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Westlake's (WLK) Earnings and Revenues Beat Estimates in Q1
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Westlake Corporation (WLK - Free Report) reported a profit of $174 million or $1.34 per share in first-quarter 2024, down from $394 million or $3.05 per share in the year-ago quarter. The bottom line surpassed the Zacks Consensus Estimate of $1.09.
Sales fell around 11.3% year over year to $2,975 million in the quarter. The top line beat the Zacks Consensus Estimate of $2,946.1 million.
The Performance and Essential Materials segment registered a 17.8% fall in sales compared with the previous year’s levels, bringing in $1,931 million in the recent quarter. This figure fell short of our projected estimate of $2,001 million. The segment's operating income was $22 million, down from the $403 million recorded in first-quarter 2023. The downside was primarily due to a reduction in average sales prices for several key products, notably caustic soda and epoxy resin. Despite lower average sales prices, the impact was partially mitigated by an increase in sales volume during the quarter.
The Housing and Infrastructure Products segment achieved sales of $1,044 million, up 3.7% year over year. This figure surpassed our estimate of $924.7 million. The segment's operating income was $210 million, up $67 million from first-quarter 2023 levels. The uptick was driven by an increase in sales volume, especially for pipe and fittings, as well as reduced material costs.
Financial Position
In the first quarter of 2024, net cash produced by operating activities was $169 million. Cash and cash equivalents totaled $3,108 million as of Mar 31, 2024, with long-term debt of $4,590 million. Capital expenditures totaled $272 million. Free cash flow was $291 million in the quarter.
Outlook
The company sees continued growth for the Housing and Infrastructure Products segment despite high inflation and interest rates. This is primarily owing to a limited supply of houses and favorable demographics that support sustained housing demand.
In the Performance and Essential Materials segment, near-term performance is expected to remain relatively stable. However, growth in this segment could be limited by weak end-market demand and low-priced imports from Asia in some product categories and regions.
While the company is waiting for broader economic conditions to improve, it is taking steps to boost profitability in its European operations by implementing structural cost reductions. Additionally, it is investing in projects to enhance the reliability and efficiency of its plants.
Price Performance
Westlake’s shares have gained 29.2% in a year compared with the industry’s 24.2% rise.
Image Source: Zacks Investment Research
Zacks Rank & Key Picks
Westlake currently carries a Zacks Rank #3 (Hold).
The consensus estimate for GFI’s first-quarter earnings is pegged at 22 cents per share. The Zacks Consensus Estimate for GFI’s first-quarter earnings has been stable in the past 60 days.
Valvoline is slated to report fiscal second-quarter results on May 8. The consensus estimate for VVV’s second-quarter earnings is pegged at 36 cents per share. The company’s shares have rallied around 27% in the past year.
AVD is expected to report first-quarter results on May 14. The consensus estimate for AVD’s first-quarter earnings is pegged at 8 cents per share, indicating a year-over-year rise of 14.3%.
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Westlake's (WLK) Earnings and Revenues Beat Estimates in Q1
Westlake Corporation (WLK - Free Report) reported a profit of $174 million or $1.34 per share in first-quarter 2024, down from $394 million or $3.05 per share in the year-ago quarter. The bottom line surpassed the Zacks Consensus Estimate of $1.09.
Sales fell around 11.3% year over year to $2,975 million in the quarter. The top line beat the Zacks Consensus Estimate of $2,946.1 million.
Westlake Corp. Price, Consensus and EPS Surprise
Westlake Corp. price-consensus-eps-surprise-chart | Westlake Corp. Quote
Segment Highlights
The Performance and Essential Materials segment registered a 17.8% fall in sales compared with the previous year’s levels, bringing in $1,931 million in the recent quarter. This figure fell short of our projected estimate of $2,001 million. The segment's operating income was $22 million, down from the $403 million recorded in first-quarter 2023. The downside was primarily due to a reduction in average sales prices for several key products, notably caustic soda and epoxy resin. Despite lower average sales prices, the impact was partially mitigated by an increase in sales volume during the quarter.
The Housing and Infrastructure Products segment achieved sales of $1,044 million, up 3.7% year over year. This figure surpassed our estimate of $924.7 million. The segment's operating income was $210 million, up $67 million from first-quarter 2023 levels. The uptick was driven by an increase in sales volume, especially for pipe and fittings, as well as reduced material costs.
Financial Position
In the first quarter of 2024, net cash produced by operating activities was $169 million. Cash and cash equivalents totaled $3,108 million as of Mar 31, 2024, with long-term debt of $4,590 million. Capital expenditures totaled $272 million. Free cash flow was $291 million in the quarter.
Outlook
The company sees continued growth for the Housing and Infrastructure Products segment despite high inflation and interest rates. This is primarily owing to a limited supply of houses and favorable demographics that support sustained housing demand.
In the Performance and Essential Materials segment, near-term performance is expected to remain relatively stable. However, growth in this segment could be limited by weak end-market demand and low-priced imports from Asia in some product categories and regions.
While the company is waiting for broader economic conditions to improve, it is taking steps to boost profitability in its European operations by implementing structural cost reductions. Additionally, it is investing in projects to enhance the reliability and efficiency of its plants.
Price Performance
Westlake’s shares have gained 29.2% in a year compared with the industry’s 24.2% 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 Gold Fields Limited (GFI - Free Report) , sporting a Zacks Rank #1 (Strong Buy), and Valvoline Inc. (VVV - Free Report) and American Vanguard Corporation (AVD - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for GFI’s first-quarter earnings is pegged at 22 cents per share. The Zacks Consensus Estimate for GFI’s first-quarter earnings has been stable in the past 60 days.
Valvoline is slated to report fiscal second-quarter results on May 8. The consensus estimate for VVV’s second-quarter earnings is pegged at 36 cents per share. The company’s shares have rallied around 27% in the past year.
AVD is expected to report first-quarter results on May 14. The consensus estimate for AVD’s first-quarter earnings is pegged at 8 cents per share, indicating a year-over-year rise of 14.3%.