Westlake's 1Q Earnings Top, Sales Miss
Specialty chemicals company Westlake Chemical Corp.’s (WLK) reported first-quarter 2013 earnings of $1.84 per share exceeding $1.31 per share earned in the year-ago quarter. The results surpassed the Zacks Consensus Estimate of $1.29, reflecting a positive surprise of around 43%.
The company posted a record profit of $123.3 million in the reported quarter, surging roughly 40% from $87.8 million recorded in the prior-year quarter. Westlake benefited from globally advantaged energy and feedstock position stemming from North American shale gas and oil production.
Revenues came in at $864.6 million in the quarter, plummeting 16.5% from $1,034.9 million registered a year ago. It missed the Zacks Consensus Estimate of $875 million.
The year-over-year decrease was due to lower feedstock, ethylene and ethylene co-product sales volumes and lower sales prices for polyethylene and PVC resin. Ethylene and ethylene co-product sales volumes slipped due to a planned turnaround and ethylene unit expansion at Lake Charles, La.
Segment Performance
The Olefins segment reported income from operations of $161.1 million in the quarter, up 24.7% from $129.2 million registered a year ago. The results were positively impacted by higher olefin integrated product margins. The segment’s margins increased owing to significantly lower feedstock and energy costs, partially offset by lower sales prices.
Income from operations for the Vinyls segment was $43.7 million in the reported quarter, an increase of $22.6 million from $21.1 million in the prior year quarter. The increase was mainly attributable to higher vinyls integrated product margins, largely resulting from lower feedstock costs.
Financial Position
Westlake had cash and cash equivalents of $777.9 million as of Mar 31, 2013, down 13.1% from $895.2 million as of Mar 31, 2012. Long-term debt stood at $763.8 million as of Mar 31, 2013, flat on a year-over-year basis.
Net cash provided by operating activities was $116.3 million in the reported quarter compared with $ 105.6 million in the prior-year quarter. Capital expenditures were $150.8 million for the first quarter of 2013.
Westlake currently maintains a Zacks Rank #1 (Strong Buy).
PolyOne Corporation (POL), another prominent player in the chemical-plastics space, reported mixed first-quarter 2013 results last week. Its adjusted earnings of 31 cents a share were up 29% from 24 cents earned in the year-ago quarter and surpassed the Zacks Consensus Estimate of 27 cents.
Revenues came in at $801.1 million in the quarter, up 7.5% from $745.5 million recorded in the year-ago quarter, but missed the Zacks Consensus Estimate of $882 million.
Other companies in the chemical-plastics space with favorable Zacks Rank are Tredegar Corp. (TG) and Landec Corp. (LNDC). While Tredegar retains a Zacks Rank #1 (Strong Buy), Landec holds a Zacks Rank #2 (Buy).
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