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Westlake's (WLK) Earnings & Revenues Surpass Estimates in Q2
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Westlake Corporation (WLK - Free Report) logged a profit of $858 million or $6.60 per share in the second quarter of 2022, rising from $522 million or $4.04 cents per share in the year-ago quarter. The bottom line topped the Zacks Consensus Estimate of $6.33 per share.
Sales climbed 57% year over year to record $4,483 million in the quarter. It also outpaced the Zacks Consensus Estimate of $4,294.8 million. The top line was supported by strong demand and pricing dynamics. The company also realized the full quarter impact of all acquisitions completed since June last year.
Westlake also benefited from continued strength in residential construction and remodeling activities. The strength in U.S. housing market drove strong residential construction and repair and remodeling activities, leading to solid demand and higher pricing for polyvinyl chloride resin and its offerings in the Housing and Infrastructure Products segment.
Prices rose 32% year over year with significant gains across the segments. Volumes also went up 25% year over year, largely driven by acquisitions completed over the previous 12 months.
Sales in the Performance and Essential Materials segment went up around 45% year over year to $3,104 million in the reported quarter. Operating income in the segment was $965 million, a roughly 44% year-over-year increase. The upside was led by higher prices in chlorovinyls business, increased margins for polyethylene and the addition of the recently acquired epoxy business.
The Housing and Infrastructure Products segment generated sales of $1,379 million, up around 93% from the year-ago quarter. Operating income in the segment was $236 million, up around 146% from a year ago. The upside was mainly due to continued strength in construction and remodeling activity leading to strong demand and higher prices as well as the contributions of the acquisitions completed last year.
Financial Position
Westlake ended the quarter with cash and cash equivalents of $1,317 million, down around 29% year over year. Long-term debt was $4,858 million, up around 37% year over year.
Net cash provided by operating activities was $913 million in the reported quarter, up roughly 48% year over year.
Outlook
The company said that the strength of the housing, repair and remodeling markets and the market position for its Performance and Essential Materials remain on a solid footing. Its Housing and Infrastructure Products business has a strong presence in the repair and remodeling market, which it expects to remain strong even if new housing starts retreat from their recent highs amid the hike in global interest rates. The company expects to continue to gain from the high integration within its operations as North American producer's structural cost advantage has broadened with increased energy costs globally compared with its competitors in Europe and Asia.
Zacks Rank & Other Stocks to Consider
Westlake currently carries a Zacks Rank #5 (Strong Sell).
Better-ranked stocks worth considering in the basic materials space include Cabot Corporation (CBT - Free Report) , Sociedad Quimica y Minera de Chile S.A. (SQM - Free Report) and Albemarle Corporation (ALB - Free Report) .
Cabot, currently carrying a Zacks Rank #1 (Strong Buy), has an expected earnings growth rate of 22.5% for the current fiscal year. The Zacks Consensus Estimate for CBT's earnings for the current fiscal has been revised 0.8% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Cabot’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 16.2%. CBT has gained around 37% over a year.
Sociedad has a projected earnings growth rate of 513.7% for the current year. The Zacks Consensus Estimate for SQM’s current-year earnings has been revised 57.8% upward in the past 60 days.
Sociedad’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, the average being 28.2%. SQM has gained roughly 92% in a year. The company sports a Zacks Rank #1.
Albemarle has a projected earnings growth rate of 247% for the current year. The Zacks Consensus Estimate for ALB's current-year earnings has been revised 7.8% upward in the past 60 days.
Albemarle’s earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 24.2%, on average. ALB has gained around 4% in a year and currently carries a Zacks Rank #2 (Buy).
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Westlake's (WLK) Earnings & Revenues Surpass Estimates in Q2
Westlake Corporation (WLK - Free Report) logged a profit of $858 million or $6.60 per share in the second quarter of 2022, rising from $522 million or $4.04 cents per share in the year-ago quarter. The bottom line topped the Zacks Consensus Estimate of $6.33 per share.
Sales climbed 57% year over year to record $4,483 million in the quarter. It also outpaced the Zacks Consensus Estimate of $4,294.8 million. The top line was supported by strong demand and pricing dynamics. The company also realized the full quarter impact of all acquisitions completed since June last year.
Westlake also benefited from continued strength in residential construction and remodeling activities. The strength in U.S. housing market drove strong residential construction and repair and remodeling activities, leading to solid demand and higher pricing for polyvinyl chloride resin and its offerings in the Housing and Infrastructure Products segment.
Prices rose 32% year over year with significant gains across the segments. Volumes also went up 25% year over year, largely driven by acquisitions completed over the previous 12 months.
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 up around 45% year over year to $3,104 million in the reported quarter. Operating income in the segment was $965 million, a roughly 44% year-over-year increase. The upside was led by higher prices in chlorovinyls business, increased margins for polyethylene and the addition of the recently acquired epoxy business.
The Housing and Infrastructure Products segment generated sales of $1,379 million, up around 93% from the year-ago quarter. Operating income in the segment was $236 million, up around 146% from a year ago. The upside was mainly due to continued strength in construction and remodeling activity leading to strong demand and higher prices as well as the contributions of the acquisitions completed last year.
Financial Position
Westlake ended the quarter with cash and cash equivalents of $1,317 million, down around 29% year over year. Long-term debt was $4,858 million, up around 37% year over year.
Net cash provided by operating activities was $913 million in the reported quarter, up roughly 48% year over year.
Outlook
The company said that the strength of the housing, repair and remodeling markets and the market position for its Performance and Essential Materials remain on a solid footing. Its Housing and Infrastructure Products business has a strong presence in the repair and remodeling market, which it expects to remain strong even if new housing starts retreat from their recent highs amid the hike in global interest rates. The company expects to continue to gain from the high integration within its operations as North American producer's structural cost advantage has broadened with increased energy costs globally compared with its competitors in Europe and Asia.
Zacks Rank & Other Stocks to Consider
Westlake currently carries a Zacks Rank #5 (Strong Sell).
Better-ranked stocks worth considering in the basic materials space include Cabot Corporation (CBT - Free Report) , Sociedad Quimica y Minera de Chile S.A. (SQM - Free Report) and Albemarle Corporation (ALB - Free Report) .
Cabot, currently carrying a Zacks Rank #1 (Strong Buy), has an expected earnings growth rate of 22.5% for the current fiscal year. The Zacks Consensus Estimate for CBT's earnings for the current fiscal has been revised 0.8% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Cabot’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 16.2%. CBT has gained around 37% over a year.
Sociedad has a projected earnings growth rate of 513.7% for the current year. The Zacks Consensus Estimate for SQM’s current-year earnings has been revised 57.8% upward in the past 60 days.
Sociedad’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, the average being 28.2%. SQM has gained roughly 92% in a year. The company sports a Zacks Rank #1.
Albemarle has a projected earnings growth rate of 247% for the current year. The Zacks Consensus Estimate for ALB's current-year earnings has been revised 7.8% upward in the past 60 days.
Albemarle’s earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 24.2%, on average. ALB has gained around 4% in a year and currently carries a Zacks Rank #2 (Buy).