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Celanese's (CE) Q2 Earnings Top, Revenues Lag Estimates
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Celanese Corporation (CE - Free Report) logged earnings from continuing operations of $1.67 per share in second-quarter 2019, down from $2.52 in the year-ago quarter.
Barring one-time items, adjusted earnings were $2.38 a share, down from $2.90 in the year-ago quarter. It, however, topped the Zacks Consensus Estimate of $2.36.
Revenues of $1,592 million fell roughly 14% year over year and lagged the Zacks Consensus Estimate of $1,624.6 million. The chemical maker witnessed a challenging business environment during the second quarter. It saw weak demand and accelerated industry destocking in the quarter.
Celanese Corporation Price, Consensus and EPS Surprise
Net sales in the Engineered Materials unit were $593 million in the quarter, down 11% year over year. Sales were hurt by lower volumes and unfavorable currency impact. Volumes were impacted by demand weakness and destocking. The company commercialized 1,177 projects during the quarter.
The Acetyl Chain segment posted net sales of $865 million, down around 18% year over year. Sales were affected by reduced volumes and pricing as well as unfavorable currency impact.
Net sales in Acetate Tow segment were $164 million, essentially flat year over year. Volumes and prices were stable year over year in the quarter.
Financials
Celanese ended the quarter with cash and cash equivalents of $491 million, down around 31% year over year. Long-term debt was up roughly 7% year over year to $3,444 million.
Celanese generated operating cash flow of $424 million and free cash flow of $356 million during the quarter. Capital expenditure was $65 million for the quarter. Moreover, the company returned $378 million to shareholders through dividends and share repurchases during the reported quarter.
Outlook
Celanese backed its adjusted earnings per share guidance of roughly $10.50 for 2019, considering that underlying fundamentals will improve later this year.
The company noted that it will remain focused on strengthening its businesses by executing its productivity programs and strategically investing in high-return organic projects. Celanese is on track to commercialize more than 4,000 projects in 2019.
Price Performance
Celanese’s shares have gained 17.4% year to date, underperforming its industry’s 19% rise.
Zacks Rank & Key Picks
Celanese currently carries a Zacks Rank #3 (Hold).
A few better-ranked stocks worth considering in the basic materials space include Israel Chemicals Ltd. (ICL - Free Report) , Flexible Solutions International Inc (FSI - Free Report) and Air Products and Chemicals, Inc. (APD - Free Report) .
Israel Chemicals has an expected earnings growth rate of 13.5% for the current year and carries a Zacks Rank #1 (Strong Buy). Its shares are up roughly 10% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Flexible Solutions has an expected earnings growth rate of 342.9% for the current fiscal year and carries a Zacks Rank #2 (Buy). Its shares have surged around 145% in the past year.
Air Products has an expected earnings growth rate of 10.3% for the current fiscal year and carries a Zacks Rank #2. The company’s shares have gained around 46% over the past year.
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Celanese's (CE) Q2 Earnings Top, Revenues Lag Estimates
Celanese Corporation (CE - Free Report) logged earnings from continuing operations of $1.67 per share in second-quarter 2019, down from $2.52 in the year-ago quarter.
Barring one-time items, adjusted earnings were $2.38 a share, down from $2.90 in the year-ago quarter. It, however, topped the Zacks Consensus Estimate of $2.36.
Revenues of $1,592 million fell roughly 14% year over year and lagged the Zacks Consensus Estimate of $1,624.6 million. The chemical maker witnessed a challenging business environment during the second quarter. It saw weak demand and accelerated industry destocking in the quarter.
Celanese Corporation Price, Consensus and EPS Surprise
Celanese Corporation price-consensus-eps-surprise-chart | Celanese Corporation Quote
Segment Review
Net sales in the Engineered Materials unit were $593 million in the quarter, down 11% year over year. Sales were hurt by lower volumes and unfavorable currency impact. Volumes were impacted by demand weakness and destocking. The company commercialized 1,177 projects during the quarter.
The Acetyl Chain segment posted net sales of $865 million, down around 18% year over year. Sales were affected by reduced volumes and pricing as well as unfavorable currency impact.
Net sales in Acetate Tow segment were $164 million, essentially flat year over year. Volumes and prices were stable year over year in the quarter.
Financials
Celanese ended the quarter with cash and cash equivalents of $491 million, down around 31% year over year. Long-term debt was up roughly 7% year over year to $3,444 million.
Celanese generated operating cash flow of $424 million and free cash flow of $356 million during the quarter. Capital expenditure was $65 million for the quarter. Moreover, the company returned $378 million to shareholders through dividends and share repurchases during the reported quarter.
Outlook
Celanese backed its adjusted earnings per share guidance of roughly $10.50 for 2019, considering that underlying fundamentals will improve later this year.
The company noted that it will remain focused on strengthening its businesses by executing its productivity programs and strategically investing in high-return organic projects. Celanese is on track to commercialize more than 4,000 projects in 2019.
Price Performance
Celanese’s shares have gained 17.4% year to date, underperforming its industry’s 19% rise.
Zacks Rank & Key Picks
Celanese currently carries a Zacks Rank #3 (Hold).
A few better-ranked stocks worth considering in the basic materials space include Israel Chemicals Ltd. (ICL - Free Report) , Flexible Solutions International Inc (FSI - Free Report) and Air Products and Chemicals, Inc. (APD - Free Report) .
Israel Chemicals has an expected earnings growth rate of 13.5% for the current year and carries a Zacks Rank #1 (Strong Buy). Its shares are up roughly 10% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Flexible Solutions has an expected earnings growth rate of 342.9% for the current fiscal year and carries a Zacks Rank #2 (Buy). Its shares have surged around 145% in the past year.
Air Products has an expected earnings growth rate of 10.3% for the current fiscal year and carries a Zacks Rank #2. The company’s shares have gained around 46% over the past year.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
See their latest picks free >>