Westlake Chemical Corporation ( WLK Quick Quote WLK - Free Report) logged record profits of $522 million or $4.04 per share in the second quarter of 2021, skyrocketing from a profit of $15 million or 11 cents per share in the year-ago quarter. Earnings per share topped the Zacks Consensus Estimate of $3.80. Sales rose 67.3% year over year to $2,859 million from $1,709 million in the year-ago quarter. The top line also outpaced the Zacks Consensus Estimate of $2,467.2 million. The company benefited from a global economic rebound, increased sales prices and margins for most of its key products, especially polyvinyl chloride (PVC) resin, and strength in demand in building and construction materials business in the quarter. Segment Highlights
Sales in the Vinyls segment went up 62.3% year over year to $2,188 million in the reported quarter. Operating income in the segment was $435 million, shooting up from $20 million a year ago. The upside was led by higher sales prices, margins and volumes for PVC resin, and strong earnings in the building and construction materials business. The increase in sales prices for PVC resin was driven by robust demand in North American residential construction and the repair and remodeling markets.
The Olefins segment generated sales of $671 million, increasing 85.9% year over year. Operating income in the segment was $277 million, shooting up from $25 million in the year-ago quarter. The upside was mainly due to higher sales prices and margins for all products, driven by strong global demand, partly offset by lower sales volumes for polyethylene. Financial Position
Westlake Chemical ended the quarter with cash and cash equivalents of $1,844 million, increasing 67.3% year over year. Long-term debt was $3,555 million, down 5.1%.
Cash flow from operations was $617 million in the quarter, marking a 37.7% year-over-year increase. Outlook
The company noted that it will continue with its business investments going forward. It expects that the recently announced acquisitions of Boral North America and LASCO Fittings, totaling around $2.4 billion, will initiate a stage of development and growth for the company. The LASCO buyout is also expected to add to Westlake subsidiary NAPCO’s product portfolio with a focus on new markets and products. The company is optimistic about the strengthening of the housing, repair and remodeling markets and aims to leverage the growth opportunities arising from the acquisitions.
Westlake's shares have risen 51.6% in the past year compared with the
industry’s 49.5% growth. Image Source: Zacks Investment Research Zacks Rank & Other Key Picks
Westlake currently carries a Zacks Rank #1 (Strong Buy).
Other top-ranked stocks in the basic materials space include Orion Engineered Carbons S.A ( OEC Quick Quote OEC - Free Report) , LyondellBasell Industries N.V. ( LYB Quick Quote LYB - Free Report) and Aperam ( APEMY Quick Quote APEMY - Free Report) , each sporting a Zacks Rank #1. You can see . the complete list of today’s Zacks #1 Rank stocks here Orion has a projected earnings growth rate of 79.8% for the current year. The company’s shares have jumped 69% over the past year. LyondellBasell has a projected earnings growth rate of 222.6% for the current year. The company’s shares have grown 54.6% over the past year. Aperam has a projected earnings growth rate of 301.6% for the current year. The company’s shares have surged 111.9% over the past year.