Westlake (WLK) Misses Q4 Earnings and Revenue Estimates
Westlake Corporation WLK logged a profit of $232 million or $1.79 per share in the fourth quarter of 2022, down from $644 million or $4.98 per share in the year-ago quarter. The bottom line missed the Zacks Consensus Estimate of $2.24 per share.
The results in the reported quarter were hurt by reduced sales prices, unfavorable sales mix changes, higher energy costs and lower volumes in certain product categories.
Sales fell around 6% year over year to $3,299 million in the quarter. It missed the Zacks Consensus Estimate of $3,310.6 million. Westlake was impacted by softer demand in most geographies and product categories in the quarter.
Westlake Corp. Price, Consensus and EPS Surprise
Westlake Corp. price-consensus-eps-surprise-chart | Westlake Corp. Quote
Segment Highlights
Sales in the Performance and Essential Materials segment went down around 4% year over year to $2,361 million in the reported quarter. Operating income in the segment was $219 million, a roughly 73% year-over-year decline. The downside was due to reduced sales prices for key products, lower sales volumes, unfavorable mix and increased global fuel and power prices. These were partly offset by higher global sales prices for caustic soda and chlorine.
The Housing and Infrastructure Products segment generated sales of $938 million, down around 12% from the year-ago quarter. Operating income in the segment was $68 million, down around 21% from a year ago. The downside was due to reduced operating rates and sales volumes that more than offset higher sales prices across most product categories.
FY22 Results
Earnings for full-year 2022 were $17.34 per share compared with $15.58 per share a year ago. Net sales rose around 34% year over year to $15,794 million.
Financial Position
Westlake ended 2022 with cash and cash equivalents of $2,228 million, up around 17% year over year. Long-term debt was $4,879 million, down around 0.7% year over year.
Net cash provided by operating activities was $3,395 million in 2022.
Outlook
WLK expects the Performance and Essential Materials unit to run profitably at higher operating rates on the back of its North American footprint that leverages a structural global cost advantage in feedstocks, fuel and power. The division is also expected to benefit from stabilizing power and fuel costs in Europe and the potential for improving economic growth in China.
In Housing and Infrastructure Products, the company envisions the slowdown of residential construction to continue in response to historically low home affordability. However, it sees moderate growth in repair and remodeling activity.
Price Performance
Westlake’s shares have gained 7.7% in a year compared with the industry’s 12.1% rise.
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Zacks Rank & Key Picks
Westlake currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks worth considering in the basic materials space include Steel Dynamics, Inc. STLD, Commercial Metals Company CMC and Nucor Corporation NUE.
Steel Dynamics currently sports a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for STLD's current-year earnings has been revised 22.3% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Steel Dynamics’ earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 11.3%, on average. STLD has rallied around 96% in a year.
Commercial Metals currently carries a Zacks Rank #1. The consensus estimate for CMC's current-year earnings has been revised 10% upward in the past 60 days.
Commercial Metals’ earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 16.7%, on average. CMC has gained around 58% in a year.
Nucor currently carries a Zacks Rank #1. The Zacks Consensus Estimate for NUE’s current-year earnings has been revised 12.5% upward in the past 60 days.
Nucor beat Zacks Consensus Estimate in each of the last four quarters. It delivered a trailing four-quarter earnings surprise of 7.7% on average. NUE’s shares have gained roughly 39% in the past year.
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