Good morning, everyone, and welcome to the Olin Corporation Second Quarter Earnings Conference Call. [Operator Instructions] Please also note, today's event is being recorded. At this time, I'd like to turn the conference call over to Mr. Joseph Rupp, Chairman, President and CEO. Sir, please go ahead.

. Good morning, and thank you for joining us today. With me are John Fischer, Senior Vice President and Chief Financial Officer; John McIntosh, 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 second quarter of 2013 was $43.7 million or $0.54 per diluted share, which compares to $47.6 million or $0.59 per diluted share in the second quarter of 2012. Sales in the quarter of 2013 -- second quarter of 2013 were $652 million compared to $508.7 million in the second quarter of 2012. During the second quarter of 2013, Olin generated $108.7 million of adjusted EBITDA, which is the second highest -- the highest second quarter level in the history of the company. The record adjusted EBITDA was driven by strong volumes and reduced costs in the Winchester business. We now believe that during 2013, Olin can generate adjusted EBITDA in the range of $425 million to $460 million. In the second quarter of 2013, the Chlor Alkali segment earnings declined compared to second quarter 2012 levels, due to lower hydrochloric acid prices, higher costs associated with planned maintenance outages and plant start-ups, and higher electricity costs due to increased natural gas prices. Sales of chlorine and caustic soda and ECU pricing in the second quarter of 2013 were similar to the second quarter 2012 levels. The contribution to earnings from hydrochloric acid sales declined approximately $6 million during the second quarter of 2013 when compared to the near record quarterly level in the second quarter of 2012. Second quarter 2013 Chemical Distribution earnings fell short of our expectations, due to margin compression on caustic soda sales caused by a lag experienced in recovering producer price increases. The elevated level of commercial…

Thanks, Joe. First, I'd like to discuss a few items on the income statement. Selling and administration expenses increased $3.6 million or 8% in the second quarter of 2013 compared to the second quarter of 2012, primarily due to the inclusion of the selling and administration expenses of the KA Steel business of $2.5 million and higher stock-based compensation. The increases were partially offset by lower legal and fewer related settlement costs. Selling and administration expenses as a percentage of sales were 7% in the second quarter of 2013 compared to 9% in the second quarter of 2012. Second quarter 2013 charges to income for environmental investigatory and remedial activities were $2.4 million compared to $300,000 in the second quarter of 2012. These charges relate primarily to expected future environmental, investigatory and remedial activities associated with past manufacturing operations and former waste disposal sites. Third quarter 2013 expenses for environmental, investigatory and remedial activities are expected to be in the $2 million to $3 million range. And full year 2013 expenses for environmental, investigatory and remedial activities are now forecast to be in the $9 million to $12 million range. This forecast does not include any recovery of environmental, investigatory and remedial costs incurred and expensed in prior periods. On a total company basis, defined benefit pension plan income was $5.1 million in the second quarter of 2013 compared to $5.4 million in the second quarter of 2012. We are not required to make any cash contributions to the domestic defined benefit pension plan in 2013. In addition, under the pension funding relief provisions of the Moving Ahead for Progress in the 21st Century legislation that was enacted in 2012, we may not be required to make any additional cash contributions to our domestic defined benefit pension plan for several…

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

I wanted to follow up on the KA Steel. You mentioned that the margin compression is something that you have seen in previous periods where caustic soda prices have inflated. So it begs the question, when would you anticipate seeing that reverse and then seeing that drop to the bottom line so your margins expand? And also, we noticed that the intersegment sales ticked up materially from Q2 to Q1. I guess some of that is seasonality. But could you talk about, just in general, what you're seeing in the KA Steel business with your suppliers now that you're coming up on the 1-year anniversary with that business?

Frank, this is John. Let me try to answer a couple of those questions. We have seen an improvement late in the second quarter on margins. A typical distributor will see price increases from its suppliers at the beginning of a period, at the beginning of a quarter, and that results in a margin compression for the distributor until he can pass those price increases along. Price increases on caustic, really, were bloated towards the second half of the second quarter. And we were able to see some meaningful margin improvement in June. And we expect to see continued margin improvement through the balance of 2013. We don't typically comment on supplier situations, but -- and so I'm just going to let that question be. But I would tell you that we still are comfortable that our 1-year synergies for KA Steel is $7 million to $10 million, and our 3-year synergy target of $35 million are achievable. Part of what will make those happen is related to the intercompany question you asked. We started in the second quarter to see other products produced by Olin, namely hydrochloric acid and potassium hydroxide, show up within KA Steel, as KA Steel was prepared and started to actually sell volumes of those products into the geographies that KA Steel sells into. We expect to see that trend continue to grow as that will be the basis for the synergy numbers that we've committed to.

All right. I mean, is it fair to say -- I mean, if I'm looking -- just looking at the sell-side of it, between 20% and 25% of KA Steel's sales are coming from Olin. Where was that figure a year ago prior to the transaction?

It would have been probably in single digits.

Okay, all right, terrific. And then, hey, John -- sorry, the other John. You talked about you're entering a period of increasing financial flexibility. Obviously, the share buybacks doubled in the quarter although we really didn't see it in terms of the shares outstanding dropping. I guess, it's a matter of timing. Can you talk about when would we anticipate seeing the share count fall? And is the pace that you did in Q2, is that something that we ought to be thinking about for the balance of the year?

I think the share count dropped something in the neighborhood of 350,000 shares in the quarter. And I think as we move forward, you'll see the actual share count drop below 80 very soon. I would just say that we are viewing share repurchases that we will be in the market, but we're going to be opportunistic and try to do it in a manner that best creates shareholder value.

Our next question comes from Edward Yang from Oppenheimer. Edward H. Yang - Oppenheimer & Co. Inc., Research Division: Just following up on the KA Steel questions. So is it that the Chlor Alkali business does better and then KA Steel would be worse? I mean, do they kind of hedge each other out?

There is some benefit in that regard, especially as caustic prices change. The dynamics for manufacturing company and the distribution company are different in that type of environment.

In a changing environment. Edward H. Yang - Oppenheimer & Co. Inc., Research Division: Okay. So John, just to understand the margin squeeze that occurred in the second quarter, is that truly a timing issue? And then you get it after a lag. And what are some of the lags there? Is it basically like 3 months or 6 months?

Just to talk about that quarter specifically, there was a $50 price increase on caustic announced in late February. For the most part, most suppliers passed along a $50 increase at the beginning of the second quarter to their distributors on caustic. And so immediately, if you're a distributor and you have that situation occur, you have an immediate $50 hit to your margins. And then, it's up to you, as the distribution company, to pass that price increase along. And as I've said in an earlier answer, we did see significant margin improvement in KA Steel towards the end of the quarter, which is a reflection of the fact that we were able to pass that price increase along to our ultimate customers. It just took us some part of the quarter to make that happen. Edward H. Yang - Oppenheimer & Co. Inc., Research Division: Okay. And you mentioned that the percentage of Olin products that KA Steel was selling has increased from the single digits to the current, looks like 23%. How high -- how much higher can that go? And does that affect KA Steel -- the Chemical Distribution's businesses' relationship with other vendors outside of Olin?

Well, as I said earlier, we really are just coming on line now with our -- after having spent time getting set up logistically and in every other way to be able to sell new products through KA Steel that Olin produces. And so we're going to continue to see that set of activities and those chemicals be the way that we're going to increase KA Steel sales into their geography. In those situations, we don't see there being any impact on other people because those are products that KA Steel hasn't sold before, and we're just taking advantage of Olin's capacity to move those products in the geography that Olin never could make it to before.

Our next question comes from Don Carson from Susquehanna Financial.

A question on caustic pricing. Just wondering how much of the -- you said $30 of the $50 February increase looks like it's been posted in the rags and could go. I'm just wondering how much you expect to get of that in Q3? How much will go into Q4? And this recent -- there seems to be a reversal in the prospects for this recent $40 price initiative. It looked like a month ago, you were going to get it. It seems that with weak demand out of South America that inventories are backing up a bit. So can you just comment on what's happening with demand out of South America for U.S. caustic, and what impact do you think that will have on domestic pricing?

I can't comment specifically on aggregate demand in South America. What I can speak to, and I've read some of the same commentary that you're talking about in regards to caustic pricing, I would say the offset to that commentary is that operating rates for the North American Chlor Alkali industry retreated pretty dramatically in June for the time of year that it is, down 4% to 83%. If that trend continues, then I believe that there is the opportunity for part of the $40 price increase to make it into the marketplace. That's what's going to determine the success or not of this $40 price increase for caustic that's on the table right now, whether or not chlorine operating rates continue at the June level, which was a surprise to everybody. And really, most people couldn't explain why that occurred or whether those operating rates inch back up.

And any change in your views as to what's going to happen as we get into early '14? With some of the new capacity starting up, I know Dow was talking about perhaps shutting down some of their lower margin chlorine derivatives. Is it your expectation that shutdowns will largely offset most of the new capacity that's coming online next year?

I expect there to be some rationalization that hasn't necessarily been reflected in some of what's been reported by the industry trade press. I also believe that we'll see a continuation of 2 trends that, I think, bode well for the North American Chlor Alkali industry's ability to effectively deal with even some net increase in capacity. One is that the export of chlorine equivalents, which are up almost 20% year-over-year through May. And that effectively takes caustic that would have been produced somewhere else in the world, and it ends up being produced in the U.S. where it can be exported to the markets that we typically serve. I think the other thing that's important and is a continuing trend is the year-over-year caustic imports from a year-to-date this year compared to the same period last year are up 18%. So we are continuing to solidify our position, North America is, as the place where Chlor Alkali and derivative products are most economically made, and that leads to strengths in our ability to place our product in other parts of the world.

Our next question comes from Christopher Butler from Sidoti & Company. Christopher W. Butler - Sidoti & Company, LLC: You sort of touched on this on some of the last questions. But could you walk us through your utilization here during the second quarter? You had mentioned a pretty wide spread in month-to-month.

The industry second quarter numbers went from 85% to 86% as a quarter, although, as I mentioned earlier, the -- or went from 85% to 84%, I'm sorry. As I mentioned earlier, there was a pretty significant increase in the last month second quarter. Olin's operating rates from first quarter to second quarter actually went from 85% to 86%. Christopher W. Butler - Sidoti & Company, LLC: And month-to-month through the second quarter?

Olin's operating rates were a little bit scattered because especially in the months where we had significant outages, that impacted our operating rate on a month-to-month basis. But ours were, as I said, driven by explainable outages in our systems, so -- which is contrary to what -- we haven't been able to ascertain an explanation for what the industry made of June results, not yet. Christopher W. Butler - Sidoti & Company, LLC: And just so that I understand this clearly, if things stay soft as they were in June, and we do see a little bit of the May caustic price increase go through, then some of the commentary that you have on the distribution side of the business improving in the second half kind of gets adjusted because there's another squeeze. Is that thinking about things right?

That's possible, yes. Offset by the improved realization of caustic in the Chlor Alkali business. Christopher W. Butler - Sidoti & Company, LLC: And can you talk to your repurchases in terms of an acquisition strategy? Does this mean that you don't see a good pipeline here in front of you, as far as what you might like to do here over the next few years that way?

I think what we'd say, consistent with what we've already said, Chris, is that we still have an interest in acquisitions, and we continue to pursue them. We're just -- we're in a situation right now where, opportunistically, we have the cash and we chose to start to move on a reward to shareholders that way.

And our next question comes from Herb Hardt from Monness. Herbert Hardt - Monness, Crespi, Hardt & Co., Inc., Research Division: I have 2 questions, actually. One the $10 million contract adjustment, is that a pretax or after-tax number?

That's a pretax number. Christopher W. Butler - Sidoti & Company, LLC: Okay, secondly, higher costs for electricity, does that get passed through in things like bleach? Or is that something that's contracted for on an annual basis?

We don't -- our electricity prices are set by long-term contracts, and we don't have the ability to take short-term increases in electricity costs and pass them through. Herbert Hardt - Monness, Crespi, Hardt & Co., Inc., Research Division: The bleach pricing in general, has that been strengthening on a seasonal basis?

It has been. It's been driven by seasonal demand. It's also been driven as bleach producers increase price to make -- to take into account the increasing caustic prices that they're paying. And so we have seen price increases announced late in the second quarter for third quarter 2013 application.

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

I had a question on the bleach market. Can you describe recent trends in terms of bleach pricing and premium versus ECU? And also, maybe in the medium-term, could you describe your outlook for supply-demand balance in the bleach market? You're adding capacity, perhaps your competitors, too. How does that compare to market growth?

Our premium -- our bleach premium over selling chlorine and caustic is -- continues to be in the $150-and-plus range, which is consistent with what we've seen historically. We see bleach, I mean, bleach prices are going up, driven by, in some sense, by the raw material caustic increases. But also driven by the fact that demand is real strong. If you look at our system, and I believe, in our remarks, we talked about forecasting a record bleach sale quarter for the third quarter of this year. And so we're very comfortable with our forecast and very bullish on what the bleach market looks for -- is looking at going forward. Overall, supply-demand, there really haven't been significant announcements of people building plants to add bleach capacity. As a matter of fact, you could make the argument that we actually have seen people who used to make bleach become customers of Olin bleach by rail, which is one of our business strategies to improve our utilization and bring to market some of the expertise and some of the use of the assets we have.

And then more broad-based question. Just in principle, could Olin be a buyer of Dow's Chlor Alkali assets? Are there any things that could block that first potentially?

I -- without getting into big detail, we would always say that further consolidation in Chlor Alkali, we always would have an interest in. We still believe that there is an opportunity for one more consolidation.

Do you think from -- if you can answer this question, from an antitrust perspective or financial flexibility, could Olin be one of the potential buyers or not?

What we've said is that we would be interested in consolidation.

Got it. And a final question, if I may. Could you just comment on regional or East Coast caustic soda market? It seems like that market has been pretty strong in the first half in the absence of European imports. How do you see the situation developing in the second half? Do you see higher imports or continued lack of imports from Europe supporting prices?

I believe that the best forecast we have is that we'll continue to see imports from Europe being low. As I mentioned earlier, year-to-date through May, the net export balance in North America is up 18%, and we don't really see that changing in the second half, even when you look at the regional performance.

Our next question comes from John Roberts from UBS.

Could you give us an update on that pension expense sensitivity to long-term interest rates?

The way our pension plan is invested today, we're virtually not sensitive to that. We've got the duration of the plan assets and the duration of the plan liabilities pretty much matched. So if interest rates go up and the liability goes down, we're going to see a compression in our asset base. And we saw that when -- as the interest rates came down, we stayed fully funded. So we don't see a lot of sensitivity to that, John.

So you're fully immunized. And then how much was the military down in Winchester and assets -- at some point, when the commercial side comes off a little bit, is there a lower base because of the military sequestration drop?

We're actually operating today at a higher base level than we were 3 or 4 years ago because the second -- the follow-on second source contract that we were awarded last year was about 50% per year higher in terms of revenue. So as we look out, John, for the next 4 years, which is determined in that contract, we're really not exposed to declines in our military business.

And just lastly, on the commercial side of Winchester, are there any operating metrics you can talk about that give you some visibility into the future of that business on the commercial side since it's been so strong here? I'm thinking about average order sizes or frequency of orders or something that sort of says that the flow is still healthy in terms of new business coming in.

I think the best measure is the level of the backlog. And I think the backlog is 3x to 4x what it has been historically. And if you look at -- if we were to see, at the end of the third quarter, the backlog go back to where it was at the end of 2012, I think that's an indication that the order flow has dropped back. But right now, as long as it's 3 to 4x on a comparative basis to a non-surge period, that's a strong indicator.

And it's holding stable? I mean, 3 to 4x is a wide range. So is it 3 or 4? Or it's -- wherever it is, it's staying stable across...

Actually, it's been growing as a percentage of the non-surge backlog.

Our next question comes from Jason Freuchtel from SunTrust.

You indicated transportation costs were unusual in the quarter. What was the driver of that activity? And what's your expectations for next quarter?

Overall transportation costs went down, as we mentioned in our remarks. And that's positive news for us because of the nature of our business. It's hard for us to take one quarter of activity and define that as a long-term trend. We would hope that the combination of strategic things we've done in our Chlor Alkali business, expanding our internal consumption of products at the expense of shipping them by rail, reconfiguring our plans, reducing capacity at a couple of our locations, all of these things, which reduce our dependence on rail transport. And the strong stance we've taken in the regulatory arena of filing suit or creating a charge at the STB that's rate-based. We hope all those things are an indicator that we're taking steps that have -- are positioning us to see this become more than just a 1-quarter trend.

Okay, and how much do they decline on a sequential or a year-over-year basis?

We really don't really report on that, but we are making a comment that they really didn't increase this last quarter.

Our next question comes from Dmitry Silversteyn from Longbow Research.

Just a couple of questions because a lot of them have been answered already. First of all, on that share repurchase authorization versus dividend increases, can you give us an idea of sort of what the board thinking was there? You talked about some 300-whatever consecutive quarters of dividend payments. But going back to the last several years, you really haven't done much in terms of dividend increases in a cyclical stock like Olin. What's the rationale for buying back stock rather than increasing dividend?

Dmitry, as you know, our dividend yield's at the high end of companies in the chemical industry. And so at this point in time, we consider share repurchase as a better method of returning value to shareholders. That being said, we continue to look at the dividend on a quarterly basis. So we look at both avenues of how to return to the shareholders.

Okay, fair enough. And hydrochloric acid, you talked about lower demand and lower pricing, which probably go hand-in-hand. In terms of lower demand, was it high in 2012 on frac-ing activity? Or was there another market that significantly distorted the sort of the baseline demand picture for the chemical? And what's the outlook for that market in 2013 and forward?

As you know, natural gas prices went down. The rig counts went down. As far as from a drilling perspective, I think they're down 10% year-on-year at this point in time. I think most people believe that as the price of natural gas goes back up that there'll be more drilling activity with regard to that.

Another factor is on the supply side, in 2012, you really had a situation where all the byproduct produced -- all the byproduct manufacturers that generate byproduct HCL were operating in an environment in which they were at reduced rates. So the supply side of the HCL market was really constrained because of that. And that helped create the environment in '12 where we had all-time record HCL pricing. In '13, especially in the second quarter, we have seen an improvement in HCL demand in oil and gas exploration. We've seen an improvement in mining. And we believe that those are going to continue and be a positive for our volumes in the third quarter.

Okay. And then finally on bleach -- thanks for providing the ECU premium that you guys were selling bleach at. But if you look at the growth in year-over-year bleach volumes, it's been sort of in the mid-single digit range for the last several quarters. And if I might recollect correctly, your expectations for this business when it was sort of launched as a separate business unit within Chlor Alkali, I think your expectations for growth were significantly higher, at least double-digit levels, if not sort of teens levels. Is that correct, first of all? And secondly, what do you attribute this lower growth of bleach volumes to, if it is lower than you expected?

I think part of -- and I'm not sure that I would support that the growth is lower. I'd have to go back and look harder at the numbers. But one of the things that we're doing is we have started up new capacity at 3 of our locations, and we also have expanded our shipping by rail capabilities, and all of those things, I think, are positioning us, at this point in time, for a period in front of us in which we can grow the business significantly again.

Okay. I'm actually looking back at my notes, you didn't give explicit growth rate expectations, but you did say that you expect bleach to be about 25% of your ECU production, I think it was by 2015 or 2016, which if you sort of extrapolate that was the growth rate that was implied. Is the 25% still a goal? And is the time frame sort of the same or...

It's a combination. I think we said 17% for bleach and 13% for HCL, taking it up to a total of 30%.

Yes, it's a combination of -- the 25% was a combination of bleach and HCL.

Okay. And that's still the plan and the timing is still on track?

Yes.

Our next question comes from Cooley May from Macquarie.

I have a few general questions. First, per your comments earlier, if there are all these export market opportunities for chlorine derivatives and caustic, why would any U.S. Chlor Alkali producer, such as Dow, permanently reduce capacity from current levels?

Well, I can't speak to what Dow's situation is and what decisions they make and what reinvestment commitments or constraints they have in front of them. I can say that we expect that chlorine derivatives will continue to be a market in which these producers will try to take advantage of. And -- but that's really until North American demand returns to what you would consider to be a more normal level. And then there'll be the ability to use whatever assets they're committing to this to satisfy derivative demand in North America. We believe that overall, because products -- derivatives and/or caustic products are produced here, that has an impact on whether or not they're produced in some other part of the world. So we don't necessarily see that as being the negative issue for the market that a lot of people perceive it to be.

The biggest derivative product is EDC, DCM or PVC, as you know. And Dow is not in PVC. They're in EDC, DCM and they choose their bullet points what they want to do.

Yes, but taking that point, given that most of your chlorine, I guess, chlorine derivatives are in bleach and HCL, then you're not producing EDC, where do you think your chlorine is going to find a home after 2 of your customers backward integrate later this year?

Well, we are continuing to grow our bleach and our HCL business. And that is a consumer of chlorine. We've also reduced capacity over the last 18 months across our system. And I would also say that our chlorine demand -- our chlorine market serves a broad variety of end use points in North America. And so we're comfortable that our portfolio is varied enough that, that's not a concern for us.

Okay. And given that your caustic suppliers, the KA Steel are also your competitors, do you view supplier departures, such as possibly like Formosa, Dow, Oxy or what have you, as an ongoing risk? And could this be a reason why you're sourcing more caustic internally?

We're sourcing more caustic internally because that's the way to increase the asset utilization or Olin's assets in a way in which we can most efficiently use those assets. We're not going to comment on what suppliers might or might not do. We're comfortable that our supply base is secure, and that we're in a position where supply is not going to be a consideration that impacts KA Steel's business.

Okay. And lastly, given that volume remains at elevated levels, why are you not pushing out these planned outages set for the third quarter?

Because some of the equipment has to be worked on. I mean, there's certain pieces of equipment that we have been running extremely hard for a long period of time. And there's pieces of equipment that need to be taken care of.

Our next question comes from Richard O'Reilly from Revere Associates.

Did I understand urethane, your volumes were down 39% year-over-year? Was that right?

That was right.

Okay. Was that a customer issues or the nature of your plant outages?

Some of our major urethane guys took outages.

Okay, fine. Okay, and then the plant maintenance cost, it was a $6 million versus a $1 million delta?

It was a $7.6 million versus the $1 million.

Okay, fine. Okay, fine. Okay. So if we look at the year-over-year segment profits, you got $6 million from that decline from the hydrochloric acid, the higher power costs [indiscernible] and then the maintenance of about $6 million delta, right? And then there's something else not in the math that we don't know of, right?

We talked about the year-over-year depreciation was up about $6 million. The majority of that is in Chlor Alkali.

Okay, fine. Okay, and second, on your backlog and the commercial ammunition, how quickly can customers cancel orders?

We have experienced in the past when a surge ends that we find that we have customers who have placed double orders, and they will cancel that order -- that duplicate order. So there is a probability here at some point that some element of that backlog will just disappear.

Right. They don't -- there is no penalty on their part for canceling?

Depending upon where you are in the cycle. If it's stuff that's near in that's in manufacture, there is a penalty. If it's stuff that's 9 months out, normally, there is none.

Our next question comes from Jeff Lapatten [ph] from Elite FPLP [ph]

My question is one of general strategy. Do you guys have any plans to separate the ammo business from the chemicals business? It strikes me to represent 2 very different potential shareholder groups, especially given the current polarizing issue of firearms and corresponding extreme views adopted by certain institutional investors. The chemicals investors are going to be prohibited from investing in Olin because of your ammo business, defense industry investors have minimal desire to analyze a Chlor Alkali business, and your sell-side coverage is exclusively chemical industry analysts, who aren't focused on the extremely attractive and iconically branded ammo business. Why not spin off Winchester in the very near term?

We've owned it since 1892. It's an outstanding business that consistently generates cash and exceeds its cost of capital. And by the virtue of the fact that we've owned it for extremely long time, it has a very low tax basis, which represents a pretty big obstacle for value creation at any sale. We said publicly on numerous occasions that if we had the correct chemical opportunity to continue to grow the chemical side, if that was to present itself, then we might look at Winchester differently. And at that point in time, what we've also stated pretty firmly is that we are a chemical company that happens to own a very successful ammunition business.

Right. I mean, you wouldn't have any tax implications to the extent you did a tax free spinoff, though?

Assuming that you could get the value that you wanted -- that you were looking for in a tax free spinoff.

All right. I hope you gentlemen give it incremental consideration.

Our next question comes Fair Wade [ph] from Donegal Securities.

I see that in your report you state that one of the reasons for the decrease in Chlor Alkali segment earnings is higher electricity costs due to increase in natural gas prices. My impression was that your plants were located in places that had access to hydroelectric power, such as Niagara Falls, New York, et cetera.

Yes. We've stated in the past from an electrical perspective that we have a balanced portfolio of electricity. We have got some plants that are hydrochloric, some that are natural gas-based, some that are coal-based, some that are nuclear-based. So it doesn't affect our entire portfolio, but in this particular case, we have a couple of plants that were affected, that's what happened.

Our next question comes from James Finnerty from Citi.

Just on the M&A topic. You mentioned about the one more consolidation being possible and you would be interested in taking part in that. Outside of Chlor Alkali, are there any other opportunities for you to sort of take what you produced and sort of go downstream? And in, say, like in taking some of your hydrogen peroxide, as an example, would that be a possibility?

Well, as we've said, there are many downstream products. One that we have been actively involved in over the past several years has been bleach, which takes both chlorine and caustic and repositions it. And that was really a good genesis of the acquisition for KA Steel. So products that use hydrochloric acid, bleach, et cetera going downstream, we certainly do have an interest in there more closely related to what we do.

Would there be possibilities of going into other downstream markets that you're not currently involved in?

There are possibilities, yes, assuming that we could get the right value.

Our next question comes from Doug Ricebedder [ph] from -- who is a private investor.

My 2 questions relate to the Winchester business, and one only needs to go into any Wal-Mart or Sporting Goods store to see evidence of the backlog. I was wondering if you might take the opportunity of that shortage at the consumer end to use some pricing power or raise your margins there? And then, my second question was if you're taking any strategy or taking any action because of California's stated interest in banning lead projectiles.

Two things. One is that we did take a price increase in the -- in January of this year, 3% to 5%. We also announced a price increase that we implemented July 1 of 2%. So we have taken some pricing actions in the marketplace. And secondly, we continue to look at ways to address issues like non-lead. We actually do have projectiles for almost every caliber ammunition we make that are non-lead. And one of them in particular for the state of California, as you know, several years back, where we had -- we developed a copper bullet because of the issues with the condor in California.

And gentlemen, at this time, I'm showing no additional questions. I would like to turn the conference call back over to Mr. Rupp for any closing remarks.

We'd like to thank everyone for joining us today and look forward to announcing our results and meeting with you in October at the end of our third quarter. Thank you, and have a good summer.

And ladies and gentlemen, the conference has now concluded. We do thank you for attending today's presentation. You may now disconnect your telephone lines.