Albemarle (ALB) Tops Q2 Earnings Estimates, Ups FY19 EPS View

Albemarle Corporation (NYSE:ALB) recorded a profit of $154.2 million or $1.45 per share in the second quarter of 2019, down 49% from $302.5 million or $2.73 per share it earned year ago.

The bottom line in the year-ago quarter was boosted by $176.7 million (post tax) gain on the divestment of the polyolefin catalysts and components portion of the Performance Catalyst Solutions business.

Adjusted earnings for the reported quarter were $1.55 per share, up 14% year over year. It trounced the Zacks Consensus Estimate of $1.41.

Revenues rose around 4% year over year to $885.1 million in the quarter. It also surpassed the Zacks Consensus Estimate of $876.3 million. Revenues were aided by higher volumes across the company’s lithium and bromine businesses and favorable pricing across the board.

Segment Highlights

Sales from the Lithium unit rose around 2% year over year to $324.8 million in the reported quarter, aided by favorable pricing and higher sales volumes. Adjusted EBITDA was essentially flat year over year at $141.8 million.

The Bromine Specialties segment logged sales of $255.4 million, up around 16% year over year, driven by favorable pricing and higher volumes. Adjusted EBITDA was $81.3 million, up around 17% year over year.

The Catalysts unit recorded revenues of $266.3 million in the reported quarter, down roughly 7% year over year, as lower sales volumes and unfavorable currency impact more than offset favorable pricing. Adjusted EBITDA was $66.9 million, down roughly 11% year over year.

Financial Position

Albemarle ended the quarter with cash and cash equivalents of roughly $398.2 million, down roughly 56% year over year. Long-term debt was $1,398,4 million, down around 0.6% year over year.

Cash flow from operations was $199.3 million for the first half of 2019, down around 11% year over year. Capital expenditures were $415.6 million for the period, up 48% year over year.

Outlook

The company raised its earnings outlook for 2019. It now sees adjusted earnings for 2019 in the band of $6.25-$6.65 per share (up from the prior view of $6.10-$6.50), a year-over-year increase of 13-21%.

The company backed its net sales guidance for 2019 of between $3.65 billion and $3.85 billion, representing 8-14% year over year growth. It continues to expect adjusted EBITDA for the year in the range of $1,070 million to $1,140 million, representing 6-13% year over year growth.

Price Performance

Albemarle’s shares are down around 12.3% so far this year compared with the roughly 25% decline recorded by its industry.

Zacks Rank & Key Picks

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

Better-ranked stocks worth considering in the basic materials space include SSR Mining Inc. (NASDAQ:SSRM) , Kinross Gold Corporation (NYSE:KGC) and Flexible Solutions International Inc (NYSE:FSI) .

SSR Mining has an estimated earnings growth rate of 134.8% for the current year and carries a Zacks Rank #1 (Strong Buy). Its shares have rallied 66% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kinross has projected earnings growth rate of 110% for the current year and carries a Zacks Rank #1. The company’s shares have gained 56% in a year’s time.

Flexible Solutions has an expected earnings growth rate of 342.9% for the current fiscal year and carries Zacks Rank #2 (Buy). Its shares have surged around 122% in the past year.

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