Olin (OLN) Q2 Earnings Surpass Estimates, Revenues Miss
Olin Corporation OLN posted second-quarter 2023 profit of $146.9 million or $1.13 per share, down from $422.1 million or $2.76 per share in the year-ago quarter. Earnings per share topped the Zacks Consensus Estimate of $1.04.
The chemical maker’s revenues fell roughly 35% year over year to $1,702.7 million in the quarter. It missed the Zacks Consensus Estimate of $1,850.2 million. The top line in the reported quarter was hurt by lower volumes in its chemical businesses. The company witnessed lower sales across its segments in the quarter.
Olin Corporation Price, Consensus and EPS Surprise
Olin Corporation price-consensus-eps-surprise-chart | Olin Corporation Quote
Segment Review
Chlor Alkali Products and Vinyls: In the second quarter of 2023, revenues amounted to $1,002.3 million, which fell around 29% from the same period of 2022. The decrease was mainly attributed to a 24% reduction in volumes, partly offset by higher pricing. The reported figure fell short of our estimate of $1,119.3 million.
Epoxy: Revenues in the division went down around 43% year over year to $333.8 million on lower volumes. It missed our estimate of $387.4 million.
Winchester: Revenues fell around 16.7% year over year to $366.6 million on lower commercial ammunition shipments, which were partly offset by higher military sales.
Financials
Olin ended the quarter with cash and cash equivalents of $161.1 million, down 47% year over year. Long-term debt was $2,717.3 million at the end of the quarter, up around 5%.
The company repurchased roughly 3.5 million shares of common stock for $186.9 million during the second quarter.
Outlook
The company expects its Chemical operations to report lower results for the third quarter of 2023 compared to the second quarter, mainly due to challenges in the global economic environment and ongoing operational issues with the vinyl chloride monomer facility in Freeport, TX. However, the Winchester segment is projected to show sequential improvement in performance during the same quarter, driven by anticipated growth in both international and domestic military markets. Overall, the company foresees a 10% decline in adjusted EBITDA for the third quarter of 2023 compared to the second quarter. For the full year, the adjusted EBITDA is expected to be in the range of $1.4 billion.
Price Performance
Shares of Olin have risen 12.4% in the past year compared with a 9.1% rise of the industry.
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Zacks Rank & Key Picks
Olin currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Basic Materials space include Livent Corporation LTHM and Carpenter Technology Corporation CRS, both sporting a Zacks Rank #1 (Strong Buy), and PPG Industries, Inc. PPG, carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for LTHM’s current-year earnings has been revised 14% upward in the past 90 days. LTHM beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 22%. The company’s shares have gained 2.2% in the past year.
The earnings estimate for CRS’s current year is pegged at $1.04, indicating year-over-year growth of 198%. CRS beat the Zacks Consensus Estimate in all the last four quarters, with the average earnings surprise being 30.9%. The company’s shares have rallied 89.2% in the past year.
The Zacks Consensus Estimate for PPG’s current-year earnings has been revised 6.8% upward in the past 60 days. PPG beat the Zacks Consensus Estimate in three of the last four quarters. It delivered a trailing four-quarter earnings surprise of 7.3% on average. The company’s shares have risen roughly 11.1% in the past year.
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