Trecora Resources (TREC) Misses Q3 EPS by 15c, Revenues Beat

Trecora Resources (NYSE: TREC) reported Q3 EPS of ($0.04), $0.15 worse than the analyst estimate of $0.11. Revenue for the quarter came in at $73.42 million versus the consensus estimate of $72.38 million.

"Our results in the quarter reflect a recovery in SHR prime product sales volume from the second quarter, continued strong sales volume, revenue and margin trends in our wax business, and improved performance at AMAK where mill feed and recoveries continue to grow. However, elevated feedstock costs along with higher operating expenses pressured margins and operational disruptions impacted profitability in the quarter," said Simon Upfill-Brown, President and CEO.

"With regards to the Advanced Reformer, we were pleased to see the unit was delivering the margin uplift as designed while production accelerated. Unfortunately, in late third quarter we experienced external power quality issues from our energy supplier resulting in a loss of catalyst activity which reduced the value of the refined byproduct. Plans are underway to change the catalyst in the fourth quarter and during this period there will be a 45-day shutdown of the Advanced Reformer with associated costs of approximately $4 million, but the Penhex units will continue to operate as normal. We expect the Advanced Reformer to resume full operation in the first quarter of 2019 and we continue to anticipate EBITDA contribution of $6 million in 2019 and $12 million to $14 million by 2022 from this unit as planned.

"Demand for our products remains strong, and as we shared last quarter, we have a solid plan to achieve operational excellence in all aspects of our manufacturing operations. While full implementation will take time, in the last couple of quarters, we are seeing significant progress leading to more predictable and reliable operational execution. We remain confident that the added capacity and capabilities derived from our multi-year capital building campaign, combined with our renewed focus on operational excellence, position us well to capitalize on the continued strength of the U. S. chemicals market and drive profitable growth," concluded Upfill-Brown.

For earnings history and earnings-related data on Trecora Resources (TREC) click here.

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