Trecora Resources (TREC) Reports Q1 Loss of $0.18, Revenues Miss

Trecora Resources (NYSE: TREC) reported Q1 EPS of ($0.18), versus $0.24 reported last year. Revenue for the quarter came in at $54.59 million versus the consensus estimate of $58.14 million.

Executive Commentary

"Over the last year, we have been focused on strengthening our balance sheet and managing through the uncertainties and disruptions created by the COVID-19 pandemic, ensuring that Trecora emerged in a position of strength. In addition, prudent capital allocation has been at the forefront of our agenda, including returning value to our stockholders," said Pat Quarles, Trecora's President and Chief Executive Officer.

"We entered the first quarter well-positioned to both benefit from the recovery and leverage our evolving growth portfolio. However, the February freeze event in Texas resulted in significant disruptions to our customers and supply chain, as well as damage to our plants, thus impacting our first quarter results.

"Following the freeze event, the Board authorized a $20 million share repurchase program in March which reflects the resilience of our business, our strong balance sheet and ample liquidity. We also advanced our growth program by converting recent successful plant trials into new custom processing commitments. We remain committed to our goal of creating long-term value for our stockholders through growth and prudent capital allocation," concluded Mr. Quarles.

Sami Ahmad, Trecora's Chief Financial Officer stated, "The Texas freeze event resulted in significant loss of sales as well as higher utility, repair and maintenance costs at both facilities. Net loss from continuing operations was $4.4 million in the first quarter of 2021. We estimate the total impact to first quarter Adjusted EBITDA from continuing operations was between $4.5 to $5.0 million, including higher costs of approximately $1.9 million. While the impact of the Texas freeze event was largely confined to the first quarter, certain customer and suppliers continued to experience residual effects into the second quarter. Finally, our liquidity remains excellent with cash at the end of the quarter of $53.0 million and an undrawn revolver. We believe we have financial flexibility for growth and are firmly positioned to manage market-related business disruptions," concluded Mr. Ahmad.

Outlook

"In the second quarter we are seeing several positive developments. The strength of the US economy is driving solid demand across all of our key end-uses. It is also supporting price increase initiatives in the market. We successfully increased solvent and wax pricing recently and are seeing the aromatics market improve significantly, which benefits our by-product prices. We are also seeing a step-up in our custom processing activities due to both demand from our pre-existing customers as well as new business from our growth program. Some headwinds remain in the quarter as several of our solvents customers continue to have production constraints due to the Texas freeze event and supply chain disruptions from the strengthening US economy generally are a challenge," stated Mr. Quarles.

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

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