know in the press release and we. Please wait one moment as I reconnect the speaker line. Thank you. Hey, you're clear to talk. Matthew, sorry, we got cut off again. Maybe the fourth time will be the end of it. What I had said was if you look at all three businesses, you know, volumes are down year-over-year in the Q4. 29% Chlor-Alkali, 36% Epoxy, and clearly Winchester was down. Offsetting that to a big extent as well was improved pricing across the board in all three businesses. Got it. On caustic exports, so some spot prices in Asia for caustic have started to roll over. Is that filtering into your U.S. caustic export pricing yet? Just how would you characterize demand and volumes for your U.S. caustic exports? Yeah, I mean, this is Scott. I mean, look, I mean, there's gonna be impacts, you know, from that, of course. I mean, I would characterize, you know, demand generally, you know, not great. But it's not isolated demand on caustic. What it is is the relative demand strength between caustic and the chlorine side of the ECU. I would say those imbalances keep in place and keep forming. Even though demand may come down, it's not necessarily an indicator that our direct results follow that. Great. Thanks for the commentary. Sure. Our next question will come from Angel Castillo with Morgan Stanley. You may now go ahead. Hi. Hi. Thanks for taking my question. Just wanted to get a, I guess, level set. You used to give sensitivities for your key products in your slides. As we think about, you know, how the world has evolved, you know, both your chlorine ratchet pricing strategy as well as just your hedging strategy around natural gas, could you just update us on what, you know, as we think about those key commodities, whether it's chlorine, caustic or, you know, inputs like natural gas, what are the key sensitivities for that from an EBITDA per kind of MMBtu or dollar per metric ton basis? Yeah. Angel, thanks for the question. This is Todd. I think historically we've talked in the, you know, $1 per MMBtu in North America was worth about, you know, ±$50 million through our annual P&L. I think directionally that, you know, that still is a good metric for you to think about. As Scott mentioned earlier about gas, you know, we're a hedger, so those high price, you know, numbers you saw during, you know, 2022, those sort of got paired off, and we didn't experience them. Maybe here in the very short run, because we're a hedger, some of the dips in gas, you won't see that benefit running through immediately in our system. Got it. That's, that's very helpful. What about caustic and chlorine and other kind of derivatives? Yeah, I mean, those, you know, Our model really isn't variability at all. I wouldn't model any impact from gas, especially with the fact that we hedge. No, I'm sorry. I meant the pricing, for instance, like a $1 change in the price of caustic or chlorine. Yeah. Yeah. No, no, I appreciate the question, but I don't think we're gonna go through and probably exactly quantify, you know, what difference, you know, a certain change in price of a commodity in a public index might have on our bottom line. First of all, we don't, you know, all of our business certainly doesn't follow the index. Second of all, normally, when something's going down, we're getting the value somewhere else. Understood. No worries. Then the second question, just, you know, going back to some of the discussions around the macro and, you know, some of the demand picture of what you've been seeing. You noted, I think in the slide, vinyl troughing here in the Q1 and Epoxy improving in the second half. I was curious, one, you know, as we think about the 2023 outlook, how much of this are you seeing anything in orders that gives you confidence, you know, in those rebounds? Is it more just destocking or abating? Or anything that, you know, how do you get kinda comfortable with those, with those factors? As you think about just the overall, kind of recovery and some of that, how much of it is it macro versus your ability to pull, levers and parlay? Well, look, I mean, we'll start with Epoxy. I mean, of course, it's very challenged right now as we've tried to lay out. Damian, do you wanna give a little guidance on back half? Sure. I mean, when we look at, you know, some of the factors in the back half, you know, we're seeing, you know, some, you know, improved demand. I think y'all, you know, you see the news. You know, China, as I said, being the largest, you know, consuming region of Epoxy, it's, you know, looking like it's emerging from its, you know, almost year-long slumber. We also see, you know, other areas that are starting to pull, you know, Epoxies, as well. If we, you know, we highlighted our, you know, growth platforms and our macro trends around wind, you know, infrastructure, electrification, mobility. You know, those are all that, you know, we're already starting to see, you know, some of that, you know, the demand profile improve with our valued customers. you know, it's a combination of what we see in the landscape, but, you know, more purposely our participation in some of these growth platforms that are, you know, gonna look to drive, you know, some improved demand recovery in the second half. Yeah. Because we're running out of time, you know, I'll just shortchange the Vinyls answer. You know, there has been some light improvement in ADC pricing there. Thanks. Thank you. Our next question will come from Eric Petrie with Citi. You may now go ahead. Hi, good morning, Scott and Todd. Morning. What's embedded in your earnings outlook in terms of China and domestic consumption? You know, at the end of last year, we saw a ramp-up of exports in Epoxy as well as caustic soda. Any comments on those export levels into 2023 and impact on earnings? Yeah. No, what's embedded is still that demand stays, you know, fairly muted, suspended for the better part of the first half of the year. Then recovers. You know, specifically in Epoxy, right? Trade flows actually reversed out of China. Even when China recovers, still the amount of imports going into China is likely to be less than it was before because there have been some structural capacity adds there. You know, what this has taught us, knowing that, you know, we really didn't expect sort of the worst conditions in 15 years. What it has taught us here is that, you know, we certainly have more trough minimization footprint work to do there. We're working on that. Helpful color. Secondly, on decarbonization, how are you thinking, Scott, about carbon sequestration versus buying renewable power? Does building out these hydrogen plants impact that decision tree? Well- to maximize the IRA credit? Yeah. Yeah. I mean, look, I mean, you know, there could be some IRA credits for us with regard to hydrogen. I mean, we are the largest electrolysis grade hydrogen producer in the country today. We'll, you know, we'll see where that goes. As far as other activities to minimize our CO2 footprint, you know, most of them are centered around our own efficiency and productivity programs. It's not impossible that, you know, we get some RECs in the, in the future. Will we do more CO2 sequestration like we called out in our slide? I think those opportunities are more limited for us. Thank you. Sure. Our next question will come from John Roberts with Credit Suisse. You may now go ahead. Morning. This is Matt Skowronski on for John. Scott, while Epoxy has been down or operating at lower rates, have you made any structural changes, such as operational or with your customer base, so that when demand finally returns, Epoxy will look different than it has previously? Yeah. The answer is yes, but completely in process now. When I said we're gonna do more trough minimization footprint work, you know, that we're analyzing right now. When demand does return, yeah, that business is gonna look a little different. It's gonna be more focused on systems where we've had staying power, you know, even through these really sloppy recessionary conditions. Got it. That's helpful. Todd, in Winchester, can you describe what the impact to margins was from lower operating rates versus higher costs? The margins in the segment have just been a little bit volatile since the Lake City contract started. Just trying to figure out what a normalized level would be. Yeah. Thanks for the question. I think that what you saw in the Q4 because of the, you know, significant pullback in volume to address, I'll say the, you know, supply chain, you know, the fatness in the supply chain, as Scott would have said, you know, you saw margins come in significantly compared to where they had been. Overall, you know, we had a higher level of military sales in the Q4 compared to where we had been over the last 12 months, so that also will slightly affect the margin, a little bit lower our average margin there. Great. Thanks. Our next question will come from Roger Spitz with Bank of America. You may now go ahead. Thank you. Good morning. I have two. One is, can you comment on how much of your merchant or total chlorine was sold on the below market legacy contracts as of December 2022? We won't give you a specific number, but I would say that that's turned into, you know, the minority share now. As Patrick said, we still have an uplift coming in 2024 that'll essentially place almost 100% of our chlorine on a different standard, likely the Olin Chlor-Alkali Index. Got it. The second one was, this may seem a little odd, but how can you say how much, if any, of your ECU production you sell as cell liquor, meaning versus finished product? I'm not exactly sure, you know, what you mean by that. You know, we have some site partners where we may not, you know, fully take the product to an end state that would be sold in merchant transportation equipment, and we won't quantify that. That's what I meant. Thank you very much. Okay, sure. This concludes our question and answer session. I would like to turn the conference back over to Scott Sutton for closing remarks. Yeah. Yeah. No. I would just say thanks to everybody for joining. Sorry we had so many technical difficulties this time. Looking forward to the next call. Thanks. Thank you for attending today's presentation. You may now disconnect.