Olin (OLN) Q3 Earnings Surpass Estimates, Revenues Miss
Olin Corporation OLN posted third-quarter 2023 profit of $104.1 million or 82 cents per share, down from $315.2 million or $2.18 per share in the year-ago quarter. Earnings per share topped the Zacks Consensus Estimate of 67 cents.
The chemical maker’s revenues fell roughly 28% year over year to $1,671.4 million in the quarter. It missed the Zacks Consensus Estimate of $1,758.2 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 third quarter, revenues amounted to $969.6 million, down around 23% year over year. It lagged the Zacks Consensus Estimate of $1,026 million. The sales decrease was primarily due to lower volumes, partially offset by products sold by BWA, lower pricing and a less favorable mix. The lower pricing was primarily due to a fall in caustic soda pricing.
Epoxy: Revenues in the division went down around 50% year over year to $321.6 million on lower volumes. It missed the consensus estimate of $355 million. The decline in revenues was principally caused by reduced volumes, including the shutdown of the cumene facility and one of OLN’s bisphenol manufacturing lines, as well as decreased product prices.
Winchester: Revenues fell around 8% year over year to $380.2 million. It beat the consensus estimate of $378 million. The decline was due to lower commercial ammunition shipments and pricing, which more than offset increased domestic and international military sales.
Financials
Olin ended the quarter with cash and cash equivalents of $158.3 million, down from $163.6 million in the prior-year quarter. Long-term debt was $2,711.2 million at the end of the quarter, up from $2,580.4 million a year ago.
The company repurchased around 3.7 million shares of common stock for $202.1 million during the third quarter.
Outlook
Olin predicts fourth-quarter 2023 operating results to be weaker sequentially. It believes that the challenging worldwide conditions for its Chlor Alkali Products and Vinyls business are nearing a beneficial inflection point. It intends to cut operating rates in the fourth quarter, limiting market participation and expediting the favorable inflection point.
As a result, the company anticipates a reduction in Chlor Alkali Products and Vinyls business results in the fourth quarter. It expects European and North American demand downturns to remain a problem for the Epoxy business, which will be exacerbated by increased Asian exports. The company expects the fourth-quarter 2023 results for Winchester business to be comparable with the third-quarter performance.
Other Corporate and Unallocated costs are predicted to be lower in 2023 than in 2022. OLN anticipates environmental expenses of $25 million to $30 million in 2023, up from $23.2 million in 2022.
Non-operating pension income is expected to be around $23 million in 2023, down from $38.7 million a year ago.
The company presently anticipates capital spending in the $225 million to $250 million band in 2023. Depreciation and amortization expenses are expected to be in the $535 million range in 2023.
Price Performance
Shares of Olin have declined 20.5% in the past year against a 5.8% decline of the industry.
Image Source: Zacks Investment Research
Zacks Rank & Key Picks
Olin currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the basic materials space include Equinox Gold Corp. EQX, Koppers Holdings Inc. KOP and The Andersons Inc. ANDE.
Equinox has a projected earnings growth rate of 90% for the current year. It currently carries a Zacks Rank #2 (Buy). Equinox delivered a trailing four-quarter earnings surprise of roughly 18.1%, on average. The stock is up around 38.9% in a year. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Koppers has a projected earnings growth rate of 7.5% for the current year. It currently carries a Zacks Rank #2. Koppers delivered a trailing four-quarter earnings surprise of roughly 21.7%, on average. The stock is up around 45.8% in a year.
Andersons currently carries a Zacks Rank #1. The stock has gained roughly 39.8% in the past year. ANDE beat the Zacks Consensus Estimate in each of the last four quarters. It delivered a trailing four-quarter earnings surprise of 64.4%, on average.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
The Andersons, Inc. (ANDE) : Free Stock Analysis Report
Koppers Holdings Inc. (KOP) : Free Stock Analysis Report
Olin Corporation (OLN) : Free Stock Analysis Report
Equinox Gold Corp. (EQX) : Free Stock Analysis Report
