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Olin (OLN) Earnings Beat, Revenues Miss Estimates in Q3

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Olin Corporation (OLN - Free Report) reported net income of $44.2 million or 27 cents per share in third-quarter 2019, down from profit of $195.1 million or $1.16 per share a year ago.

Excluding one-time items, adjusted earnings for the quarter were 41 cents per share, which surpassed the Zacks Consensus Estimate of 36 cents.

The chemical maker’s revenues fell roughly 15.8% year over year to $1,576.6 million in the quarter. Moreover, it missed the Zacks Consensus Estimate of $1,729.8 million.

The company witnessed continued weakness in caustic soda pricing in the quarter. Prices declined modestly on a sequential basis in the quarter.

Olin Corporation Price, Consensus and EPS Surprise

 

Segment Review

Chlor Alkali Products and Vinyls: Revenues at the division fell around 16.6% year over year to $876.3 million in the quarter on lower caustic soda pricing and volume.

Epoxy: Revenues at the division declined around 20.9% year over year to $511.6 million on lower product prices as well as reduced volume.

Winchester: Revenues rose around 8.4% year over year to $188.7 million on higher commercial sales.

Financials

Olin ended the quarter with cash and cash equivalents of $177.4 million, up around 13.2% year over year. Long-term debt was $3,339 million at the end of the quarter, up around 0.1% year over year.

Outlook

Moving ahead, Olin expects to continue witnessing weaker demand from refrigerant agricultural, urethane, alumina, and pulp and paper customers. The company also expects caustic soda prices to decline in the fourth quarter.

So far this year, the Epoxy unit has witnessed lower product demand from industrial coatings, electrical laminate and automotive customers, thereby putting pressure on prices of epoxy resin.

The company predicts net income of $30-$59 million for 2019. Adjusted EBITDA for the year is expected to be $930-$980 million. Olin anticipates challenging demand and pricing environment to continue in the fourth quarter.

Price Performance

Shares of Olin have dipped 14.3% over a year compared with the industry’s decline of 28.4%.

 

 

Zacks Rank & Stocks to Consider

Olin currently carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the basic materials space are Kinross Gold Corporation (KGC - Free Report) , Franco-Nevada Corporation (FNV - Free Report) and Kirkland Lake Gold Ltd. (KL - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kinross has an expected earnings growth rate of 210% for 2019. The company’s shares have surged 76.4% in the past year.

Franco-Nevada has a projected earnings growth rate of 39.3% for 2019. The company’s shares have rallied 48.8% in a year.

Kirkland Lake Gold has an estimated earnings growth rate of 93.4% for the current year. Its shares have moved up 132% in the past year.

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