Kraton Share's Rise on Positive Q1/20 Earnings Report

Source: Streetwise Reports   04/30/2020

Shares of Kraton Corp. traded 24% higher after the specialty polymers and high-value biobased products maker reported that net income in Q1/20 increased to $209.0 million, compared to $13.6 million in Q1/19.

Kraton Corp. (KRA:NYSE) yesterday announced Q1/20 financial results for the period ending March 31, 2020.

The company reported that Q1/20 results reflect the benefit of its geographic and end-market diversification and that the current COVID-19 situation had no material impact on the firm in the quarter. Kraton noted that its plants have continued to operate at normal capacities throughout the pandemic and its supply chain has remained intact without any interruptions in availability of raw materials.

The firm stated in Q1/20, it achieved consolidated net income of $209.0 million, compared to $13.6 million in Q1/19. The company noted that the Q1/20 consolidated net income included a gain of $175.2 million from the sale of its Cariflex™ business.

The company indicated that Q1/20 consolidated adjusted EBITDA was $77.9 million, which decreased by 12.9% from Q1/19. The firm outlined that operating income for its Polymer segment in Q1/20 increased to $17.9 million, up 93.8% compared to Q1/19, but that its Chemical segment operating income decreased by 60.1% to $10.3 million in the quarter.

The company’s President and CEO Kevin M. Fogarty commented, “As for our overall Q1/20 results, we are very pleased to have delivered $77.9 million of Adjusted EBITDA, especially considering this to be against a backdrop of such a uniquely challenging global operating environment…During the quarter we saw positive demand trends in a number of end markets, including medical applications such as IV bags and in personal care and hygiene products. We also saw growing sales into adhesive markets, driven by tapes and labels for packaging applications as well as construction adhesives used in applications such as medical gowns and masks.”

“We are also very pleased to have completed the sale of our Cariflex business in the quarter, providing for a substantial debt reduction and improving our capital structure and liquidity position,” Fogarty added.

The company stated that even though its Q1/20 results were not materially impacted by COVID-19, the progression of COVID-19 may result in significant disruption in global demand fundamentals for the balance of 2020. Therefore, the company advised that as it is not possible to determine the magnitude or duration of the impact that COVID-19 may have for the balance of 2020, it is not providing FY/20 Adjusted EBITDA guidance at this time.

Kraton Corp. is headquartered in Houston and is a global producer of specialty polymers and high-value biobased products derived from pine wood pulping co-products. The company’s sustainable polymers are used in numerous areas including adhesives, automotive, coatings, lubricants, medical, packaging, paving, personal care products and roofing applications. The firm stated that it is the largest global provider in the pine chemicals industry. Kraton’s specialty pine-based products are sold into adhesives and tire markets. It additionally manufactures many performance chemicals including fuel additives, oilfield chemicals, coatings, fluids and lubricants and inks.

Kraton began the day with a market capitalization of around $423.3 million with approximately 31.83 million shares outstanding. KRA shares opened 10.75% higher today at $14.73 (+$1.43, +10.75%) over yesterday’s $13.30 closing price. The stock has traded today between $14.29 and $18.35 per share and is currently trading at $16.53 (+$3.24, +24.38%).

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