(Cleveland, OH) swung from a net loss of $1.9 million in the year-ago quarter to net income of $45.7 million in the second quarter of 2010 as revenues increased by 40% and the company pulled in record operating income from its three strategic platforms. From April through June, PolyOne generated $692.9 million in revenue, compared to $496.5 million in the second quarter of 2009. In addition to higher selling prices due to increases in raw material costs, PolyOne also saw a 27% increase in volume with each of their strategic platforms—Specialty, Distribution, Performance Products—recording double-digit sales and operating income increases.
In the company's earnings statement, Stephen D. Newlin, chairman, president, and CEO, said the results were particularly pleasing to PolyOne considering that demand from two key end markets—housing and automotive—is hovering near historic lows. Over the last three years, PolyOne has worked on diversifying its portfolio to enter end markets that are less cyclical, including healthcare, consumer products, and packaging.
Looking forward in housing and autos, Newlin said the consensus estimate for U.S. housing starts is 650,000 in 2010, well below the 50-year statistical average of 1.5 million per year. The consensus estimate for U.S. auto and light vehicle sales this year of 11.5 million vehicles, doesn't even equal the estimated scrap rate of 12.0 million vehicles per year, or the long-term average of 15 million vehicles sold per year.
The strong performance allowed PolyOne to pay off a line of credit from Citicorp on July 7, fully repaying $40.0 million of outstanding borrowings almost a year before the revolver and letter of credit facility was scheduled to mature on March 20, 2011.
The market reacted strongly to PolyOne's positive earnings. According to Bloomberg Data, PolyOne shares rose the most in the Russell 2000 Index, climbing 11% to $11.47 in August 2, trading. The company's second-quarter profit, excluding some items, of $0.25/share, beat the average analyst estimate by 28%. The stock price's 52-week range goes from a low of $4 to a high of $11.89. —[email protected]