Trecora Resources (TREC:BUY) TREC revenues plummeted as the drop in South Hampton Resources revenues more than offset those of Trecora Chemical gains

12-AUG-16 – Trecora Resources (TREC:BUY) TREC revenues plummeted as the drop in South Hampton Resources revenues more than offset those of Trecora Chemical gains. However, income related to bargain purchase acquisition and AMAK helped earnings to reach a record high of $12.1 million. We are maintaining our last BUY rating and $18.00 price target, which will be updated following our review of the 10-Q.

Q2:16 HIGHLIGHTS

Total revenues fell 17.7% to $48.9 million in Q2:16 from $59.4 million in the same quarter of previous year, as the South Hampton Resources segment net revenues plunged 22.7% (more than offsetting 31.8% gain in revenues of TC segment) due to reduction in both petrochemical sales volume and average sales price of petrochemical products which declined 13.3% and 13.1% respectively.
Gross profit margin deteriorated to 22.5% for the quarter compared to 25.6% in Q2:15, following the slump in revenues. But it remained flat with respect to Q1:16.
Adjusted EBITDA (excluding equity in AMAK earnings/losses, share based compensation and bargain purchase gain) dropped to $8.8 million in Q2:16 from $12.3 million in the year earlier quarter.
TREC net income jumped 89.6% to $12.1 million or $0.48 per diluted share in Q2:16 from $6.4 million or $0.25 per diluted share, primarily attributable to the benefit realized from bargain purchase acquisition (BASF) and equity income from earnings of Al Masane Al Kobra Mining Company (AMAK).
Cash & equivalents decreased to $9.4 million at the quarter end compared to $14.2 million in Q1:16.
Book value per common share increased to $6.65 in Q2:16 from $6.14 in Q1:16.