Veritiv Corporation reported record earnings per share (EPS) of $6.12 in second-quarter 2022, surging 278% from the year-ago quarter’s levels. The bottom line beat the Zacks Consensus Estimate of $4.50. The upside was driven by double-digit organic sales growth and year-over-year adjusted EBITDA margin improvements across each of its segments.
Veritiv’s total revenues increased 9.8% year over year to $1,821 million. Cost of sales was up 7% year on year to $1,411 million in the reported rose 21% year over year to $409.8 million. The gross margin was 22.5% in the second quarter compared with the prior-year period’s 20.4%.
Adjusted EBITDA was $136 million, rising 85% from the year-earlier quarter’s levels. Adjusted EBITDA margin expanded to 7.5% from 4.4% in the prior-year quarter. With this, Veritiv delivered the 10th consecutive quarter of year-over-year improvement in adjusted EBITDA on operational improvements.
Financial Position
Veritiv had cash and cash equivalents of $32.1 million as of Jun 30, 2022, down from $49.3 million held on Dec 31, 2021. Long-term debt was $398.3 million as of Jun 30, 2022, down from $499.7 million on Dec 31, 2021. The company ended the year with a net leverage ratio of 0.7.
Net cash generated from operating activities in the first half of 2022 was $62.3 million compared with the prior-year period’s $50.1 million. In the second quarter, the company repurchased around $94.4 million in shares under its share repurchase program of $200 million.
On May 2, 2022, Veritiv completed the Veritiv Canada, Inc. business sale to Imperial Dade. The company can now focus on its strategy to invest in high-growth, higher-margin businesses as well as geographies and capitalize on its industry-leading Packaging and Facility Solutions capabilities.
2022 Guidance Raised
Veritiv raised its net income guidance for 2022 to the range of $285-$315 million from the previous band of $270-$305 million. Earnings per share are expected to be between $19.50 and $21.50 compared with the previous expectation of $18.00-$21.00 for the year. Veritiv anticipates adjusted EBITDA in the range of $475-$505 million, up from the previous guidance of $445-$485 million.
Free cash flow for 2022 is expected to be $250 million, with a capital expenditure of around $30 million. Net cash provided by operating activities is projected to be $280 million.
Price Performance
Shares of Veritiv have skyrocketed 52% in a year against the industry’s 21.4% decline.
Zacks Rank & Stocks to Consider
Veritiv currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks worth considering in the basic materials space include Cabot Corporation (CBT - Free Report) , Ashland Global Holdings Inc. (ASH - Free Report) and Albemarle Corporation (ALB - Free Report) .
Cabot, currently carrying a Zacks Rank #1 (Strong Buy), has an expected earnings growth rate of 22.5% for the current fiscal year. The Zacks Consensus Estimate for CBT's earnings for the current fiscal has been revised 0.8% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Cabot’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 16.2%. CBT has gained around 32% over a year.
Ashland, currently carrying a Zacks Rank #2, has a projected earnings growth rate of 50.9% for fiscal 2022. The Zacks Consensus Estimate for ASH’s fiscal 2022 earnings has been revised 10.5% upward in the past 60 days.
ASH’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters. It has a trailing four-quarter earnings surprise of roughly 1.82%, on average. ASH shares are up around 20.9% in a year.
Albemarle has a projected earnings growth rate of 247% for the current year. The Zacks Consensus Estimate for ALB’s current-year earnings has been revised 7.8% upward in the past 60 days.
Albemarle’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 20%. ALB has gained roughly 18% in a year. The company has a Zacks Rank #2.
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Veritiv Corporation reported record earnings per share (EPS) of $6.12 in second-quarter 2022, surging 278% from the year-ago quarter’s levels. The bottom line beat the Zacks Consensus Estimate of $4.50. The upside was driven by double-digit organic sales growth and year-over-year adjusted EBITDA margin improvements across each of its segments.
Veritiv’s total revenues increased 9.8% year over year to $1,821 million. Cost of sales was up 7% year on year to $1,411 million in the reported rose 21% year over year to $409.8 million. The gross margin was 22.5% in the second quarter compared with the prior-year period’s 20.4%.
Adjusted EBITDA was $136 million, rising 85% from the year-earlier quarter’s levels. Adjusted EBITDA margin expanded to 7.5% from 4.4% in the prior-year quarter. With this, Veritiv delivered the 10th consecutive quarter of year-over-year improvement in adjusted EBITDA on operational improvements.
Financial Position
Veritiv had cash and cash equivalents of $32.1 million as of Jun 30, 2022, down from $49.3 million held on Dec 31, 2021. Long-term debt was $398.3 million as of Jun 30, 2022, down from $499.7 million on Dec 31, 2021. The company ended the year with a net leverage ratio of 0.7.
Net cash generated from operating activities in the first half of 2022 was $62.3 million compared with the prior-year period’s $50.1 million. In the second quarter, the company repurchased around $94.4 million in shares under its share repurchase program of $200 million.
On May 2, 2022, Veritiv completed the Veritiv Canada, Inc. business sale to Imperial Dade. The company can now focus on its strategy to invest in high-growth, higher-margin businesses as well as geographies and capitalize on its industry-leading Packaging and Facility Solutions capabilities.
2022 Guidance Raised
Veritiv raised its net income guidance for 2022 to the range of $285-$315 million from the previous band of $270-$305 million. Earnings per share are expected to be between $19.50 and $21.50 compared with the previous expectation of $18.00-$21.00 for the year. Veritiv anticipates adjusted EBITDA in the range of $475-$505 million, up from the previous guidance of $445-$485 million.
Free cash flow for 2022 is expected to be $250 million, with a capital expenditure of around $30 million. Net cash provided by operating activities is projected to be $280 million.
Price Performance
Shares of Veritiv have skyrocketed 52% in a year against the industry’s 21.4% decline.
Zacks Rank & Stocks to Consider
Veritiv currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks worth considering in the basic materials space include Cabot Corporation (CBT - Free Report) , Ashland Global Holdings Inc. (ASH - Free Report) and Albemarle Corporation (ALB - Free Report) .
Cabot, currently carrying a Zacks Rank #1 (Strong Buy), has an expected earnings growth rate of 22.5% for the current fiscal year. The Zacks Consensus Estimate for CBT's earnings for the current fiscal has been revised 0.8% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Cabot’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 16.2%. CBT has gained around 32% over a year.
Ashland, currently carrying a Zacks Rank #2, has a projected earnings growth rate of 50.9% for fiscal 2022. The Zacks Consensus Estimate for ASH’s fiscal 2022 earnings has been revised 10.5% upward in the past 60 days.
ASH’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters. It has a trailing four-quarter earnings surprise of roughly 1.82%, on average. ASH shares are up around 20.9% in a year.
Albemarle has a projected earnings growth rate of 247% for the current year. The Zacks Consensus Estimate for ALB’s current-year earnings has been revised 7.8% upward in the past 60 days.
Albemarle’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 20%. ALB has gained roughly 18% in a year. The company has a Zacks Rank #2.
Where Will Stocks Go…
If Biden Wins? If Trump Wins?
The answers may surprise you.
Since 1950, even after negative midterm years, the market has never had a lower presidential election year. With voters energized and engaged, the market has been almost unrelentingly bullish no matter which party wins!
Now is the time to download Zacks' free Special Report with 5 stocks that offer extreme upside for both Democrats and Republicans…
1. Medical manufacturer has gained +11,000% in the last 15 years.
2. Rental company is absolutely crushing its sector.
3. Energy powerhouse plans to grow its already large dividend by 25%.
4. Aerospace and defense standout just landed a potentially $80 billion contract.
5. Giant Chipmaker is building huge plants in the U.S.
Hurry, Download Special Report FREE >>
Get the latest research report on ASH - FREE
Get the latest research report on ALB - FREE
Get the latest research report on CBT - FREE