Olin (OLN)

A Dollar Figure for Mid-Cycle

Olin earned $651.8M of adjusted EBITDA in FY2025, a year management called a "trough market environment", and says a normal year earns about $2.0B. That figure is its 2029 target from the December 2024 Investor Day. It assumes mid-cycle conditions in chlor-alkali and vinyls (CAPV) and normal conditions in epoxy and Winchester, its ammunition business, with CAPV alone at about $1.5B.

Chlor-alkali is the electrolysis of salt brine into chlorine and caustic soda. Olin turns much of the chlorine into vinyls (the PVC chain) and epoxy resins, and sells caustic soda into uses led by water treatment, alumina, and pulp and paper.

Olin's net debt is 4.1x FY2025 adjusted EBITDA but about 1.3x its own mid-cycle target. The debt, $2,659.7M at 31 December 2025, is the same in both; only the earnings figure changes. That is why the mid-cycle EBITDA guide divides net debt by mid-cycle EBITDA.

Olin's main costs are power and ethylene. Electricity is the largest raw-material cost in CAPV, because electrolysis runs on it; about 76% of Olin's electricity comes from natural gas or hydro. Olin also supplies about 73% of its own salt, the other input to electrolysis, so less of that cost is bought at market prices. The vinyls business buys its ethylene. Olin has invested about $1.1B to secure about 650,000 tonnes of cost-based ethylene, about half contracted to 2035 and half to 2040 (Investor Day 2024). Epoxy uses propylene, cumene and ethylene. Power and that contracted ethylene set Olin's place on the cost curve, which ranks producers by cost.

How the Numbers Read

Electrolysis makes chlorine and caustic soda together in a fixed ratio; the industry calls one tonne of chlorine plus its caustic an electrochemical unit (ECU). Olin runs its plants only as hard as demand for the less wanted of the two allows, and accepts lower volume to hold price. So volume can look soft while margin holds.

Olin's announced 2026 caustic price increases show which way it pushed prices, not where they landed. For PVC, the Excel model that comes with the Selborne primer assumes 54¢/lb over the long run.

How You Would Value a Business Like This

Management calls FY2025 a trough, so a multiple on that year's EBITDA would mislead. Olin's own 2029 target is the mid-cycle figure it offers; the method applies a through-cycle multiple or a DCF to mid-cycle earnings, as the mid-cycle EBITDA guide works through on fictional producers.

What to Watch in the Financials

Progress towards the 2029 target. FY2025 adjusted EBITDA was about a third of the target, and CAPV carries three-quarters of it.

Net debt. Olin ended 2025 with net debt about level with a year earlier; leverage rose from 3.1x to 4.1x because EBITDA fell.

Pricing beside volume. Because Olin cuts volume to hold price, lower volume at firm prices can be a choice.

Key Risks

Power and gas costs. Power is the largest raw-material cost in CAPV, and the gas-fired part of Olin's supply ties that cost to US gas prices.

The 2029 target is an estimate. The company projection needs selling prices to recover faster than costs and the ECU to run closer to full. Because chlorine and caustic soda are made together, weak demand for either caps output of both.