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Albemarle (ALB) Tops Q2 Earnings Estimates, Ups FY19 EPS View

Zacks Equity Research

Albemarle Corporation ALB recorded a profit of $154.2 million or $1.45 per share in the second quarter of 2019, down 49% from $302.5 million or $2.73 per share it earned year ago.

The bottom line in the year-ago quarter was boosted by $176.7 million (post tax) gain on the divestment of the polyolefin catalysts and components portion of the Performance Catalyst Solutions business.

Adjusted earnings for the reported quarter were $1.55 per share, up 14% year over year. It trounced the Zacks Consensus Estimate of $1.41.

Revenues rose around 4% year over year to $885.1 million in the quarter. It also surpassed the Zacks Consensus Estimate of $876.3 million. Revenues were aided by higher volumes across the company’s lithium and bromine businesses and favorable pricing across the board.

Albemarle Corporation Price, Consensus and EPS Surprise

 

Albemarle Corporation Price, Consensus and EPS Surprise

Albemarle Corporation price-consensus-eps-surprise-chart | Albemarle Corporation Quote

Segment Highlights

Sales from the Lithium unit rose around 2% year over year to $324.8 million in the reported quarter, aided by favorable pricing and higher sales volumes. Adjusted EBITDA was essentially flat year over year at $141.8 million.

The Bromine Specialties segment logged sales of $255.4 million, up around 16% year over year, driven by favorable pricing and higher volumes. Adjusted EBITDA was $81.3 million, up around 17% year over year.

The Catalysts unit recorded revenues of $266.3 million in the reported quarter, down roughly 7% year over year, as lower sales volumes and unfavorable currency impact more than offset favorable pricing. Adjusted EBITDA was $66.9 million, down roughly 11% year over year.

Financial Position

Albemarle ended the quarter with cash and cash equivalents of roughly $398.2 million, down roughly 56% year over year. Long-term debt was $1,398,4 million, down around 0.6% year over year.

Cash flow from operations was $199.3 million for the first half of 2019, down around 11% year over year. Capital expenditures were $415.6 million for the period, up 48% year over year.

Outlook

The company raised its earnings outlook for 2019. It now sees adjusted earnings for 2019 in the band of $6.25-$6.65 per share (up from the prior view of $6.10-$6.50), a year-over-year increase of 13-21%.

The company backed its net sales guidance for 2019 of between $3.65 billion and $3.85 billion, representing 8-14% year over year growth.  It continues to expect adjusted EBITDA for the year in the range of $1,070 million to $1,140 million, representing 6-13% year over year growth.

Price Performance

Albemarle’s shares are down around 12.3% so far this year compared with the roughly 25% decline recorded by its industry.


 

Zacks Rank & Key Picks

Albemarle currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks worth considering in the basic materials space include SSR Mining Inc. SSRM, Kinross Gold Corporation KGC and Flexible Solutions International Inc FSI.

SSR Mining has an estimated earnings growth rate of 134.8% for the current year and carries a Zacks Rank #1 (Strong Buy). Its shares have rallied 66% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kinross has projected earnings growth rate of 110% for the current year and carries a Zacks Rank #1. The company’s shares have gained 56% in a year’s time.

Flexible Solutions has an expected earnings growth rate of 342.9% for the current fiscal year and carries Zacks Rank #2 (Buy). Its shares have surged around 122% in the past year.

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