Albemarle (ALB) Earnings And Revenues Beat Estimates In Q1

Albemarle Corporation (NYSE:ALB) recorded earnings of $51.2 million or 45 cents per share for the first quarter of 2017 compared with $228.2 million or $2.02 a year ago.

The decrease in earnings was attributed to loss on early repayment of debt of 34 cents per share as well as gain on sale of business of $1.02 per share, lower tax rate and income from discontinued operations of 15 cents per share a year ago.

Barring one-time items, the adjusted earnings for the reported quarter were $1.05 per share, topping the Zacks Consensus Estimate of 95 cents.

Revenues increased around 17.5% year over year to $722.1 million in the reported quarter. Sales in the quarter rose as favorable impact of higher sales volume in three reportable segments more than offset the impact of divestitures of specialty chemicals business, minerals-based flame retardants and currency exchange. Sales beat the Zacks Consensus Estimate of $678.7 million.

Segment Highlights

Sales from the Lithium and Advanced Materials unit jumped 31.5% year over year to $284.4 million in the reported quarter, supported by favorable pricing, higher sales volumes, partly offset by unfavorable impacts of currency exchange.

The Bromine Specialties segment raked in sales of $219.2 million, up roughly 11.5% year over year, aided by higher sales volumes.

The Refining Solutions unit reported revenues of $185.4 million in the reported quarter, up around 8.7% year over year. Sales were driven by higher sales volumes, partly offset by unfavorable impacts of unfavorable currency, customer and product mix.

Financial Position

Albemarle ended the first quarter with cash and cash equivalents of roughly $1.25 billion, almost five-fold year-over-year increase.

The company repaid roughly $750 million in long-term debt during the quarter and outstanding debt as of Mar 31, 2017 was $1.4 billion.

Cash flow from operations was around $82.6 million for the first quarter, down 52% year over year owing to working capital changes.

Outlook

According to the President, Chairman and CEO, Luke Kissam, the first-quarter results reflect increased growth profile of the company as a result of changes made in the business portfolio over the years. Excluding the impact of divestitures and foreign currency translations, Albemarle’s adjusted EBITDA (earnings before interest, tax, depreciation and amortization) and revenues expanded by double digits.

Moving ahead, the company is more optimistic about 2017 based on a strong start in Lithium and Bromine Specialties and favorable outlook for both businesses. Albemarle now sees net sales in the band of $2.9–$3.05 billion (up from $2.8– $2.95 billion expected earlier) and adjusted earnings per share of between $4.20 and $4.40 (up from previous estimate of $4.00–$4.25 per share) for 2017. Adjusted EBITDA for the year is expected to be between $835 million and $875 million, also an increase from $800–$840 million expected earlier.

Price Performance

Albemarle’s shares rallied around 14.2% over the past three months, outperforming the Zacks categorized Chemicals-Diversified industry’s 3.4% gain.

Zacks Rank & Key Picks

Albemarle currently carries a Zacks Rank #3 (Hold).

Better-ranked companies in the basic materials space include Akzo Nobel NV (OTC:AKZOY) , Nucor Corporation (NYSE:NUE) and The Chemours Company (NYSE:CC) . All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

Akzo Nobel has an expected long-term earnings growth of 11.1%.

Nucor has an expected long-term earnings growth of 12%.

Chemours has an expected long-term earnings growth of 15.5%.

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