Westlake Corporation WLK logged a second-quarter 2024 profit of $313 million or $2.40 per share, up from $297 million or $2.31 per share in the year-ago quarter. The bottom line surpassed the Zacks Consensus Estimate of $1.90.

Sales fell around 1.3% year over year to $3,207 million in the quarter. It surpassed the Zacks Consensus Estimate of $3,176.1 million. WLK witnessed strong demand for the majority of products in its Housing and Infrastructure Products (HIP) segment and higher average sales prices in the Performance and Essential Materials (PEM) unit compared with first-quarter 2024.

Westlake Corp. Price, Consensus and EPS Surprise

Westlake Corp. price-consensus-eps-surprise-chart | Westlake Corp. Quote

Segment Highlights

Sales in the PEM segment went down around 5.7% year over year to $2,013 million in the reported quarter. It was below our estimate of $2,046.8 million. Operating income in the segment was $157 million, a roughly 27% year-over-year decline. This fall was attributed to lower average sales prices for the majority of Westlake's major products, particularly caustic soda and PVC resin, which were somewhat offset by increased production and sales volume across the company's key products.

The HIP segment generated sales of $1,194 million, up around 7.1% from the year-ago quarter. The figure was above our estimate of $1,086 million. Operating income in the segment was $266 million, up roughly 40% from a year ago. The year-over-year rise was driven by increased production and sales volumes for all of Westlake's key products.

Financial Position

In the second quarter, net cash generated by operating activities was $237 million, with capital expenditures of $231 million. As of Jun 30, 2024, cash and cash equivalents totaled $3 billion, while total debt was $4.9 billion.

Outlook

Looking ahead, WLK expects the HIP segment to continue benefiting from favorable structural factors such as the decade-long underinvestment in housing that followed the financial crisis, population growth, an aging housing stock and increased infrastructure investments spurred by the Infrastructure and Jobs Act. 

While global industrial and manufacturing conditions have improved modestly, the company is taking steps to enhance PEM segment profitability, including the recently announced plan to temporarily cease operations at two units within the European epoxy business to align Westlake's manufacturing footprint and costs with changing global conditions.

Zacks Rank & Key Picks

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

Better-ranked stocks worth a look in the basic materials space include Barrick Gold Corporation GOLD, B2Gold Corp. BTG and Avino Silver & Gold Mines Ltd. ASM.

Barrick is slated to report second-quarter results on Aug 12, before market open. The Zacks Consensus Estimate for its second-quarter earnings is pegged at 26 cents. GOLD beat the consensus estimate in each of the last four quarters, with the average earnings surprise being 18.3%. GOLD currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

B2Gold, carrying a Zacks Rank #2, is slated to report second-quarter results on Aug 8. The Zacks Consensus Estimate for BTG's second-quarter earnings is pegged at 8 cents.

Avino Silver, carrying a Zacks Rank #1, is slated to report second-quarter results on Aug 13. The Zacks Consensus Estimate for ASM's second-quarter earnings is pegged at 2 cents. The stock has surged nearly 32.4% in the past year.