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Olin (OLN) Surpasses Earnings & Revenue Estimates in Q3

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Olin Corporation (OLN - Free Report) logged a profit of $195.1 million or $1.16 per share in third-quarter 2018, up from to a profit of $52.7 million or 31 cents a year ago.

Barring one-time items, earnings came in at 75 cents per share in the quarter, beating the Zacks Consensus Estimate of 74 cents.

Revenues rose roughly 20.4% year over year to $1,872.4 million, beating the Zacks Consensus Estimate of $1,844 million.

Olin Corporation Price, Consensus and EPS Surprise

 

Segment Review

Chlor Alkali Products and Vinyls: Revenues at the division increased 19.3% year over year to $1,051.1 million in the third quarter, mainly on the back of higher chlorine, caustic soda, ethylene dichloride and other chlorine-derivatives pricing, partly offset by higher raw material and freight costs.
 
Epoxy: Revenues at the division went up around 32.1% year over year to $647.3 million, mainly buoyed by higher product prices and volumes, partly marred by higher raw material costs.

Winchester: Revenues at the division declined around 5.3% year over year to $174 million, mainly due to lower sales to commercial customers.

Financials

Olin ended the third quarter with cash and cash equivalents of $156.7 million, down around 38.7% year over year. The company repaid around $250 million of outstanding debt using available cash during the first nine months of 2018. Long-term debt was $3,336.4 million at the end of the reported quarter compared with $3,663.5 million a year ago.

Olin repurchased roughly 0.5 million shares of common stock for $16.8 million in the quarter.

Outlook

Olin forecasts a decline in adjusted EBITDA from the third quarter due to seasonally weaker demand for epoxy resins, chlorine derivatives and commercial ammunition, lower caustic soda prices and higher ethylene costs resulting from increased ethane prices. The company anticipates adjusted EBITDA for 2018 to be around $1.26 billion. (+/- 2%, considering upside opportunities and downside risks).
 
Olin expects caustic soda pricing to improve over the next several years. Steady growth in global demand, chlor alkali capacity reduction across North America, Europe and China over the last two years and minimal capacity addition support a favorable outlook for caustic soda.
 
Price Performance

Shares of Olin have lost 34.4% in the past six months, underperforming the industry’s 19.7% decline.



Zacks Rank & Stocks to Consider

Olin currently carries a Zacks Rank #4 (Sell).

A few better-ranked stocks in the basic materials space are CF Industries Holdings, Inc. (CF - Free Report) , KMG Chemicals, Inc. and The Mosaic Company (MOS - Free Report) .

CF Industries has an expected long-term earnings growth rate of 6% and a Zacks Rank #1 (Strong Buy). The company’s shares have gained 24.6% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

KMG Chemicals has an expected long-term earnings growth rate of 28.5% and a Zacks Rank #1. Its shares have risen 36.4% in a year’s time.

Mosaic has an expected long-term earnings growth rate of 7% and a Zacks Rank #2 (Buy). The company’s shares have rallied 37.8% in the past year.

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