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Westlake's (WLK) Earnings and Sales Miss Estimates in Q4
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Westlake Corporation (WLK - Free Report) posted a loss of $497 million or $3.86 per share in fourth-quarter 2023. This compares with a profit of $232 million or $1.79 per share in the prior-year quarter.
The decline in earnings was primarily caused by a non-cash impairment charge of $475 million concerning the company's base epoxy resin assets in The Netherlands and the goodwill linked with its epoxy business.
Barring one-time items, earnings came in at 72 cents per share for the reported quarter. It lagged the Zacks Consensus Estimate of 81 cents.
Sales fell around 14.3% year over year to $2,826 million in the quarter. It lagged the Zacks Consensus Estimate of $2,854.2 million.
In the reported quarter, sales in the Performance and Essential Materials segment declined approximately 20% year over year to $1,880 million, falling short of our estimate of $1,916.5 million. Loss from operations amounted to $39 million, against an income from operations of $219 million in the same quarter last year. The $258 million year-over-year decline was caused by reduced average selling prices across major products, notably caustic soda, PVC resin and epoxy resin, partially mitigated by increased sales volume.
In the Housing and Infrastructure Products segment, sales reached $946 million, inching up 1% from the year-ago quarter’s levels and surpassing our estimate of $917.3 million. Income from operations rose by $53 million from fourth-quarter 2022 figures, totaling $121 million. The year-over-year upside can be attributed to heightened sales volume, notably for pipe and fittings, coupled with lower material costs.
Financial Position
In the fourth quarter of 2023, net cash produced by operating activities was $573 million. Cash and cash equivalents totaled $3,304 million as of Dec 31, 2023, with a total debt of $4,906 million. Capital expenditures totaled $282 million in the quarter. Free cash flow was $291 million in the fourth quarter.
FY23 Results
In 2023, Westlake reported net sales of $12,548 billion, with net income at $479 million and EBITDA totaling $1,962 million. Compared with the previous year, Westlake's 2023 financial performance suffered from reduced product pricing and margins, notably in PEM, as well as lowered sales volume, particularly in HIP.
In 2023, net cash provided by operating activities totaled $2,336 million, while capital expenditures for the same period amounted to $1,034 million. Free cash flow for the full year of 2023 stood at $1,302 million.
Outlook
For the year 2024, WLK anticipates healthy consumer spending in the United States, buoyed by a resilient labor market and declining interest rates, to drive moderate growth in HIP segment sales volume. Within the PEM segment, WLK does not anticipate additional decline, as recent indications suggest stabilization in sales prices and volumes across domestic and export markets for most products.
Price Performance
Westlake’s shares have moved up 12% in a year compared with the industry’s 16.7% rise.
Image Source: Zacks Investment Research
Zacks Rank & Key Picks
Westlake currently carries a Zacks Rank #3 (Hold).
The consensus estimate for CRS’ current fiscal year earnings is pegged at $3.97 per share, indicating a year-over-year surge of 248.3%. CRS beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 14.3%. The company’s shares have rallied 33.8% in the past year.
Eldoradohas a projected earnings growth rate of 1,040% for the current year. The Zacks Consensus Estimate for EGO’s current-year earnings has been revised upward by 10% in the past 60 days. EGO topped the consensus estimate in each of the last four quarters, with the average earnings surprise being 496%. The company’s shares have rallied 33.8% in the past year.
The consensus estimate for HWKN’s current fiscal year earnings is pegged at $3.61 per share, indicating a year-over-year rise of 26%. The Zacks Consensus Estimate for HWKN’s current-year earnings has been revised upward by 4.3% in the past 30 days. HWKN beat the consensus estimate in each of the last four quarters, with the average earnings surprise being 30.6%. The company’s shares have rallied 71.1% in the past year.
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Westlake's (WLK) Earnings and Sales Miss Estimates in Q4
Westlake Corporation (WLK - Free Report) posted a loss of $497 million or $3.86 per share in fourth-quarter 2023. This compares with a profit of $232 million or $1.79 per share in the prior-year quarter.
The decline in earnings was primarily caused by a non-cash impairment charge of $475 million concerning the company's base epoxy resin assets in The Netherlands and the goodwill linked with its epoxy business.
Barring one-time items, earnings came in at 72 cents per share for the reported quarter. It lagged the Zacks Consensus Estimate of 81 cents.
Sales fell around 14.3% year over year to $2,826 million in the quarter. It lagged the Zacks Consensus Estimate of $2,854.2 million.
Westlake Corp. Price, Consensus and EPS Surprise
Westlake Corp. price-consensus-eps-surprise-chart | Westlake Corp. Quote
Segment Highlights
In the reported quarter, sales in the Performance and Essential Materials segment declined approximately 20% year over year to $1,880 million, falling short of our estimate of $1,916.5 million. Loss from operations amounted to $39 million, against an income from operations of $219 million in the same quarter last year. The $258 million year-over-year decline was caused by reduced average selling prices across major products, notably caustic soda, PVC resin and epoxy resin, partially mitigated by increased sales volume.
In the Housing and Infrastructure Products segment, sales reached $946 million, inching up 1% from the year-ago quarter’s levels and surpassing our estimate of $917.3 million. Income from operations rose by $53 million from fourth-quarter 2022 figures, totaling $121 million. The year-over-year upside can be attributed to heightened sales volume, notably for pipe and fittings, coupled with lower material costs.
Financial Position
In the fourth quarter of 2023, net cash produced by operating activities was $573 million. Cash and cash equivalents totaled $3,304 million as of Dec 31, 2023, with a total debt of $4,906 million. Capital expenditures totaled $282 million in the quarter. Free cash flow was $291 million in the fourth quarter.
FY23 Results
In 2023, Westlake reported net sales of $12,548 billion, with net income at $479 million and EBITDA totaling $1,962 million. Compared with the previous year, Westlake's 2023 financial performance suffered from reduced product pricing and margins, notably in PEM, as well as lowered sales volume, particularly in HIP.
In 2023, net cash provided by operating activities totaled $2,336 million, while capital expenditures for the same period amounted to $1,034 million. Free cash flow for the full year of 2023 stood at $1,302 million.
Outlook
For the year 2024, WLK anticipates healthy consumer spending in the United States, buoyed by a resilient labor market and declining interest rates, to drive moderate growth in HIP segment sales volume. Within the PEM segment, WLK does not anticipate additional decline, as recent indications suggest stabilization in sales prices and volumes across domestic and export markets for most products.
Price Performance
Westlake’s shares have moved up 12% in a year compared with the industry’s 16.7% rise.
Image Source: Zacks Investment Research
Zacks Rank & Key Picks
Westlake currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Basic Materials space are Carpenter Technology Corporation (CRS - Free Report) , sporting a Zacks Rank #1 (Strong Buy), Eldorado Gold Corporation (EGO - Free Report) and Hawkins, Inc. (HWKN - Free Report) , both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for CRS’ current fiscal year earnings is pegged at $3.97 per share, indicating a year-over-year surge of 248.3%. CRS beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 14.3%. The company’s shares have rallied 33.8% in the past year.
Eldoradohas a projected earnings growth rate of 1,040% for the current year. The Zacks Consensus Estimate for EGO’s current-year earnings has been revised upward by 10% in the past 60 days. EGO topped the consensus estimate in each of the last four quarters, with the average earnings surprise being 496%. The company’s shares have rallied 33.8% in the past year.
The consensus estimate for HWKN’s current fiscal year earnings is pegged at $3.61 per share, indicating a year-over-year rise of 26%. The Zacks Consensus Estimate for HWKN’s current-year earnings has been revised upward by 4.3% in the past 30 days. HWKN beat the consensus estimate in each of the last four quarters, with the average earnings surprise being 30.6%. The company’s shares have rallied 71.1% in the past year.