Albemarle (ALB) Q3 Earnings Top Estimates, Revenues Lag

Albemarle Corporation (NYSE:ALB) saw its profits rise in the third quarter of 2018. The chemical maker posted a profit of $129.7 million, or $1.20 per share in the quarter, a roughly 9% increase from $118.7 million or $1.06 per share year ago. The bottom line in the reported quarter was supported by higher lithium prices and earnings growth across the company’s Bromine Specialties and Catalysts units.

Barring one-time items, adjusted earnings for the reported quarter were $1.31 per share, topping the Zacks Consensus Estimate of $1.25.

Revenues rose around 3% year over year to $777.7 million in the quarter. It trailed the Zacks Consensus Estimate of $804.4 million.

Revenues, in the reported quarter, were aided by favorable pricing across the board and increased sales volumes in Bromine Specialties and Catalysts. This was, in part, offset by reduced volumes in lithium due to shut downs at three of Albemarle’s manufacturing sites and the impact of the divestment of the polyolefin catalysts and components portion of the Performance Catalyst Solutions ("PCS") business.

Albemarle Corporation Price, Consensus and EPS Surprise

Albemarle Corporation Price, Consensus and EPS Surprise | Albemarle Corporation Quote

Segment Highlights

Sales from the Lithium unit edged up around 0.6% year over year to $270.9 million in the reported quarter as higher pricing offset lower sales volumes. Adjusted EBITDA inched up roughly 0.6% year over year to $113.6 million.

The Bromine Specialties segment raked in sales of $232.6 million, up around 9% year over year, driven by favorable pricing and higher volumes. Adjusted EBITDA was $78.6 million, up around 23% year over year.

The Catalysts unit logged revenues of $251.1 million in the reported quarter, up roughly 3% year over year on the back of higher volumes and favorable pricing. Adjusted EBITDA was $62.6 million, up roughly 4% year over year.

Financial Position

Albemarle ended the quarter with cash and cash equivalents of roughly $641.2 million, down roughly 39% year over year. Long-term debt was $1,411.6 million, essentially stable year over year.

Cash flow from operations was roughly $376.9 million for the first nine months of 2018, compared with cash flow from operations of around $74.8 million for the same period a year ago. Capital expenditures were $471.7 million for the same period, up from $187.5 million a year ago owing to expansion actions in lithium.

Outlook

Albemarle backed its guidance for 2018. The company continues to see adjusted earnings for the year to be in the band of $5.30-$5.50 per share, a year-over-year increase of 15%-20%.

The company also envisions net sales for 2018 to be between $3.3 billion and $3.5 billion. Adjusted EBITDA for the year has been forecast in the range of $990 million to $1,020 million.

Price Performance

Albemarle’s shares have gained around 7.2% in the past three months, outperforming the roughly 11.9% decline recorded by its industry.

Zacks Rank & Stocks to Consider

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

A few better-ranked stocks worth considering in the basic materials space are Methanex Corporation (NASDAQ:MEOH) , CF Industries Holdings, Inc. (NYSE:CF) and KMG Chemicals, Inc. (NYSE:KMG) .

Methanex has expected long-term earnings growth rate of 15% and sports a Zacks Rank #1 (Strong Buy). Its shares have rallied 30% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

CF Industries has expected long-term earnings growth rate of 6% and carries a Zacks Rank #1. Its shares have gained 44% in a year.

KMG Chemicals has expected long-term earnings growth rate of 28.5% and carries a Zacks Rank #2 (Buy). Its shares have rallied 45% in the past year.

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