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Olin (OLN) Misses Earnings and Revenue Estimates in Q4

Anindya Barman

Olin Corporation OLN logged a profit of $53.3 million or 32 cents per share in fourth-quarter 2018, down significantly from a profit of $489.3 million or $2.89 per share a year ago. Earnings fell short of the Zacks Consensus Estimate of 34 cents. Earnings in the year-ago quarter included a tax benefit of $437.9 million.

The chemical maker’s revenues edged up 0.9% year over year to $1,635 million in the quarter, missing the Zacks Consensus Estimate of $1,706 million.

Olin Corporation Price, Consensus and EPS Surprise

 

Olin Corporation Price, Consensus and EPS Surprise | Olin Corporation Quote

FY18 Results

For 2018, profit was $327.9 million or $1.95 per share, down roughly 40% from $549.5 million or $3.26 per share in 2017.

Adjusted EBITDA for the full year was record $1,265.4 million, up around 34% year over year.

Revenues for the year went up around 11% year over year to $6,946.1 million.

Segment Review

Chlor Alkali Products and Vinyls: Revenues at the division rose around 7% year over year to $980.8 million in the fourth quarter, mainly due to higher chlorine, ethylene dichloride and other chlorine-derivatives prices that more than offset lower volumes.

Epoxy: Revenues at the division went down around 5% year over year to $508.7 million, hurt by lower cumene and resin volumes that more than offset higher product prices.

Winchester: Revenues at the division declined around 12% year over year to $145.5 million, mainly due to reduced shipments to commercial customers.

Financials

Olin ended 2018 with cash and cash equivalents of $178.8 million, down around 18% year over year. The company repaid $122 million of debt using its cash flow during the fourth quarter. Long-term debt was $3,104.4 million at the end of 2018, down 14% year over year.

Olin repurchased roughly 1.6 million shares of common stock for around $30 million in the fourth quarter. For 2018, it repurchased 2.1 million shares worth around $50 million.  

Outlook

Moving ahead, Olin forecasts adjusted EBITDA for 2019 to be comparable to 2018 levels considering a balanced level of upside potential and downside risks. The company also expects 2019 to be another strong year of cash flow generation.

Olin started the year with caustic soda prices meaningfully lower than 2018. However, it expects this to be offset by better chlorine, ethylene dichloride and chlorine-derivatives prices and a decline in turnaround costs.

The company expects sustained improvement in chlorine, ethylene dichloride and chlorine-derivatives prices in 2019. Olin is also optimistic about improvements in domestic and export caustic soda prices over the course of 2019.  

Price Performance

Shares of Olin have lost 33.1% in the past year, underperforming the industry’s 20.9% decline.



 

Zacks Rank and Stocks to Consider

Olin currently carries a Zacks Rank #5 (Strong Sell).

A few better-ranked stocks worth considering in the basic materials space include Israel Chemicals Ltd. ICL, Quaker Chemical Corporation KWR and B2Gold Corp. BTG.

Israel Chemicals has an expected earnings growth rate of 11.1% for the current year and carries a Zacks Rank #2 (Buy). The company’s shares have rallied 46% over the past year.  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Quaker Chemical has an expected earnings growth rate of 20.5% for the current year and carries a Zacks Rank #2. Its shares have gained 41% in the past year.

B2Gold has an expected earnings growth rate of 13.7% for the current year and carries a Zacks Rank #2. Its shares have gained 5% in the past year.

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