Markets

Olin (OLN) Earnings Miss, Revenues Beat Estimates in Q1

Olin Corporation OLN slipped to a loss of $80 million or 51 cents per share in first-quarter 2020 from a profit of $41.7 million or 25 cents per share a year ago.

The bottom line in the reported quarter was hurt by planned maintenance turnaround costs.

Excluding one-time items, adjusted loss for the quarter was 41 cents per share, which was wider than the Zacks Consensus Estimate of a loss of 27 cents.

The chemical maker’s revenues fell 8.3% year over year to $1,425.1 million in the quarter. However, it topped the Zacks Consensus Estimate of $1,412.4 million.

The company witnessed continued weakness in caustic soda pricing in the quarter. Lower product prices also hurt its Epoxy unit.

Olin Corporation Price, Consensus and EPS Surprise

 

Olin Corporation Price, Consensus and EPS Surprise

Olin Corporation price-consensus-eps-surprise-chart | Olin Corporation Quote

Segment Review

Chlor Alkali Products and Vinyls: Revenues at the division fell 12.9% year over year to $759.9 million in the reported quarter on lower caustic soda and ethylene dichloride pricing.

Epoxy: Revenues at the division dropped 8.9% year over year to $477.2 million on lower product prices.

Winchester: Revenues rose 19.6% year over year to $188 million on higher commercial and military sales.

Financials

Olin ended the quarter with cash and cash equivalents of $194.5 million, up 84% year over year. Long-term debt was $3,489.5 million at the end of the quarter, up 13.8% year over year.

Outlook

The company expects a sequential improvement in caustic soda pricing and sequentially lower ethylene dichloride pricing in the second quarter.

It anticipates Chlor Alkali Products and Vinyls volumes for the second quarter to decline sequentially on account of weaker customer demand and higher level of maintenance turnaround activities.

For the second quarter, Olin expects the Epoxy business to face weaker product demand from customers of automotive and industrial coatings in Europe and North America.

The company expects the U.S. Army Lake City contract to increase Winchester's annual revenues by $450-$500 million and adjusted EBITDA by $40-$50 million. Moreover, it anticipates commercial ammunition demand to continue to increase in the second quarter.

Also, the company projects planned maintenance turnaround costs of $55 million for the second quarter.

Price Performance

Shares of Olin have lost 25.1% over a year compared with the industry’s decline of 33.4%.

 

 

Zacks Rank & Stocks to Consider

The company currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Equinox Gold Corp. EQX, Franco-Nevada Corporation FNV and Kinross Gold Corporation KGC.

Equinox Gold currently sports a Zacks Rank #1 (Strong Buy) and has a projected earnings growth rate of 237.9% for 2020. The company’s shares have gained 47.4% in a year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Franco-Nevada has a projected earnings growth rate of 22% for 2020. It currently carries a Zacks Rank #2 (Buy). The company’s shares have rallied 90.9% in a year.

Kinross has a projected earnings growth rate of 52.9% for 2020. The company’s shares have surged 120.1% in a year. It currently has a Zacks Rank #2.

Today's Best Stocks from Zacks

Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.

This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.

See their latest picks free >>


Click to get this free report

Kinross Gold Corporation (KGC): Free Stock Analysis Report

Franco-Nevada Corporation (FNV): Free Stock Analysis Report

Olin Corporation (OLN): Free Stock Analysis Report

Equinox Gold Corp. (EQX): Free Stock Analysis Report

To read this article on Zacks.com click here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Other Topics

Stocks

Latest Markets Videos

    Zacks

    Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

    Learn More