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| When you get to Winchester, there's tremendous momentum in the military piece of that business |
| Our systems business has a lot of momentum |
| And again, the fundamentals underlying that business are good |
| If there is inflection in demand, that's going to be a nice upside |
| I'll say, the good -- again, the good news there is that sequentially in third quarter relative to second quarter, our volumes actually increased in that business |
| Even though we operate in an environment where bad news creates a negative recency bias, please never forget that in chlor alkali, we believe future demand growth exceeds future supply growth, and that growth may also be unbalanced across the ECU, all favorable for Olin |
| We are confident in that favorable outlook |
| And we have a very long runway on military improvements, selling international ammunition, NATO-base-type countries and then also the next-generation squad weapon program, which is a lift over the next 10 years |
| Additionally, we complemented those confirmed deliveries with the acquisition of the White Flyer Clay Targets Business at forecasted returns substantially better than share repurchase returns |
| And we've been through other mini cycles running that model over the course of those three years, and we've always been able to be successful at turning the value equation around when we need to turn it around |
| And again, this most recent quarter, for the first time ever, military ammunition sales exceeded commercial sales |
| Every product, demand growth bigger than supply growth |
| We do expect to see sequential improvement in our cost structure just like we saw that in the third quarter sequentially from the second quarter because of our hedge positions |
| We've got a long way to go, but there's a lot of positive momentum to get this done |
| But as they're filled in, it's a tightening of supply and demand, which gives us benefit |
| It leaves us with one low number in the fourth quarter of roughly $200 million EBITDA, which, by the way, at that level, we still have positive levered free cash flow |
| We've said we'll double that business in two years, and we are well on our way to doing that |
| We just made the White Flyer acquisition, and while not a major -- a major one from a revenue standpoint, it's highly profitable and we merge that up with our sports shooting ammunition |
| And I'd just ask you to remember, we are the absolute leader in these businesses, right? So when you pair those two things together, there's a lot of momentum to get this done |
| On top of that, the focus on and momentum in target shooting looks favorable |
| We're going to have a full year of benefits from the restructuring work that we've done |
| And like I said before, this recent quarter was the first one where the contribution profit -- in systems exceeded the contribution profit in resin |
| And US caustic soda prices were extremely high |
| I mean, you guys have been very specific in saying that you feel there's going to be a positive inflection in the second quarter of 2024 |
| There's already some signs that this has a good chance to succeed, right? When request for EDC and merchant chlorine come in that maybe can't be fulfilled via another path, at least that's an indicator |
| But just keep in mind, in Q1, we may still be running this initiative for part of the time, right? But no doubt, in order to make 2024 better than 2023, we have to have some quarters in the back -- in the middle to back half of the year that are substantially better than where we are right now |
| We are confident of that improvement |
| This value accelerator initiative results in a $100 million incremental penalty to adjusted EBITDA in the fourth quarter relative to our previous expectation, but delivers an anticipated improvement in 2024 adjusted EBITDA relative to 2023 |
| And congrats on a successful tenure at Olin and looking forward to the next -- your next opportunity |
| So you'll see an improvement in those |
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| Everyone had to turn down their chlor alkali plants because chlorine demand was poor |
| In the Great Recession -- as you went in the Great Recession in 2007-2008, demand for housing collapsed |
| And that results -- that result incorporates a couple of quarters where conditions have been quite challenging and we've had to pay the price to run a very deep initiative |
| Granted, we all know that new mortgage applications and sales of existing homes are really low, maybe the lowest in many years |
| At the same time, their demand, along with Europe's, together, they constitute 75% of the world's demand, has really diminished |
| This is all a temporary or transient issue around very weak demand |
| And obviously, there's housing weakness here, out in China and the like |
| Suddenly, you're saying chlorine is now the weak side |
| Even some things like titanium dioxide and bromine are likely a little bit weaker than PVC |
| If we need to continue to get the desired result that we need to deliver the most shareholder value, then we're going to continue it, right? I think it's going to be challenging for the outside world to see when we might change or reduce this value acceleration initiative |
| It is a challenging market and we've already actioned this initiative to force a rebound of our ECU values, which involves idling significant chunks of our assets and slashing our participation in weak markets |
| Those markets are very, very weak |
| Well, you know, Hassan, things aren't necessarily getting worse, right? Asia has been slow for a while and has stayed there |
| And for example, because a big chunk of our caustic business is still priced on public trade indices, those public trade indices have dropped in fourth quarter relative to third quarter |
| And then, Scott, I think you mentioned that chlorine has now flipped to the weak side of the ECU |
| Europe has been slow for a while and has stayed there, right? I mean new homes in the US, yes, there is some slowdown, but that still continues |
| But at the same time, the values on the weak side were absolutely destroyed because you're actually shutting more product into weaker and weaker markets |
| I mean, clearly, it's an uncertain world |
| And what has happened over the last four quarters is so many companies and people have chased the strong side of the ECU that the value in the strong side certainly got minimized |
| And because caustic demand, at least in my view, lags chlorine demand by two or three quarters, chlorine got extremely tight as everyone turned down their chlor alkali plants |
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