Univar (UNVR) Earnings And Revenues Miss Estimates In Q3

Univar Inc. (NYSE:UNVR) logged a profit (on a reported basis) of $49.6 million or 35 cents per share in third-quarter 2018, up 27.5% from a profit of $38.9 million or 28 cents a year ago.

Barring one-time items, earnings came in at 40 cents a share in the quarter, missing the Zacks Consensus Estimate of 42 cents.

The chemical maker’s revenues rose 4% year over year to $2,130.7 million in the quarter, falling shy of the Zacks Consensus Estimate of $2,164 million.

Gross profit rose around 3% year over year to $468.7 million in the quarter. Adjusted EBITDA margin expanded 10 basis points to 8.2%.

Univar Inc. Price, Consensus and EPS Surprise

Segment Review

Revenues at the USA division increased 8.5% year over year to $1,285.3 million in the reported quarter. Gross profit rose 6.2% year over year to $290.4 million.

Revenues at the Canada segment declined around 8.8% year over year to $273.5 million. Gross profit fell 13.3% year over year to $48.7 million in the quarter.

The EMEA segment raked in sales of $472.4 million, up 3.4% year over year. Gross profit rose around 4.9% year over year to $107.9 million.

Sales from the Rest of World unit declined 6.9% to $99.5 million. Gross profit declined around 2.7% year over year to $21.7 million.

Balance Sheet

Univar ended the quarter with cash and cash equivalents of $85.9 million, down around 70% year over year. Long-term debt totaled $2,543.7 million, down around 11.4% year over year.

Outlook

Univar expects foreign exchange headwinds and challenges in Canada to dampen growth in the fourth quarter. The company expects fourth-quarter adjusted EBITDA to be flat with last year’s results. The guidance also takes into account demand softness in certain markets.

For 2018, Univar now anticipates adjusted EBITDA growth of high single-digit while adjusted earnings per share are projected at roughly $1.60 per share, reflecting an increase of 15.1% from the prior year.

Price Performance

Univar has underperformed the industry over the past six months. The company’s shares have lost 18.6% over this period compared with the industry’s fall of 8.5%.

Zacks Rank & Stocks to Consider

Univar carries a Zacks Rank #5 (Strong Sell).

A few better-ranked stocks in the basic materials space are CF Industries Holdings, Inc. (NYSE:CF) , KMG Chemicals, Inc. (NYSE:KMG) and The Mosaic Company (NYSE:MOS) .

CF Industries has an expected long-term earnings growth rate of 6% and a Zacks Rank #1 (Strong Buy). The company’s shares have gained 44.2% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

KMG Chemicals has an expected long-term earnings growth rate of 28.5% and a Zacks Rank #2 (Buy). Its shares have risen 45.4% in a year’s time.

Mosaic has an expected long-term earnings growth rate of 7% and a Zacks Rank #2. The company’s shares have rallied 62.7% in the past year.

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