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Olin's (OLN) Q2 Earnings In Line, Revenues Beat Estimates

Zacks Equity Research

Olin Corporation OLN swung to a loss of $20 million or 12 cents per share in second-quarter 2019, from a profit of $58.6 million or 35 cents per share a year ago.

Barring one-time items, adjusted loss for the quarter was a penny per share, matching the Zacks Consensus Estimate.

The chemical maker’s revenues fell roughly 8% year over year to $1,592.9 million in the quarter. However, it beat the Zacks Consensus Estimate of $1,491 million.

The company witnessed continued weakness in caustic soda pricing in the quarter. Prices declined 3% on a sequential comparison basis in the quarter.

Olin Corporation Price, Consensus and EPS Surprise

 

Olin Corporation Price, Consensus and EPS Surprise

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

Segment Review

Chlor Alkali Products and Vinyls: Revenues at the division fell around 11% year over year to $909.2 million in the quarter, due to lower caustic soda pricing, partly masked by higher ethylene dichloride pricing.

Epoxy: Revenues at the division went down around 5% year over year to $518.8 million, hurt by lower product prices that more than offset higher cumene and epoxy resin volumes.

Winchester: Revenues declined around 0.6% year over year to $164.9 million, mainly due to lower commercial sales.

Financials

Olin ended the quarter with cash and cash equivalents of $126.9 million, down around 12% year over year. Long-term debt was $3,232.6 million at the end of the quarter, down around 8% year over year.

Outlook

Moving ahead, Olin expects improved results in its Chlor Alkali Products and Vinyls unit in the second half of 2019 on the back of seasonally higher volumes and operating rates as well as improved cost performance. The company also expects caustic soda prices to improve as the year progresses.

For the Epoxy unit, Olin sees improved performance in second half driven by higher seasonal volumes, reduced maintenance turnaround costs and resumption of normal customer operations following the re-opening of the International Terminal Company in Houston, TX.

The company expects net income of $132-$207 million for 2019. Adjusted EBITDA for the year is forecast in the band of $1,075-$1,175 million.

Price Performance

Shares of Olin are down 31.4% over a year, compared with the industry’s decline of 34.9%.



 

 

Zacks Rank & Key Picks

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

A few better-ranked stocks worth considering in the basic materials space include Arconic Inc. ARNC, Israel Chemicals Ltd. ICL and Flexible Solutions International Inc FSI.

Arconic has an estimated earnings growth rate of 38.2% for the current year and carries a Zacks Rank #1 (Strong Buy). Its shares have moved up 17% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Israel Chemicals has an expected earnings growth rate of 13.5% for the current year and carries a Zacks Rank #2 (Buy). Its shares are up roughly 7% in the past year.

Flexible Solutions has an expected earnings growth rate of 342.9% for the current fiscal year and carries a Zacks Rank #2. Its shares have surged around 96% in the past year.

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