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Specialty chemicals company Westlake Chemical Corp.’s (WLK - Snapshot Report) second-quarter 2013 earnings of $2.17 per share topped the Zacks Consensus Estimate of $1.95 and exceeded $1.72 per share earned in the year-ago quarter. Profit shot up 26% year over year to $145.8 million as the company gained from lower cost natural-gas based ethylene production stemming from North American shale gas and oil production.

Revenues rose roughly 3% year over year to $939 million in the quarter, beating the Zacks Consensus Estimate of $932 million. Westlake benefited from increased sales volumes for PVC resin, building products and caustic in the quarter, which offset lower feedstock and ethylene sales volumes.

Westlake saw higher olefins and vinyls integrated product margins in the quarter, helped by lower feedstock costs. It also gained from sequentially higher sales prices for polyethylene and PVC resin and increased volumes for most of its major vinyls products.

Sales from the Olefins segment fell roughly 7% year over year to $623.3 million. Income from operations jumped 20% year over year to $187.7 million in the quarter on higher olefins integrated product margins owing to lower feedstock costs.

The Vinyls segment recorded sales of $315.7 million in the reported quarter, a 31% year-over-year surge. Income from operations more than doubled year over year to $52.9 million, attributable to higher vinyls integrated product margins and increased volumes for major products.

Westlake ended the quarter with cash and cash equivalents of $625.5 million, down 44% year over year. Long-term debt stood at $763.8 million, essentially flat on a year-over-year basis. Net cash provided by operating activities was $255.5 million in the first half of 2013, down 19% year over year. Capital expenditures were $297.9 million for the period.

During the second quarter, Westlake closed its acquisition of CertainTeed Corporation’s Pipe and Foundation Group (“PFG”) for about $175 million in cash. The acquisition is a strategic fit for Westlake as it enhanced the company's North American Pipe and building products portfolio by adding specialty product lines and supporting technology.

Westlake currently retains a Zacks Rank #1 (Strong Buy).

Other companies in the specialty chemical space with favorabe Zacks Rank are Ferro Corp. (FOE - Snapshot Report), KMG Chemicals Inc. (KMG - Snapshot Report) and Sensient Technologies Corporation (SXT - Snapshot Report). While Ferro retains a Zacks Rank #1 (Strong Buy), KMG Chemicals and Sensient Technologies retain a Zacks Rank #2 (Buy).

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