Chris Perrella: All right. So, it’s just a lag in the contract pricing?
Scott Sutton: Exactly.
Operator: The next question comes from Frank Mitsch of Fermium Research.
Frank Mitsch: Interesting on the parlay chart reaching a high of 25% in the fourth quarter. Obviously, part of that is the initiative to ramp back your own operating rates. Where does that stand now here in January and what are your expectations for that metric through the quarter?
Scott Sutton: Yes. Hey, Frank. Yes, I mean, you’re right. I mean it’s — I think it’s very interesting that for 25% of our volumes were out there selling, we were buying those from third parties. And it might just tell you about the strength of Olin that we can do that. We can go run our assets at 50% utilization. We can take care of all those items and still have positive levered free cash flow even in the fourth quarter. So, I mean, thanks for the observation on that or the hints of the observation. I mean, I would say that, look, we’re still doing a lot of that, because we’re still running that initiative. I do think through the year, as we very slowly and incrementally may lift rates a little bit, you might see that percentage decline back some. We’re unlikely to be at a 25% purchase of all of our volumes from other parties over a long period of time, it will probably settle at something lower than that.
Frank Mitsch: And then as you assess the underlying market demands by region, you had indicated the last time that things were rather slow and so forth. How is it standing here in January, and what are your expectations? What is actually embedded in terms of underlying demand? If you think about ’24 being better than ’23 overall?
Scott Sutton: Yes. Well, I mean look in Winchester there’s a demand increase in military just sort of put that one to bed. We haven’t planned on any demand increase in Epoxy, right. That’s a self-help type of work. Even in Chlor Alkali, very limited demand recovery. But I will just say that sentiment is a little bit better here at the start of the year, customers are restarting. Two of our larger customers that have large off-takes have been down for many weeks and in fact they are restarting. There is some light confidence, I’d say in homebuilders where at least maybe that doesn’t go the wrong way. So there’s just not a lot of strength in demand built in our outlook, Frank.
Operator: The next question comes from Kevin McCarthy of Vertical Research Partners.
Kevin McCarthy: Scott, I’d welcome your updated thoughts on the shape of the Epoxy cycle. If I look at Slide 8, it appears as though your prices eroded in 4Q versus 3Q. How do you think that will trend in the first quarter? And then, I’m also interested to hear your thoughts on Epoxy’s in Europe. We’re reading about disruptions in trade routes relative to the Red Sea and purchasing managers seem to want to kind of get ahead of those longer lead times and increased tensions and friction and so forth. How do you see the next quarter or two shaping up for Epoxy?
Scott Sutton: Look, I mean, we’ve announced price increase and we’re getting some price increase. And in fact, if you really looked at what’s happened over the last few months has been more of a wash tub bottom. It really hasn’t declined further. In fact, even the trade publications now are saying that this is a bottom. Believe me, we absolutely say that this is a bottom. And the disruptions for trade routes that is starting to have an impact, particularly in Europe. So there’s a lot of momentum for the start of lifting prices again through Epoxy. It’s going to be slow though. I think, what you’ll end up seeing us do is sort of take that wash tub and profit up a little bit. I wouldn’t expect something really, really fast there, but we’re going to change the slope of that curve.
Kevin McCarthy: And then curious on EDC, we’ve seen those prices percolate higher notwithstanding weakness in downstream PVC resin. How much headroom is there before you kind of run into that PVC ceiling, so to speak?
Scott Sutton : Well, I mean, particularly the export PVC pricing is not good and you’ve seen EDC lift, but there’s still a substantial gap left even when PVC is this low. And that’s one of the focuses we’ve had and one of the initiatives we’ve had is to try to close that gap. And we were never really successful at closing that gap. So there’s still room there to move it some more relative to PVC.
Kevin McCarthy: And if it is the last call, Scott, congrats on all that you’ve been able to do with the company in less than three years and look forward to keeping in touch.
Scott Sutton : No, thanks a lot. It’s really not me though. It’s this team and this employee group.
Operator: The next question comes from David Begleiter of Deutsche Bank.
David Begleiter : Scott, just on the Blue Water Alliance, can update us on how it performed last year and what’s the expected EBITDA contribution in 2024?
Scott Sutton: Yes, I mean, look, I probably won’t give a forecast of the EBITDA contribution. But I mean, clearly that does appear indirectly in our financials and it wasn’t a positive contributor in 2023, which was actually the expectation, right. It’s sort of the first year. There’s a lot of purposes for Blue Water, we don’t intend for it to be a wild direct contributor of profit. But the value to time one and the value in the overall product levels of Olin is there. I mean part of our parlay work that we’re doing now and we just had that discussion being 25% of our business it is associated with Blue Water. So, it will likely improve this year, but it’s not going to be a major direct contributor relative to the size of the rest of our business.
David Begleiter: And just again on Epoxy, what’s the path back to mid-cycle earnings given the amount of oversupply in the marketplace today?
Scott Sutton: Well, I guess it depends on what you call mid-cycle in that business. But I’ll just say it’s a multiyear path and maybe leave it at that.
Operator: The next question comes from Mike Leithead of Barclays.
Mike Leithead: First question on Winchester. You’ve obviously talked Scott, about the earnings improvement likely this year. Could you first remind us just how big military is relative to your overall kind of sales mix in this business? And second, it is an election year. Does that normally change commercial order patterns or do you see that impacting at all commercial sales volumes?
