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Univar's (UNVR) Earnings Beat, Sales Miss Estimates in Q2
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Univar Solutions Inc. recorded a profit (on a reported basis) of $1.8 million or a penny per share in second-quarter 2020, down from $16.3 million or 10 cents per share in the year-ago quarter.
Barring one-time items, earnings per share were 33 cents, down from 42 cents in the year-ago quarter. However, the figure surpassed the Zacks Consensus Estimate of 24 cents.
The company’s revenues were $2,009.2 million in the quarter, down 22.3% year over year. It trailed the Zacks Consensus Estimate of $2,125 million.
On a constant-currency basis, revenues fell 20.6% year over year.
Revenues in the USA division fell 27.2% year over year on a reported basis to $1,169.4 million in the quarter. The downside was due to lower industrial end market demand as well as the Environmental Sciences divestiture, price deflation and energy headwinds. These were partly offset by higher demand for products in essential end markets. Gross profit fell 19.1% year over year.
The EMEA segment raked in revenues of $409.6 million, down 10.5% year over year. The downside was caused by reduced industrial and end markets demand. Gross profit was down 3.3% year over year.
Revenues in the Canada segment fell 18.1% year over year to $331.5 million. The downside was due to lower industrial end market demand as well as the Environmental Sciences divestiture, price deflation and energy headwinds. Gross profit fell 18.8% year over year.
Revenues from the LATAM unit fell 15.4% to $98.7 million. Gross profit also dropped 0.8% year over year.
Financials
Univar ended the second quarter with cash and cash equivalents of $547.4 million, up nearly 400% year over year. Long-term debt was $2,902.1 million, down 6.9% year over year.
Net cash provided by operating activities was $151.7 million in the second quarter.
Outlook
As disclosed earlier, the company withdrew its 2020 adjusted EBITDA guidance due to the evolving and dynamic implications of the coronavirus pandemic on its business as well as the macro-economic environment.
Univar is actively managing its expenses and trying to reduce costs to maintain its financial strength. Further, these savings are expected to generate more than $40 million in cost reductions for 2020, which are incremental to the net synergies expected from the Nexeo acquisition of $35 million. It expects to achieve $120 million in annual Nexeo net synergies by 2022.
Price Performance
Univar’s shares have lost 13.5% in a year compared with 3.4% decline recorded by the industry.
Equinox Gold has an expected earnings growth rate of 255.7% for 2020. The company’s shares have surged 110.3% in the past year.
Harmony Gold has an expected earnings growth rate of 264.3% for fiscal 2020. Its shares have returned 125.1% in the past year.
Koninklijke has an expected earnings growth rate of 0.8% for 2020. The company’s shares have gained 22.9% in the past year.
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Univar's (UNVR) Earnings Beat, Sales Miss Estimates in Q2
Univar Solutions Inc. recorded a profit (on a reported basis) of $1.8 million or a penny per share in second-quarter 2020, down from $16.3 million or 10 cents per share in the year-ago quarter.
Barring one-time items, earnings per share were 33 cents, down from 42 cents in the year-ago quarter. However, the figure surpassed the Zacks Consensus Estimate of 24 cents.
The company’s revenues were $2,009.2 million in the quarter, down 22.3% year over year. It trailed the Zacks Consensus Estimate of $2,125 million.
On a constant-currency basis, revenues fell 20.6% year over year.
Univar Inc. Price, Consensus and EPS Surprise
Univar Inc. price-consensus-eps-surprise-chart | Univar Inc. Quote
Segment Review
Revenues in the USA division fell 27.2% year over year on a reported basis to $1,169.4 million in the quarter. The downside was due to lower industrial end market demand as well as the Environmental Sciences divestiture, price deflation and energy headwinds. These were partly offset by higher demand for products in essential end markets. Gross profit fell 19.1% year over year.
The EMEA segment raked in revenues of $409.6 million, down 10.5% year over year. The downside was caused by reduced industrial and end markets demand. Gross profit was down 3.3% year over year.
Revenues in the Canada segment fell 18.1% year over year to $331.5 million. The downside was due to lower industrial end market demand as well as the Environmental Sciences divestiture, price deflation and energy headwinds. Gross profit fell 18.8% year over year.
Revenues from the LATAM unit fell 15.4% to $98.7 million. Gross profit also dropped 0.8% year over year.
Financials
Univar ended the second quarter with cash and cash equivalents of $547.4 million, up nearly 400% year over year. Long-term debt was $2,902.1 million, down 6.9% year over year.
Net cash provided by operating activities was $151.7 million in the second quarter.
Outlook
As disclosed earlier, the company withdrew its 2020 adjusted EBITDA guidance due to the evolving and dynamic implications of the coronavirus pandemic on its business as well as the macro-economic environment.
Univar is actively managing its expenses and trying to reduce costs to maintain its financial strength. Further, these savings are expected to generate more than $40 million in cost reductions for 2020, which are incremental to the net synergies expected from the Nexeo acquisition of $35 million. It expects to achieve $120 million in annual Nexeo net synergies by 2022.
Price Performance
Univar’s shares have lost 13.5% in a year compared with 3.4% decline recorded by the industry.
Zacks Rank & Key Picks
Univar currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space include Equinox Gold Corp. (EQX - Free Report) , Harmony Gold Mining Company Limited (HMY - Free Report) and Koninklijke DSM NV , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Equinox Gold has an expected earnings growth rate of 255.7% for 2020. The company’s shares have surged 110.3% in the past year.
Harmony Gold has an expected earnings growth rate of 264.3% for fiscal 2020. Its shares have returned 125.1% in the past year.
Koninklijke has an expected earnings growth rate of 0.8% for 2020. The company’s shares have gained 22.9% in the past year.
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Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.3% per year.
These 7 were selected because of their superior potential for immediate breakout.
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