Scott Sutton: Look, give me a little clarification. I missed the gap between what two things.
Matthew Blair: The gap between chlorine and caustic and ECU and which is the strong side and which is the weak side?
Scott Sutton : First of all, Olin does do better when there’s a difference in the supply demand profile on the chlorine side of the ECU versus the caustic side of the ECU. Just because we can act on one versus the other. The only challenge that we really that is when both are bad and they’re equal. That’s the hardest profile for Olin to act on. So we don’t have a problem with one being weak and one being stronger. That’s the way we’re set up now. Caustic is stronger, flooring is weak, but overlaying that is just general weakness and that’s why our earnings are down.
Matthew Blair: And then, I thought it was interesting. You mentioned that in general Winchester is a bright spot and talked about military being a big opportunity. I think the slides mentioned that military demand was actually down a little bit in the fourth quarter, quarter-over-quarter, even given this period of global instability? What are you seeing in Q1? Is that starting to rebound?
Scott Sutton : Yes. And I understand your comment. That was just a sequential issue and it’s really only order pattern related and delivery related. A lot of those deliveries into the military application are very large and they’re very discrete. So that’s only an order pattern issue. Again, I would just compare year-on-year-on-year and there’s substantial lifts year-on-year-on-year.
Operator: The next question comes from Vincent Andrews of Morgan Stanley.
Vincent Andrews: On the cash taxes, my recollection is that those that increase was also supposed to be the case last year and I think you mentioned defer into this year. So is this year that increase I think is $80 million is that definitive for 2024 or is there some chance to further defer those?
Todd Slater: I wish, I could sound very optimistic and say there’s a chance to defer. I don’t believe that will be the case. And we would expect that $80 million we paid out roughly during the middle of this year.
Vincent Andrews: And then also on that same Slide 9 and the primary uses for cash flow, the third one being the Alliance and JV opportunities. Is there sort of a rough amount you could suggest that could go towards those this year or max amount?
Todd Slater: At this point, they would be very small. We do have a hydrogen joint venture that we do have a little bit more that will be paid during this year. So that is a small number relative to any of those cash flow numbers.
Operator: The next question comes from John Roberts of Mizuho.
John Roberts: Thank you, and best wishes as well, Scott. I think acetone prices spiked during the quarter. Is that just the normal co-product dynamics with the weak BPA market for Epoxies or is there something else going on there?
Scott Sutton: Yes. I mean principally that’s it. You’re right. I mean phenol acetone co-production a little bit like chlorine caustic. And we sort of transferred some of our model that we run in the ECU world into our phenol acetone production and marketing scheme. And so you’ve seen us take advantage of that and get some value out of assets.
John Roberts: And then at Lake City, do you think there are any political risks to being able to use the excess capacity for commercial production? The New York Times had a pretty high profile article during the quarter?
Scott Sutton: No. I don’t think there’s any risk there at all. I mean, what I will say is that, look, I mean, there’s always this sort of backdoor play to try to go after the second amendment of the constitution in the U.S., and that’s what that is. And those kind of things are not likely to be very successful. I just go back to the fact that probably in this country, there’s 26,000 gun laws on the books. Still sports shooting is the largest participant sport in the country just below exercise. Okay? And coming after ammunition, there’s probably an unsuccessful road that some might follow there.
Operator: The next question comes from Roger Spitz of Bank of America.
Roger Spitz: I’m assuming you’ve idled some of your electrolyzers or perhaps full trains to get to the 50% operating rates. Will there be material restart cost as you move your operating rates up? I guess membranes can be finicky or you mainly idling just your asbestos diaphragm spectralizers?
Scott Sutton: No, there’s no incremental cost. We can move those up and down rather quickly. And in fact just a smaller point for you that’s pretty interesting is the diaphragm systems relative to the membrane systems are very easy to go up and down. That’s an advantage of asbestos diaphragms or other kinds of diaphragms relative to membrane system, very easy to turn on and off.
Roger Spitz: And secondly, historically, ammunition sales, commercial ammunition sales have been higher when the Democrats are have the administration versus Republicans. Do you have any view of how much EBITDA is in Winchester attributed to the fact that we currently have a Democratic administration?
Scott Sutton: Well, I would say not really. I would say it’s more attributed to the fact that there’s at least 15 million new participants doing sport shooting in this country and every month, I forget how many, maybe someone will tell me how many months in a row that the mix background checks have been above 1 million guns a month, but it’s like 40 million or 50 million maybe even more. I just can’t remember the number and that trend continues. And that’s driven a lot more participation in the sport.
Operator: As there are no further questions, this concludes our question-and-answer session. I would like to turn the conference back over to Scott Sutton for closing comments.
Scott Sutton: Well, I would just say thanks very much to everybody for attending today. Thank you.
Operator: Thank you for attending today’s presentation. You may now disconnect.
