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Celanese Corporation (CE - Free Report) logged earnings from continuing operations of $2.52 per share for the second quarter of 2018, a roughly 47% increase from $1.72 per share a year ago.
Earnings, barring one-time items, were $2.90 per share, a 62% surge from $1.79 per share posted a year ago. It outstripped the Zacks Consensus Estimate of $2.40.
Revenues of $1,844 million were up roughly 22% year over year, also outpacing the Zacks Consensus Estimate of $1,789 million.
The chemical maker benefited from gains across its Engineered Materials (EM) and Acetyl Chain units in the quarter. Strong pricing across its businesses also supported the results.
Celanese Corporation Price, Consensus and EPS Surprise
Sales from the EM unit jumped 22% year over year to $664 million in the quarter. Segment income went up around 17% year over year to $175 million. Growth in Asia and the Americas, better product mix, recent acquisitions and project commercializations contributed to the division’s earnings. The company commercialized 733 projects in EM during the quarter, up 34% year over year, and is on track to deliver nearly 3,000 project wins in 2018.
Celanese saw lower volume and pricing in the quarter in its Acetate Tow segment due to lower industry capacity utilization, partly masked by mix and productivity gains. Segment income was $77 million, up roughly 8% year over year.
The Acetyl Chain segment saw net sales of $1 billion in the quarter, up around 27% year over year. Segment income was $277 million, a more than two-fold year over year rise. The division gained from improving acetyl industry fundamentals as well as higher volumes and pricing in the quarter.
Financials
Celanese ended the quarter with cash and cash equivalents of $708 million, up around 39% year over year. Long-term debt was up 10% year over year to $3,228 million.
Celanese generated operating cash flow of $585 million and free cash flow of $500 million in the quarter. Capital expenditure for the quarter was $79 million. Moreover, the company returned $173 million to shareholders through dividends and share repurchases in the quarter.
Outlook
Celanese raised its adjusted earnings per share guidance for 2018 to roughly $10.50-$10.75 factoring in strength across its EM and Acetyl Chain units. The company expects the momentum in Acetyl Chain to continue into the third quarter. The project pipeline model also continues to advance in EM. Celanese also envisions Acetate Tow earnings to remain relatively flat year over year in 2018. Moreover, the company expects to deliver free cash flow of more than $1 billion in 2018.
Price Performance
Celanese has outperformed the industry in a year’s time. While shares of the company are up around 12.6%, the industry saw a rise of roughly 6.3% over the same period.
KMG Chemicals has an expected long-term earnings growth rate of 28.5%. Its shares have gained roughly 48% over a year.
Methanex has an expected long-term earnings growth rate of 15%. The company’s shares have rallied around 53% in a year.
BHP Billiton has an expected long-term earnings growth rate of 5.3%. Its shares have shot up roughly 25% over a year.
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Image: Bigstock
Celanese's (CE) Q2 Earnings & Revenues Trounce Estimates
Celanese Corporation (CE - Free Report) logged earnings from continuing operations of $2.52 per share for the second quarter of 2018, a roughly 47% increase from $1.72 per share a year ago.
Earnings, barring one-time items, were $2.90 per share, a 62% surge from $1.79 per share posted a year ago. It outstripped the Zacks Consensus Estimate of $2.40.
Revenues of $1,844 million were up roughly 22% year over year, also outpacing the Zacks Consensus Estimate of $1,789 million.
The chemical maker benefited from gains across its Engineered Materials (EM) and Acetyl Chain units in the quarter. Strong pricing across its businesses also supported the results.
Celanese Corporation Price, Consensus and EPS Surprise
Celanese Corporation price-consensus-eps-surprise-chart | Celanese Corporation Quote
Segment Review
Sales from the EM unit jumped 22% year over year to $664 million in the quarter. Segment income went up around 17% year over year to $175 million. Growth in Asia and the Americas, better product mix, recent acquisitions and project commercializations contributed to the division’s earnings. The company commercialized 733 projects in EM during the quarter, up 34% year over year, and is on track to deliver nearly 3,000 project wins in 2018.
Celanese saw lower volume and pricing in the quarter in its Acetate Tow segment due to lower industry capacity utilization, partly masked by mix and productivity gains. Segment income was $77 million, up roughly 8% year over year.
The Acetyl Chain segment saw net sales of $1 billion in the quarter, up around 27% year over year. Segment income was $277 million, a more than two-fold year over year rise. The division gained from improving acetyl industry fundamentals as well as higher volumes and pricing in the quarter.
Financials
Celanese ended the quarter with cash and cash equivalents of $708 million, up around 39% year over year. Long-term debt was up 10% year over year to $3,228 million.
Celanese generated operating cash flow of $585 million and free cash flow of $500 million in the quarter. Capital expenditure for the quarter was $79 million. Moreover, the company returned $173 million to shareholders through dividends and share repurchases in the quarter.
Outlook
Celanese raised its adjusted earnings per share guidance for 2018 to roughly $10.50-$10.75 factoring in strength across its EM and Acetyl Chain units. The company expects the momentum in Acetyl Chain to continue into the third quarter. The project pipeline model also continues to advance in EM. Celanese also envisions Acetate Tow earnings to remain relatively flat year over year in 2018. Moreover, the company expects to deliver free cash flow of more than $1 billion in 2018.
Price Performance
Celanese has outperformed the industry in a year’s time. While shares of the company are up around 12.6%, the industry saw a rise of roughly 6.3% over the same period.
Zacks Rank & Other Stocks to Consider
Celanese currently carries a Zacks Rank #2 (Buy).
Other top-ranked stocks worth considering in the basic materials space include KMG Chemicals, Inc. , Methanex Corporation (MEOH - Free Report) and BHP Billiton Limited (BHP - Free Report) each carrying a Zacks Rank #1 (Strong Buy). 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%. Its shares have gained roughly 48% over a year.
Methanex has an expected long-term earnings growth rate of 15%. The company’s shares have rallied around 53% in a year.
BHP Billiton has an expected long-term earnings growth rate of 5.3%. Its shares have shot up roughly 25% over a year.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
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