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Westlake Chemical's (WLK) Q3 Earnings & Sales Beat Estimates

Westlake (WLK) achieves consecutive record quarterly earnings and higher sales led by global market recovery and increased sales prices and volumes for most of its key products.

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This story originally appeared on Zacks

Westlake Chemical Corporation WLK logged a profit of $607 million or $4.69 per share in the third quarter of 2021, skyrocketing from $57 million or 45 cents per share in the year-ago quarter. The bottom line topped the Zacks Consensus Estimate of $4.01 per share. The company achieved consecutive record quarterly earnings as it reaped benefits of the global economic expansion.

Sales rose 61% year over year to $3,055 million from $1,898 million. The top line also outpaced the Zacks Consensus Estimate of $2,716.2 million.

The company benefited from a global economic rebound, increased sales prices and margins for most of its key products, and strength in demand in the building and construction materials business in the quarter.

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Segment Highlights

Sales in the Vinyls segment went up 54% year over year to $2,348 million in the reported quarter. Operating income in the segment was $601 million, shooting up from $42 million.  The upside was led by higher sales prices, margins and volumes, and strong earnings in the building products business.

The Olefins segment generated sales of $707 million, increasing 92% year over year. Operating income in the segment was $281 million, shooting up from $51 million. The upside was mainly due to higher sales prices and margins for all products, driven by strong global demand.

Financial Position

Westlake Chemical ended the quarter with cash and cash equivalents of $3,571 million, up around threefold year over year. Long-term debt was $4,929 million, up 34%.

Cash flow from operations was $755 million in the quarter, skyrocketing nearly 112% year over year.

Outlook

The company noted that it expects that the recently completed acquisitions of LASCO Fittings, Boral North America and Dimex, totaling around $2.6 billion, will initiate a stage of development and growth for its building products business. The LASCO buyout is expected to add to Westlake subsidiary NAPCO’s product portfolio with a focus on new markets and products. The Dimex acquisition adds a range of post-industrial recycled plastic consumer and building products. Westlake has also secured a leading position in the growing building products and construction markets through the Boral North America buyout.  The company is optimistic that the investments will strengthen its footprint in the sustainable building product markets and provide long-term growth opportunities.

Price Performance

Westlake's shares have risen 34.1% in the past year compared with the industry’s 34.3% growth.

Zacks Investment ResearchImage Source: Zacks Investment Research

Zacks Rank & Other Key Picks

Westlake currently carries a Zacks Rank #1 (Strong Buy).

Other top-ranked stocks in the basic materials space include Methanex Corporation MEOH, Olin Corporation OLN, and Arkema S.A. ARKAY, each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Methanex has a projected earnings growth rate of 429% for the current year. The company’s shares have jumped 51.7% over a year.

Olin has a projected earnings growth rate of 740% for the current year. The company’s shares have grown 229.3% over a year.

Arkema has a projected earnings growth rate of 88.7% for the current year. The company’s shares have surged 110.3% over a year.



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