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Univar (UNVR) Updates FY19 View Post Nexeo Buyout Closure

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Univar Inc. has provided an update for 2019 outlook. The revised guidance reflects the recently-completed acquisition of Nexeo Solutions, Inc. The company closed the acquisition on Mar 1, 2019.

For 2019, Univar now expects adjusted EBITDA between $740 million and $760 million, on a combined basis. The projected figure reflects 10-months earnings from the Nexeo Chemicals business and realized synergies worth roughly $10 million. it expects to generate $300-$350 million in free cash flow, before one-time integration costs of around $70 million.

Per the company, the guidance does not reflect the impact of the Nexeo plastics distribution business, which will be considered as discontinued. In February 2019, Univar announced the divestiture of Nexeo Plastics to an affiliate of One Rock Capital Partners, LLC in a deal valued at roughly $640 million.

The transaction is expected to close in first-half 2019, subject to customary closing adjustments. The company will use the net proceeds from the deal to reduce debt.

Univar’s adjusted earnings came in at 33 cents a share in the fourth quarter of 2018, which beat the Zacks Consensus Estimate of 32 cents.

The company’s revenues edged up 0.6% year over year to $1,971.2 million in the quarter, trailing the Zacks Consensus Estimate of $2,022.1 million.

Univar faced challenges in Canada and weaker-than-expected demand from most industrial end markets in the fourth quarter. However, it gained from improved operational execution.

Zacks Rank & Key Picks

Univar currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the basic materials space include Kirkland Lake Gold Ltd. , Ingevity Corp. (NGVT - Free Report) and Materion Corp. (MTRN - Free Report) , all currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Kirkland has an expected earnings growth rate of 8.8% for 2019. The company’s shares have surged 115.7% in the past year.

Ingevity has an expected earnings growth rate of 17.9% for 2019. The company’s shares have surged 51.2% in a year’s time.

Materion has an expected earnings growth rate of 12.6% for 2019. Its shares have gained 17.7% in a year’s time.

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