Good morning, and welcome to Olin's First Quarter 2012 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. Joseph Rupp, Chairman, President and CEO. Please go ahead, sir.

Good morning, and thank you for joining us today. With me this morning are John Fischer, Senior Vice President and Chief Financial Officer; John McIntosh, our Senior Vice President of Operations; and Larry Kromidas, our Assistant Treasurer and Director of Investor Relations. Last night, we announced that net income in the first quarter of 2012 was $38.7 million, or $0.48 per diluted share. First quarter 2012 net income included a $1.9 million pretax restructuring charge, primarily associated with our ongoing Winchester centerfire relocation project. Sales in the first quarter of 2012 were $507.2 million. Chlor Alkali first quarter 2012 segment earnings increased 65% compared to the first quarter of 2011 and represent a record level of first quarter Chlor Alkali segment earnings. The year-over-year improvement of Chlor Alkali earnings reflects improved pricing, the 100% ownership of Sunbelt for the full quarter and increased contributions from bleach and hydrochloric acid. First quarter 2012 Winchester segment earnings declined compared to the first quarter of 2011 as improved volumes were more than offset by higher commodity costs and transition costs associated with our ongoing centerfire ammunition relocation project. In the first quarter of 2012, Olin generated adjusted EBITDA of $94.9 million, which represents the highest level of first quarter adjusted EBITDA ever. Our first quarter 2012 adjusted EBITDA increased 38% when compared to the first quarter of 2011. This is the first quarter that we've discussed EBITDA, and we believe it clarifies the impact of the capital investments that were made in 2011 and are continuing in 2012, including investments to exit mercury cell technology, the acquisition of PolyOne's 50% interest in the SunBelt joint venture, the Winchester's centerfire ammunition relocation project to Oxford, Mississippi and the bleach expansion projects. These investments have caused annual depreciation expense to increase by approximately $35 million,…

Thank you, Joe. First, I'd like to discuss a few items on the income statement. Selling and administration expenses increased $4.2 million, or 11%, in the first quarter of 2012 compared to the first quarter of 2011. The year-over-year increase reflects increased salary and benefit costs, a higher level of legal and legally related settlement costs and the inclusion of SunBelt's selling and administrative expenses as consolidated Olin expenses for the full quarter, partially offset by reduced acquisition cost related to SunBelt. First quarter 2012 charges to income for environmental, investigatory and remedial activities were $2.8 million, which included $100,000 of recoveries from third parties for environmental costs incurred in expense in prior periods. During the first quarter of 2011, there were $1.5 million of charges related to environmental, investigatory and remedial activities, which included $500,000 of recoveries for environmental costs incurred in expense in prior periods. After giving consideration to the recoveries in both periods, year-over-year expenses related to environmental, remedial and investigatory activities increased by $900,000. These charges related primarily to expected future investigatory and remedial activities associated with past manufacturing operations and former waste disposal sites. We continue to forecast that full year 2012 expenses for environmental, investigatory and remedial activities prior to any recoveries will be comparable to 2011. We are not currently expecting any additional environmental recoveries in 2012. On a total company basis, defined benefit pension plan income was $4.9 million in the first quarter of 2012 compared to $5.6 million in the first quarter of 2011. We are not required to make any cash contributions to our domestic defined benefit pension plan in 2012 and believe the earliest we may be required to make any cash contributions to that plan is 2014. In 2012, we expect to make cash contributions to our Canadian…

[Operator Instructions] Our first question is from Frank Mitsch with Wells Fargo Securities.

You referenced in a discussion on Chlor Alkali the unplanned outage in Q1 spilling over into Q2. And I was wondering if it might be possible to kind of size that for us in terms of other financial impact or in terms of volume impact that you're seeing there? And I'll also clarify, you do not have any major planned turnarounds in Q2 in that area?

No, we do not have any major turnarounds. It's worth about 3% in operating rate for us. The outage is worth about 3%.

And what percent of that was in Q1 versus what percent of that in Q2?

Frank, the impact on Q2 is about 3%. The impact in Q1 was less than 1%.

All Right. Okay. Okay. Great. And I just want to clarify. It sounded to me, I guess, that your freight rates impacting your ECU netback, that was -- the freight rate was sequentially down. Was that correct?

That was correct. It was, and it was most attributable to just a comparable -- the quarter we were comparing it with, we had some extraordinary freight shipments because of logistical issues. So it was really an indication of a benefit from a comparable period. We don't expect freight costs -- we don't expect that trend to continue. As a matter of fact, we expect freight costs for the full year to be an increase over what we saw in 2011.

Okay, okay. Fine. That was kind of an unusual comment to hear. I'd never seen freight rates actually go down. And then lastly, but you are forecasting that your electricity costs will be down year-over-year on the Chlor Alkali side. Could you size that for us in terms of order of magnitude, your expectation there?

I would rather just explain what's driving it than try and size it. As we look at our fuel mix, our portfolio of fuels from the companies we buy electricity from, that portfolio is shifting away from coal and shifting towards natural gas. And in today's environment, natural-gas-generated fuel is obviously a benefit, and so as we look at the balance of the year, we just expect to see that trend manifest in our numbers.

Our next question is from Christopher Butler with Sidoti & Company. Christopher W. Butler - Sidoti & Company, LLC: I was hoping that you might talk a little bit towards your Chlor Alkali pricing, a little bit more with the 2 price increases that were announced as kind of a backdrop. The assumption that I've been under is depending on volume growth as the year progressed would determine whether the chlorine price increase took hold versus the caustic soda price. It was probably going to be one or the other. A little bit surprised that it seems that there's less in the cards overall. Could you talk to that a bit for us?

I think simplistically, what we'd tell you is that we expect chlorine prices to firm up as we move into the seasonally stronger summer period. We also believe that caustic price increases that were announced that have not yet been successful may just be stalled. Christopher W. Butler - Sidoti & Company, LLC: And as we look at this quarter and take out SunBelt, could you talk to the organic volume growth that you saw?

Chris, if you took out SunBelt, the chlorine and caustic soda volumes were essentially flat. The growth we saw was in hydrochloric acid and bleach. Christopher W. Butler - Sidoti & Company, LLC: And looking towards the spring, it sounds like you're optimistic about a good bleach spring season for you?

Yes, we are.

Our next question is from Alex Yefremov with Bank of America Merrill Lynch.

I just wanted to come back to electricity contracts. Could you explain to us whether the declines that you're seeing in your electricity costs is a function of lower prices on existing contracts or a re-signing of those contracts that expire? And also maybe, if you could address, what percentage of your electricity contracts on average are re-signed each year?

All of our electricity contracts are long-term contracts, so we don't typically have annual contract extensions or contract renewals. So this is just based on -- electricity prices, just based on what the utilities are charging for -- industrial rates that are applicable to a large industrial consumer like Olin and including what they're paying for their respective fuels they use in their generation portfolio.

So the declines in the costs that you see is a function of basically repricing existing contracts to a lower rate, is that correct?

That's correct.

Fuel adjustments.

Yes, it's fuel adjustments as part of the tariff for a large industrial electricity consumer.

And if you look at those fuel adjustments, what kind of leverage is there to natural gas prices? Is it pretty straightforward versus spot natural gas, or maybe it's half that rate? Or could you just give us some sense of the sensitivity versus spot natural gas?

I don't -- we don't have that information because the utilities manage their fuel acquisition as a pretty well guarded part of their portfolio. I can tell you that when we look at our exposure to the various fuels, whether it's coal, natural gas, hydropower or nuclear, we're very comfortable that we have a balanced portfolio and we don't have undue exposure, positive or negative, negative exposure in any of those areas.

And just a follow-up, if I may. On Winchester, are you -- do you expect to increase prices this year versus last year? It sounds like you're signing some positive price trends there?

We have price increases that have been announced to take effect June 1.

Can you size them?

In the 2% to 6% range depending upon the product.

Our next question is from Don Carson with Susquehanna Financial.

I just want to clarify on pricing. You talk about the potential for lower prices in Q2. Is this just from the ECU or is this a comment on byproducts like hydrochloric acid and bleach as well? And I'm wonder specifically on HCL what the downturn in drilling rig activity. Are you seeing any reduction in demand or prices?

The pricing comment is related to ECU pricing. And it's driven by the fact that first quarter caustic index prices dropped $25. In the first quarter, chlorine index pricing dropped $45. So to the extent that we have contracts that are tied to index pricing, we're going to have to deal with those changes in the second quarter. So it's ECU. From an HCL standpoint, we have seen some seasonal reduction in demand relative to the oil and shale gas fields but nowhere else. We continue to see strong HCL demand in steel and high-fructose corn syrup and in the other markets that we serve with our HCL product.

Joe, your initial guidance for Q1 was $0.35 to $0.40, including a $2.5 million restructuring costs. You came in at $48 million. What was the driver of this upside and are you being similarly cautious with your Q2 guidance? Could there be a similar upside?

What I'd say there, Don, is just that our performance certainly was better from a bleach -- from an HCL perspective, a little bit from a volume perspective, for the first quarter. In the second quarter, I think where we are in the second quarter is it wouldn't take a lot for it to get better. I think there's just a little bit of uncertainty as to what demands -- what demand levels are going to be and what that may have an effect from a pricing perspective.

And then finally on cash flow, what happens to CapEx next year? And I know you've talked in the past about perhaps returning more cash to shareholders. Just wondering where you're thinking of accelerating your share repurchase or whether that would be a bump in the dividend?

Our expectation is that capital spending next year will probably be a round number, $100 million less than it is forecast to be this year. We'd put it at somewhere between $100 million to $125 million, keeping in mind that maintenance capital is probably in the $80 million to $85 million range today. And I think we've said all along that our preference for the use of cash is to invest in the business first. We would look at the dividend, second; and we'd be more aggressive on share repurchases, third.

Our next question is from Dmitry Silversteyn with Longbow research.

A couple of questions, if I may. What -- can you give us an idea what your bleach premiums to ECU were in the quarter as well as your hydrochloric acid premiums?

Well, we've said that our bleach premiums typically run in the $100 to $200 range in the quarter. We just finished that we were at the high end of that range. On HCL premiums, and this is a premium to chlorine, the number in the last quarter was roughly comparable with that in terms of range. But I would say that HCL being sold into either shale or oil has an additional premium associated with it.

So something better than $200 premium versus a ton of chlorine?

Into that market segment over the last quarter, yes.

Okay. And if you sort of look at combined bleach and hydrochloric acid volumes versus your ECU, what percentage of your production was these 2 products?

About 12% of our capacity we can produce is bleach, and about 8% is hydrochloric acid.

And in the first quarter, obviously, bleach is weaker, so we didn't use the full 12%.

All right. Okay. So okay, 8% of chlorine -- of hydrochloric acid. Okay. Utilization rates expectations, I think you talked about having kind of flattish utilization rates in the second quarter because of these 2 customer outages, one of which will last into the second quarter. Do you expect the utilization rates -- can you kind of look out beyond second quarter, or is that too soon to talk about third quarter utilization rates?

Well we -- our expectation for operating rates in the second quarter were not flat. We talked in our prepared comments about mid-80 operating rates, and our operating rates for the first quarter were in the 80% range.

[indiscernible] slightly year-over-year, I apologize.

We're forecasting an improvement in the second quarter. And typically, second and third quarter are for us the highest utilization quarters that we experience during the course of the year. We've seen nothing to indicate that trend won't continue. To forecast anything more specific than that in the third quarter is really something that we just don't have that much clarity on.

Got it. Got it. Question on pricing environment. You talked about the price increases in caustic sort of stalling or being delayed, and it doesn't sound like you're very optimistic about the chlorine price increase. Has anything changed in the environment in perception of buyers, sellers to give you some confidence that the index pricing at least will start moving up in the second quarter, so hopefully by the third quarter you're going to see some price increases?

I can make a comment anecdotally about what we see in our system, okay. We are light on caustic shipments and have been for a significant part of the first quarter, and that trend has continued. And from our perspective, it wouldn't take much in terms of a reduction in demand for chlorine, driven by the strength of the downstream derivative markets or operating problems or planned shutdowns across the industry to make that caustic demand situation even tighter than it currently is as we see it right now. We continue to see strong demand on -- in the caustic molecule for the market segments we serve. So we think we're potentially at a transition point where it wouldn't take much movement on the chlorine side for us to see positive caustic pricing movement.

So despite the tightness in the market we've seen in the first quarter and seeing right now, there's not a price movement. But you think if it tightens further, that we see can this logjam breaking?

But from our perspective, we're telling our customers that we can't meet their shipment dates, and we're pushing to the extent we can a pricing philosophy that is consistent with that. And we assume or see the potential that the rest of the industry will -- could be in a similar position.

And then a final question. You talked about moving more to natural gas and less coal in terms of your energy source. How much of your energy needs are met by natural gas currently?

We've not given those numbers out. But what I will say again, is when you look at those for fuels we feel we're very balanced and we feel good about our position. And it's not anything we're doing. This is driven by regulations that the utilities are facing associated with air emissions. And that's what's driving them away from coal as a fuel source and towards natural gas, which is cleaner from the standpoint of using it in generating electricity.

So it's not you changing vendors or suppliers, so to speak of electricity. It's just that your suppliers are changing their starting point.

Yes.

That's correct.

Our next question is from Herb Hardt with Monness. Herbert Hardt - Monness, Crespi, Hardt & Co., Inc., Research Division: As you look out your CapEx over the next few years, does that ratio of bleach and HCL get much higher?

As we move through 2012 and complete the high-pure plants, we will have gone from about 8% of our capacity being able to be dedicated to bleach to 15%. We've said as a long-term objective that we'd like to get that up to 20%. So that will require additional investment beyond the end of 2012. I think we're also looking at the hydrochloric acid market and what's happened to it and trying to assess the long-term nature of the current demand. And that would also be an opportunity for us to invest. And we would not at all be uncomfortable with putting 12% to 15% of our chlorine capacity into HCL, and that would also inquire investment.

Our next question is from Edward Yang with Oppenheimer. Edward H. Yang - Oppenheimer & Co. Inc., Research Division: I'm sorry if I missed this, but the better-than-expected operating rate in the quarter, was that weather related and was that going to -- did that borrow any future demand from future quarters?

No. It wasn't a quarter-over-quarter change. Edward H. Yang - Oppenheimer & Co. Inc., Research Division: Okay. And I mean, it sounds like you're optimistic on the pricing outlook, but we really haven't seen a lot of traction on the price increases yet both on the chlorine and caustic side yet. But before those contract prices are accepted, would spot prices move up ahead and kind of narrow the gap with current contract prices? Currently, they're below, or is that kind of that really doesn't have any influence on whether those contracts get accepted?

If you're a buyer, that's the position you would take as the spot prices ought to change before contract prices do. But if you look historically, that relationship doesn't always hold. And I think you just have to look at what's going on in the marketplace and what the supply and demand balance is. And there can be events that change that but will happen in a manner that will drive both contract and spot pricing. Edward H. Yang - Oppenheimer & Co. Inc., Research Division: Okay. And there are a couple of cross currents here. It sounds like from what we're hearing, North American housing is getting better but China is getting weaker. It's a little wobbly right now. I mean, what's more important?

Well, I don't know if you can necessarily qualify as one being more important. China's important because China is still an exporter of caustic into the U.S. West Coast. But they're very disadvantaged now because of freight rates, and they're really disadvantaged from going anywhere else with caustic in North America. Caustic exports out in North America continue to be very strong and will be very similar to what they were in 2011, which was net export numbers in excess of 1 million tons going to South America. So when we look at the other world geographies, we typically look at it from a caustic standpoint as to who's most competitive and who can serve the geographies closest to them. Chlorine derivatives are going to be driven by what China's demand pattern is because that and the Far East where most of the chlorine derivatives end up these days. Edward H. Yang - Oppenheimer & Co. Inc., Research Division: And your comments on the exports, again, this year being as strong as last year, that's on the caustic side or on the chlorine derivative side, on the vinyl side?

Well, on the caustic side, specifically, but chlorine derivative exports were strong last year, and we forecast that, that will continue this year as well. Edward H. Yang - Oppenheimer & Co. Inc., Research Division: Okay. And then finally on Winchester, are you seeing a pickup in demand just related to the election or is this more of a recurring kind of improvement you're seeing?

There's just been a pickup which may be related to the election and also is to just undercurrent of interest in personal defense that just continues to be there.

Our next question is from Gregg Goodnight with UBS.

I actually have one question that hasn't been asked. The inventories of caustic, both at producers and downstream, how do you typify those right now? Are they [indiscernible] is it fairly full tanks? Are there some [ph] inventories has to pick up in rates of the industry-replenished inventories? Could you typify that for me, please?

I can tell you that our inventories across our system are low, and that inventories in our terminal system are also low and that our customers are not sitting on large inventories of caustic, either. I've heard mixed reports about distributor inventories and distributor tanks up and down the river system. In some cases, I've heard reports that because of the mild winter, they bought inventories a little sooner than normal in preparation for an early bleach season and some early seasonal demand. But that's anecdotal at best. But when we look through our system, all the way to our customers, caustic inventories are low.

Okay. As a follow-up, you’ve had issues with your own shipments. Have you tried to arrange swaps with other producers? And if you have, what has been your experience? Is there material available?

We have tried to arrange swaps. In some cases, material availability was an issue because we couldn't -- we could find caustic available but it was diaphragm caustic and not high-purity caustic. But I wouldn't say that there's an abundance of caustic available in the market right now from any of the producers in the industry.

Our next question is from Roman Kuznetsov with Gates Capital Management.

It's actually Jeff. I have a question, a few questions actually. First on capacity, is there any -- can you talk about the new capacity additions in North America that might be coming on and will those be natural gas based? Are there -- can you give us your rough fuel mix between the coal and hydro and natural gas? And secondly, on the freight rates, I know you had a good performance this quarter versus a tough comp. I think last year, they were at 20%. Can you tell me what they been at the last 3 years and what you expect them to be at the next 3 years?

The only capacity announcements that's out there is the Westlake announcement, and they're forecasting an additional plant in their system being built between now and the end of 2013. In terms of fuel mix, we don't specifically give out numbers for the respective fuels other than to say between coal, natural gas, hydro and nuclear, we have a balanced portfolio as we look across our system. And that's really as specific as we've gotten. I don't think -- from a freight standpoint, I don't have last 3 years' numbers in front of me, but I guess, I wouldn't expect future freight increases to look much different than they've looked in recent history.

Again, Jeff, I would say if you were looking to model something, an average of about 10% per year is what we've seen over a long period of time.

Okay. And then one last question. Actually, 2 others. First, on the environment outlays, if I recall from the 10-K, it was about $60 million of outlays this year. And if I recall, did you say the expense was going to be comparable, which is around $20 million, so the delta would about $40 million of outlay above the expense?

Jeff, the outlays that we referred to in the 10-K cover not just the legacy environmental sites but also environmental expenditures associated with the operations of our current sites. What we have said is that we expect to spend between $20 million and $30 million a year for modeling purposes to service the legacy sites, and the expense that we referred to in 2012 being equal to '11 was associated with the legacy sites.

So for the whole company, what would be the environmental expense be for '12 and what would the outlay be?

If you were looking at expense for the entire company, there's approximately $20 million -- $20 million to $25 million that shows up in Corporate and Other that is associated with the legacy. And then there's another $20 million or $25 million a year that shows up in cost of goods sold associated with the plant operations.

Okay. So the delta is only about $15 million or something like that?

Something like that. Historically, the spending around the environmental -- the legacy environmental has had a fairly high standard deviation anywhere from $15 million to $30 million.

Okay, that's helpful. And then just one last question, sort of a bigger picture. Does the housing recovery help the company or does it make it more challenging on the caustic side?

Housing recovery that is slow and steady is good for the company. A spike in housing we would think in the short run would be negative because it would put more caustic in the market in the short run than the market might be able to absorb without reducing prices.

This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Joseph Rupp for any closing remarks.

We just want to thank you for joining us, and we look forward to reporting our results to you in July at the end of the second quarter. Thank you.

The conference has now concluded. Thank you for attending today's presentation. Please disconnect your lines.