A month has gone by since the last earnings report for Univar . Shares have lost about 1.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Univar due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Univar’s Q2 Earnings Beat Estimates, Revenues Up Y/Y
Univar recorded profits of $153.2 million or 90 cents per share in second-quarter 2021, shooting up from $1.8 million or a penny per share in the year-ago quarter.
Barring one-time items, earnings per share were 57 cents, up from 33 cents in the year-ago quarter. The figure surpassed the Zacks Consensus Estimate of 50 cents.
The company’s revenues were $2,394.1 million in the quarter, up around 19.2% year over year.
The growth in sales was attributable to a favorable impact of chemical price inflation and higher industrial demand. However, this was partially offset by the exit of the Canadian Agriculture wholesale distribution business and the divestitures of the Distrupol and Canadian Agriculture services. Univar benefited from the advancement of its Streamline 2022 (S22) program and market share growth in the quarter.
Segment Review
Revenues in the USA division increased 28.3% year over year to $1,500.2 million in the quarter. The rise was primarily driven by higher industrial end-market demand and chemical price inflation.
The EMEA segment raked in revenues of $504 million, up 23% year over year. Chemical price inflation and higher industrial end-market demand were partially offset by the effects of the Distrupol divestiture.
Revenues in the Canada segment went down around 28% year over year to $238.6 million. The decline was mainly due to the Canadian Agriculture wholesale distribution exit and the divestiture of Canadian Agriculture services.
Revenues from the LATAM unit rose roughly 53.3% to $151.3 million, driven by higher demand for products in industrial solutions as well as chemical price inflation.
Financials
Univar ended the quarter with cash and cash equivalents of $207 million, a roughly 62.2% year-over-year decline. Long-term debt was $2,215.1 million, down around 23.7% year over year.
Net cash used by operating activities was $83.7 million in the second quarter, decreasing 44.8% from $151.7 million in the prior-year quarter.
Outlook
The company expects adjusted EBITDA for third-quarter 2021 to be in the range of $175-$185 million. It also sees adjusted EBITDA in a band of $705-$725 million for 2021 compared with the 2020 figure of $635.8 million. Forecast for net free cash flow for the year has been reiterated in the band of $280-$300 million.
Under the S22 Program, the company is focused on improving adjusted EBITDA margins to 9% by the end of 2022 and expects to reduce leverage to 2.7x or lower by the end of 2021. It also forecasts 2021 year-end liquidity to be more than $800 million, inclusive of $100 million of debt pay-down in the second half of the year. Moreover, Univar expects more normalized margins and continued market share growth in the second half of 2021 as its aims for a more customer-centric approach.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
At this time, Univar has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Univar has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Univar (UNVR) Down 1.6% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Univar . Shares have lost about 1.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Univar due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Univar’s Q2 Earnings Beat Estimates, Revenues Up Y/Y
Univar recorded profits of $153.2 million or 90 cents per share in second-quarter 2021, shooting up from $1.8 million or a penny per share in the year-ago quarter.
Barring one-time items, earnings per share were 57 cents, up from 33 cents in the year-ago quarter. The figure surpassed the Zacks Consensus Estimate of 50 cents.
The company’s revenues were $2,394.1 million in the quarter, up around 19.2% year over year.
The growth in sales was attributable to a favorable impact of chemical price inflation and higher industrial demand. However, this was partially offset by the exit of the Canadian Agriculture wholesale distribution business and the divestitures of the Distrupol and Canadian Agriculture services. Univar benefited from the advancement of its Streamline 2022 (S22) program and market share growth in the quarter.
Segment Review
Revenues in the USA division increased 28.3% year over year to $1,500.2 million in the quarter. The rise was primarily driven by higher industrial end-market demand and chemical price inflation.
The EMEA segment raked in revenues of $504 million, up 23% year over year. Chemical price inflation and higher industrial end-market demand were partially offset by the effects of the Distrupol divestiture.
Revenues in the Canada segment went down around 28% year over year to $238.6 million. The decline was mainly due to the Canadian Agriculture wholesale distribution exit and the divestiture of Canadian Agriculture services.
Revenues from the LATAM unit rose roughly 53.3% to $151.3 million, driven by higher demand for products in industrial solutions as well as chemical price inflation.
Financials
Univar ended the quarter with cash and cash equivalents of $207 million, a roughly 62.2% year-over-year decline. Long-term debt was $2,215.1 million, down around 23.7% year over year.
Net cash used by operating activities was $83.7 million in the second quarter, decreasing 44.8% from $151.7 million in the prior-year quarter.
Outlook
The company expects adjusted EBITDA for third-quarter 2021 to be in the range of $175-$185 million. It also sees adjusted EBITDA in a band of $705-$725 million for 2021 compared with the 2020 figure of $635.8 million. Forecast for net free cash flow for the year has been reiterated in the band of $280-$300 million.
Under the S22 Program, the company is focused on improving adjusted EBITDA margins to 9% by the end of 2022 and expects to reduce leverage to 2.7x or lower by the end of 2021. It also forecasts 2021 year-end liquidity to be more than $800 million, inclusive of $100 million of debt pay-down in the second half of the year. Moreover, Univar expects more normalized margins and continued market share growth in the second half of 2021 as its aims for a more customer-centric approach.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
At this time, Univar has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Univar has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.