Versum Materials (VSM) Q2 Earnings Meet, Sales Lag Estimates

Versum Materials, Inc. (NYSE:VSM) recorded profit of $50.4 million or 46 cents per share in second-quarter fiscal 2019 (ended Mar 31, 2019), down 18% from $61.6 million or 56 cents a year ago. The bottom line in the reported quarter was hurt by transaction- related expenses, higher taxes and lower revenues.

Barring one-time items, adjusted earnings came in at 57 cents per share, which matched the Zacks Consensus Estimate.

Sales fell around 4% year over year to $326.2 million for the quarter, affected by lower sales in both Materials and Delivery Systems & Services (DS&S) segments. The figure, trailed the Zacks Consensus Estimate of $337.5 million.

Versum Materials Inc. Price, Consensus and EPS Surprise

Versum Materials Inc. price-consensus-eps-surprise-chart | Versum Materials Inc. Quote

Segment Highlights

Revenues at the Materials segment edged down 1% year over year to $216.5 million in the reported quarter as volume growth was masked by unfavorable price/mix and currency impacts. Performance was impacted by weaker demand in foundry.

Sales at the DS&S unit dropped 10% year over year to $109.1 million in the quarter, affected by weaker demand and project timing.

Financials

Versum Materials ended the quarter with cash and cash equivalents of $390.8 million, up around 54% year over year. Long-term debt was $972.2 million, down 0.4% year over year.

Cash from operations was $73.3 million for six months ended Mar 31, up from $56.5 million a year-ago.

Outlook

Versum Materials, in April 2019, entered into a definitive merger deal with Merck KGaA. The merger is expected to create a leading electronic materials player focused on the semiconductor and display industries. The companies are working towards closing the transaction in second-half 2019.

Versum Materials sees sales in the range of $1.38-$1.43 billion for fiscal 2019 (up 1-4% year over year). Adjusted EBITDA has been forecast between $465 million and $485 million (up 4-9% year over year).

Price Performance

Shares of Versum Materials have gained 31.9% over a year compared with the industry’s 0.9% rise.

Zacks Rank and Stocks to Consider

Versum Materials currently carries a Zacks Rank #4 (Sell).

Better-ranked stocks in the basic materials space include AngloGold Ashanti Limited (NYSE:AU) , Flexible Solutions International Inc. (NYSE:FSI) and Air Products and Chemicals, Inc. (NYSE:APD) .

AngloGold has an expected earnings growth rate of 86.8% for the current year and carries a Zacks Rank #1 (Strong Buy). The company’s shares have shot up around 38% over the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Flexible Solutions has an expected earnings growth rate of 171.4% for the current year and carries a Zacks Rank #2 (Buy). Its shares have rallied roughly 88% in the past year.

Air Products has an expected earnings growth rate of 10.3% for the current fiscal year and carries a Zacks Rank #2. Its shares have gained around 24% in the past year.

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