Univar Inc. 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. (CF - Free Report) , KMG Chemicals, Inc. and The Mosaic Company (MOS - Free Report) .
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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Univar Inc. 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. (CF - Free Report) , KMG Chemicals, Inc. and The Mosaic Company (MOS - Free Report) .
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.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Get the latest research report on CF - FREE
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