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Westlake Chemical (WLK) Earnings, Sales Trail Estimates in Q4

Westlake Chemical CorporationWLK recorded a net income of $802 million or $6.15 per share for fourth-quarter 2017, marking an eight-fold rise from $99 million or 76 cents earned a year ago.

The bottom line in the reported quarter was boosted by a tax benefit of around $591 million. The results were also supported by higher margins and increased sales volumes for all major products and lower costs associated with planned turnarounds and unplanned outages, partly neutralized by higher feedstock and energy costs.

Barring one-time items, earnings for the reported quarter were $1.62 per share, which missed the Zacks Consensus Estimate of $1.69.

Westlake Chemical reported net sales of $2,010 million, up around 15.9% year over year. Sales in the quarter benefited from higher sales volumes and prices for major products. Revenues, however, missed the Zacks Consensus Estimate of $2,073 million.

Full-Year 2017 Results

For 2017, the company reported profit of $1,304 million or $10.00 per share, against a net income of $399 million or $3.06, a year ago. Westlake Chemical reported revenues of $8 billion in 2017, up around 58.4% from $5.1 billion in 2016.

Westlake Chemical Corporation Price, Consensus and EPS Surprise

Westlake Chemical Corporation Price, Consensus and EPS Surprise | Westlake Chemical Corporation Quote

Segment Highlights

Sales from the Olefins segment improved roughly 9.8% year over year to $517 million in the quarter. Operating income of the segment increased 11.4% year over year to $166 million supported by increased integrated margins resulting from higher sales prices and lower costs related to planned turnarounds and unplanned outages, partly offset by increased feedstock and energy costs.

The Vinyls segment logged sales of $1,493 million, up roughly 18.1% year over year. Operating income of the segment was $216 million, roughly more than five-fold year-over-year increase from $38 million earned a year ago, aided by increased sales volumes resulting from higher operating rates and increased integrated margins.

Financial Position

Westlake Chemical ended the quarter with cash and cash equivalents of roughly $1,531 million, up 233.6% year over year.

Long-term debt was $3,127 million at the end of the quarter, down 15% from $3,679 million a year ago.

Cash flow from operations was around $575 million for the fourth quarter, up 98.3% year over year.

Outlook

The company noted that since its Axiall transaction in August 2016, it has made considerable progress in integration and improvement activities and continues to invest to improve operations and create additional value related to the transaction.

Price Performance

Shares of Westlake Chemical have moved up 12.8% in last three months outperforming the 8.2% growth recorded by its industry .

Zacks Rank & Other Stocks to Consider

Westlake Chemical carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the basic materials space are Methanex Corporation MEOH , LyondellBasell Industries N.V. LYB and The Chemours Company CC . All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Methanex has an expected long-term earnings growth rate of 15%. Its shares have gained 8.7% over a year.

LyondellBasell has an expected long-term earnings growth rate of 9%. The company's shares have rallied 14.9% in a year.

Chemours has an expected long-term earnings growth rate of 15.5%. Its shares have surged 42.8% over a year.

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


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

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