Shares of specialty chemicals company
) shot up as much as 5% after it reported forecast-topping
numbers for the third quarter of 2013.
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The Texas-based company's earnings for the quarter climbed to
$2.54 per share from $1.30 per share a year-ago, outshining the
Zacks Consensus Estimate of $2.21. Profit zoomed roughly 96% year
over year to $170.3 million as the company gained from higher
pricing and lower feedstock costs stemming from North American
shale gas production.
Revenues rose roughly 22% year over year to around $1,004 million
in the quarter, beating the Zacks Consensus Estimate of $935
million. Westlake benefited from increased sales volumes for
styrene and caustic, higher selling prices and contributions from
its specialty PVC pipe business (acquired in May 2013) in the
Westlake saw higher olefins and vinyls integrated product margins
in the quarter, helped by higher selling prices for key products.
Increased ethylene production at the company's Lake Charles
complex also contributed to olefins margin expansion.
Sales from Westlake's Olefins segment jumped roughly 26% year
over year to $679.3 million. Income from operations surged 91%
year over year to $237.2 million in the quarter on higher olefins
integrated product margins.
The Vinyls segment recorded sales rose around 15% year over year
to $324.8 million in the reported quarter. Income from operations
surged 64% year over year to $39.6 million, attributable to
higher vinyls integrated product margins.
Westlake ended the quarter with cash and cash equivalents of
$591.6 million, down 50% year over year. Long-term debt stood at
$763.8 million, essentially flat on a year-over-year basis. Net
cash provided by operating activities was $547.5 million for the
first nine months of 2013, up 11% year over year. Capital
expenditures were $498.3 million for the period.
Moving ahead, Westlake expects continued cost benefits from North
American shale gas production. The company continues to invest to
capture this cost advantage with the planned commencement of its
chlor-alkali unit in Geismar, La., before the end of 2013 and
expansion of its ethylene and PVC capacity at its Calvert City,
Ky., facility in 2014.
Westlake currently retains a Zacks Rank #3 (Hold).
Other companies in the specialty chemical space with favorabe
Zacks Rank are
HB Fuller Co.
Globe Specialty Metals, Inc.
). All of them retain a Zacks Rank #2 (Buy).