Kraton Corp (KRA) Q4 Earnings Trail Estimates, Sales Top
Kraton Corporation KRA swung to a profit in the fourth quarter of 2017. The chemical maker logged a profit of $69.6 million or $2.17 per share in the reported quarter compared with a loss of $3.7 million or 12 cents per share a year ago.
Barring one-time items, adjusted earnings came in at 67 cents per share for the reported quarter, up from 29 cents a year ago. The results, however, missed the Zacks Consensus Estimate of 79 cents.
Revenues rose around 12% year over year to roughly $466 million in the quarter. It beat the Zacks Consensus Estimate of $457 million. The company saw higher revenues across all segments in the quarter.
Kraton Corporation Price, Consensus and EPS Surprise
Kraton Corporation Price, Consensus and EPS Surprise | Kraton Corporation Quote
FY17 Results
For 2017, profit was $97.5 million or $3.07 per share, compared with $107.3 million or $3.43 per share logged a year ago. Adjusted earnings per share for the year were $2.85.
Revenues for the full year rose roughly 12% year over year to $1,960.4 million.
Segment Review
Revenues for the Polymer segment climbed roughly 17% year over year to $279.5 million in the reported quarter. Sales volumes rose 3% year over year to 75.6 kilotons in the quarter. The company recorded volume gains in performance products and specialty polymers while volume fell in Cariflex.
Sales for the Chemical segment rose roughly 5% year over year to $186.5 million. Sales volumes dipped roughly 3% year over year to 100.9 kilotons. While volumes for adhesives and roads and construction increased, the same for performance chemicals and tires decreased in the quarter.
Financials
Kraton’s cash and cash equivalents were around $89.1 million at the end of 2017, down 27% year over year. Long-term debt was $1,574.9 million, down around 7% year over year. The company reduced net debt by $163 million in 2017.
Outlook
Moving ahead, Kraton expects adjusted EBITDA for 2018 to be roughly $400 million. The company also expects to cut net debt, excluding the net debt of its KFPC joint venture, by around $125 million this year.
Kraton also realized roughly $45 million of its $70 million cost reduction target for its Polymer segment at the end of 2017 and expects to realize a major portion of the remaining savings in 2018.
Price Performance
Shares of Kraton have rallied 84% over a year, outperforming the 1.4% decline recorded by its industry.
Zacks Rank & Stocks to Consider
Kraton currently carries a Zacks Rank #3 (Hold).
Better-ranked companies in the basic materials space include Olympic Steel, Inc. ZEUS, Methanex Corporation MEOH and The Mosaic Company MOS, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Olympic Steel has an expected long-term earnings growth rate of 7.5%. Its shares rallied 43% over the past six months.
Methanex has an expected long-term earnings growth rate of 15%. Its shares have rallied 29% over the past six months.
Mosaic has an expected long-term earnings growth rate of 9.5%. Its shares have rallied 34% over the past six months.
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