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Westlake's Q3 Earnings and Revenues Miss Estimates on Lower Volumes
WLKWestlake(WLK) ZACKS·2024-11-12 13:30

Core Insights - Westlake Corporation (WLK) reported a third-quarter 2024 profit of 108millionor83centspershare,asignificantdecreasefrom108 million or 83 cents per share, a significant decrease from 285 million or 2.20pershareinthesamequarterlastyear.Adjustedearningswere2.20 per share in the same quarter last year. Adjusted earnings were 1.41 per share, missing the Zacks Consensus Estimate of 2.12[1][2]FinancialPerformance−Salesforthereportedquarterwere2.12 [1][2] Financial Performance - Sales for the reported quarter were 3,117 million, remaining flat year over year but below the Zacks Consensus Estimate of 3,230.6million.Sequentially,salesdeclinedby33,230.6 million. Sequentially, sales declined by 3% due to a 4% drop in sales volumes, which outweighed a 1% increase in average sales prices [2] - The Performance and Essential Materials (PEM) segment saw sales increase by approximately 2% year over year to 2,019 million, surpassing the estimate of 2,017.8million.However,PEMsalesvolumefellby12,017.8 million. However, PEM sales volume fell by 1% sequentially, while average sales price rose by 1% [3] - The Housing and Infrastructure Products (HIP) segment generated sales of 1,098 million, down around 4% from the previous year and below the estimate of 1,211.8million.ThisdeclinewasattributedtoweakerNorthAmericanresidentialconstructionactivityandweatherdisruptions[4]FinancialPosition−AsofSeptember30,2024,Westlakehadcashandcashequivalentstotaling1,211.8 million. This decline was attributed to weaker North American residential construction activity and weather disruptions [4] Financial Position - As of September 30, 2024, Westlake had cash and cash equivalents totaling 2.9 billion, with total debt at 4.6billion.Thenetcashprovidedbyoperatingactivitiesinthethirdquarterwas4.6 billion. The net cash provided by operating activities in the third quarter was 474 million, with capital expenditures amounting to 220million[5]Outlook−Thecompanyindicatedthattherecoveryfromtherecentdownturninglobalindustrialandmanufacturingactivitiesremainsuneven.However,recentmonetaryandfiscalstimuluscouldpotentiallyacceleratemacroeconomicrecovery.Westlakeplanstofocusondevelopingandcommercializinginnovativeproducts,improvingplantprofitability,andcreatinglong−termshareholdervalue[6]IndustryContext−WestlakecurrentlyholdsaZacksRankof5(StrongSell).Incomparison,DuPontdeNemours,Inc.reportedadjustedearningsof220 million [5] Outlook - The company indicated that the recovery from the recent downturn in global industrial and manufacturing activities remains uneven. However, recent monetary and fiscal stimulus could potentially accelerate macroeconomic recovery. Westlake plans to focus on developing and commercializing innovative products, improving plant profitability, and creating long-term shareholder value [6] Industry Context - Westlake currently holds a Zacks Rank of 5 (Strong Sell). In comparison, DuPont de Nemours, Inc. reported adjusted earnings of 1.18 per share, exceeding the Zacks Consensus Estimate of 1.04,andraiseditsfull−year2024projectionsforoperatingEBITDAandadjustedearningspershare[7]−TheChemoursCompanyrecordedadjustedearningsof40cents,surpassingtheZacksConsensusEstimateof32cents,butexpectsadeclineinconsolidatednetsalesinthemidtohigh−singledigitsforthefourthquarter[8]−PPGIndustries,Inc.reportedthird−quarteradjustedearningspershareof1.04, and raised its full-year 2024 projections for operating EBITDA and adjusted earnings per share [7] - The Chemours Company recorded adjusted earnings of 40 cents, surpassing the Zacks Consensus Estimate of 32 cents, but expects a decline in consolidated net sales in the mid to high-single digits for the fourth quarter [8] - PPG Industries, Inc. reported third-quarter adjusted earnings per share of 2.13, missing the Zacks Consensus Estimate of 2.15,andanticipatesflatorganicsalesandadjustedearningspershareatthelowerendofthe2.15, and anticipates flat organic sales and adjusted earnings per share at the lower end of the 8.15 to $8.30 range for full-year 2024 [9]