Versum Materials, Inc. recorded profit of $61.1 million or 56 cents per share in first-quarter fiscal 2019 (ended Dec 31, 2018), up more than three times from $18.7 million or 17 cents a year ago. The improvement reflects the impacts of the U.S. Tax Act.
Barring one-time items, adjusted earnings came in at 55 cents per share, which matched the Zacks Consensus Estimate.
Sales rose around 3% year over year to $339.5 million for the quarter, driven by gains in both Materials and Delivery Systems & Services (DS&S) segments. The figure, however, trailed the Zacks Consensus Estimate of $343.7 million.
Segment Highlights
Revenues at the Materials segment rose 3% year over year to $221.7 million in the reported quarter, driven by double-digit volume gains in Advanced Materials as well as higher volumes in Process Materials. Strong sales in both memory and logic segments offset softer foundry activity.
Sales at the DS&S unit went up 2% year over year to $117.2 million in the quarter on the back of continued strong equipment and installation project activities.
Financials
Versum Materials ended the quarter with cash and cash equivalents of $408 million, up around 47% year over year. Long-term debt was $973.2 million, down 0.4% year over year.
Cash from operations was $46 million for the reported quarter, up from $39 million a year-ago.
Outlook
For fiscal 2019, the company now sees sales in the range of $1,380-$1,430 million (up 1-4% year over year), down from its earlier view of $1,425-$1,475 million. Adjusted EBITDA has been forecast between $465 million and $485 million (up 4-9% year over year), also down from prior view of $475-$495 million.
The company expects slowing memory output and weakening industry capital spending environment to impact its top-line performance. However, it expects new Process of Record (“POR”) wins and infrastructure projects in DS&S to mitigate some of this impact. The company also expects positive segment mix and cost discipline to drive EBITDA margins.
Price Performance
Shares of Versum Materials have gained 6.3% over a year against the industry’s 2.1% rise.
Zacks Rank & Stocks to Consider
Versum Materials currently carries a Zacks Rank #4 (Sell).
A few better-ranked stocks worth considering in the basic materials space include Seabridge Gold Inc. (SA - Free Report) , Israel Chemicals Ltd. (ICL - Free Report) and Franco-Nevada Corporation (FNV - Free Report) .
Seabridge Gold has an expected earnings growth rate of 20.8% for the current year and carries a Zacks Rank #1 (Strong Buy). Its shares have rallied 26% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Israel Chemicals has an expected earnings growth rate of 11.1% for the current year and carries a Zacks Rank #2 (Buy). The company’s shares have shot up 41% over the past year.
Franco-Nevada has an expected earnings growth rate of 8.7% for the current year and carries a Zacks Rank #2. Its shares have gained 8% in the past year.
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Versum Materials, Inc. recorded profit of $61.1 million or 56 cents per share in first-quarter fiscal 2019 (ended Dec 31, 2018), up more than three times from $18.7 million or 17 cents a year ago. The improvement reflects the impacts of the U.S. Tax Act.
Barring one-time items, adjusted earnings came in at 55 cents per share, which matched the Zacks Consensus Estimate.
Sales rose around 3% year over year to $339.5 million for the quarter, driven by gains in both Materials and Delivery Systems & Services (DS&S) segments. The figure, however, trailed the Zacks Consensus Estimate of $343.7 million.
Segment Highlights
Revenues at the Materials segment rose 3% year over year to $221.7 million in the reported quarter, driven by double-digit volume gains in Advanced Materials as well as higher volumes in Process Materials. Strong sales in both memory and logic segments offset softer foundry activity.
Sales at the DS&S unit went up 2% year over year to $117.2 million in the quarter on the back of continued strong equipment and installation project activities.
Financials
Versum Materials ended the quarter with cash and cash equivalents of $408 million, up around 47% year over year. Long-term debt was $973.2 million, down 0.4% year over year.
Cash from operations was $46 million for the reported quarter, up from $39 million a year-ago.
Outlook
For fiscal 2019, the company now sees sales in the range of $1,380-$1,430 million (up 1-4% year over year), down from its earlier view of $1,425-$1,475 million. Adjusted EBITDA has been forecast between $465 million and $485 million (up 4-9% year over year), also down from prior view of $475-$495 million.
The company expects slowing memory output and weakening industry capital spending environment to impact its top-line performance. However, it expects new Process of Record (“POR”) wins and infrastructure projects in DS&S to mitigate some of this impact. The company also expects positive segment mix and cost discipline to drive EBITDA margins.
Price Performance
Shares of Versum Materials have gained 6.3% over a year against the industry’s 2.1% rise.
Zacks Rank & Stocks to Consider
Versum Materials currently carries a Zacks Rank #4 (Sell).
A few better-ranked stocks worth considering in the basic materials space include Seabridge Gold Inc. (SA - Free Report) , Israel Chemicals Ltd. (ICL - Free Report) and Franco-Nevada Corporation (FNV - Free Report) .
Seabridge Gold has an expected earnings growth rate of 20.8% for the current year and carries a Zacks Rank #1 (Strong Buy). Its shares have rallied 26% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Israel Chemicals has an expected earnings growth rate of 11.1% for the current year and carries a Zacks Rank #2 (Buy). The company’s shares have shot up 41% over the past year.
Franco-Nevada has an expected earnings growth rate of 8.7% for the current year and carries a Zacks Rank #2. Its shares have gained 8% in the past year.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, wouldn't you like to know about our 10 finest buy-and-holds for the year?
From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 – 2017, they soared far above the market's +126.3%, reaching +181.9%.
This year, the portfolio features a player that thrives on volatility, an AI comer, and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs.
See Stocks Today >>
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 >>
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