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Univar's (UNVR) Q3 Earnings and Revenues Surpass Estimates
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Univar Solutions Inc. recorded profits of $84.4 million or 49 cents per share in third-quarter 2021, shooting up from $28.9 million or 17 cents per share in the year-ago quarter. The company reported strong third-quarter results amid tight supply and transport challenges on strong execution and its extensive network of facilities and owned trucking fleet that have given it an edge.
Barring one-time items, earnings per share were 62 cents, up from 30 cents in the year-ago quarter. The bottom line surpassed the Zacks Consensus Estimate of 43 cents.
The company’s revenues were $2,487.9 million in the quarter, up around 23.8% year over year. The top line beat the Zacks Consensus Estimate of $2,261.6 million.
The growth in sales was attributable to a favorable impact of chemical price inflation and higher industrial demand. However, this was partly offset by the exit of the Canadian Agriculture wholesale distribution business and the divestitures of the Distrupol and Canadian Agriculture services. Univar benefited from the advancement of its Streamline 2022 (S22) program in the quarter.
Segment Review
Revenues from the USA division increased 28.9% year over year to $1,616.8 million in the quarter. The rise was primarily driven by higher industrial end-market demand and chemical price inflation.
The EMEA segment raked in revenues of $480.3 million, up 20.3% year over year. Chemical price inflation and higher industrial end-market demand were partly offset by the effects of the Distrupol divestiture.
Revenues from the Canada segment went down around 4.9% year over year to $223.3 million. The decline was mainly due to the Canadian Agriculture wholesale distribution exit and the divestiture of Canadian Agriculture services.
Revenues from the LATAM unit rose roughly 39% to $167.5 million, driven mainly by chemical price inflation.
Financials
Univar ended the quarter with cash and cash equivalents of $220.8 million, a roughly 19% year-over-year decline. Long-term debt was $2,198.8 million, down around 17.4%.
Net cash used by operating activities was $123.7 million in the third quarter, a more than 15 times leap from $8.1 million in the prior-year quarter.
Outlook
The company expects adjusted EBITDA for fourth-quarter 2021 to be in the range of $180-$190 million. It also raised its guidance for adjusted EBITDA to the band of $770-$780 million from the previously expected range of $705-$725 million for 2021. Its adjusted EBITDA was $635.8 million in 2020. Forecast for net free cash flow for the year has been lowered to the band of $200-$210 million from the previously expected $280-$300 million.
Univar expects continued strong business conditions in the fourth quarter, which has two and a half less billing days than the third quarter, and its guidance has taken this into consideration. The company is optimistic about its prospects for full-year 2021 as it has made great strides in its strategic priorities.
Moreover, its board has approved a share repurchase program authorizing it to buy back up to $500 million of its outstanding common stock over the next five years. It also forecasts continued strong liquidity and the majority of its debt obligations to mature in 2026 and beyond.
Under the S22 Program, the company is focused on improving adjusted EBITDA margins to 9% by the end of 2022 and expects to reduce leverage to 2.6x or lower by the end of 2021. Additionally, it expects to achieve the targeted $120 million in annual net synergies from the Nexeo acquisition by early 2022.
Price Performance
Univar’s shares have gained 44.1% over a year compared with the 24.2% rise of the industry.
Image: Bigstock
Univar's (UNVR) Q3 Earnings and Revenues Surpass Estimates
Univar Solutions Inc. recorded profits of $84.4 million or 49 cents per share in third-quarter 2021, shooting up from $28.9 million or 17 cents per share in the year-ago quarter. The company reported strong third-quarter results amid tight supply and transport challenges on strong execution and its extensive network of facilities and owned trucking fleet that have given it an edge.
Barring one-time items, earnings per share were 62 cents, up from 30 cents in the year-ago quarter. The bottom line surpassed the Zacks Consensus Estimate of 43 cents.
The company’s revenues were $2,487.9 million in the quarter, up around 23.8% year over year. The top line beat the Zacks Consensus Estimate of $2,261.6 million.
The growth in sales was attributable to a favorable impact of chemical price inflation and higher industrial demand. However, this was partly offset by the exit of the Canadian Agriculture wholesale distribution business and the divestitures of the Distrupol and Canadian Agriculture services. Univar benefited from the advancement of its Streamline 2022 (S22) program in the quarter.
Segment Review
Revenues from the USA division increased 28.9% year over year to $1,616.8 million in the quarter. The rise was primarily driven by higher industrial end-market demand and chemical price inflation.
The EMEA segment raked in revenues of $480.3 million, up 20.3% year over year. Chemical price inflation and higher industrial end-market demand were partly offset by the effects of the Distrupol divestiture.
Revenues from the Canada segment went down around 4.9% year over year to $223.3 million. The decline was mainly due to the Canadian Agriculture wholesale distribution exit and the divestiture of Canadian Agriculture services.
Revenues from the LATAM unit rose roughly 39% to $167.5 million, driven mainly by chemical price inflation.
Financials
Univar ended the quarter with cash and cash equivalents of $220.8 million, a roughly 19% year-over-year decline. Long-term debt was $2,198.8 million, down around 17.4%.
Net cash used by operating activities was $123.7 million in the third quarter, a more than 15 times leap from $8.1 million in the prior-year quarter.
Outlook
The company expects adjusted EBITDA for fourth-quarter 2021 to be in the range of $180-$190 million. It also raised its guidance for adjusted EBITDA to the band of $770-$780 million from the previously expected range of $705-$725 million for 2021. Its adjusted EBITDA was $635.8 million in 2020. Forecast for net free cash flow for the year has been lowered to the band of $200-$210 million from the previously expected $280-$300 million.
Univar expects continued strong business conditions in the fourth quarter, which has two and a half less billing days than the third quarter, and its guidance has taken this into consideration. The company is optimistic about its prospects for full-year 2021 as it has made great strides in its strategic priorities.
Moreover, its board has approved a share repurchase program authorizing it to buy back up to $500 million of its outstanding common stock over the next five years. It also forecasts continued strong liquidity and the majority of its debt obligations to mature in 2026 and beyond.
Under the S22 Program, the company is focused on improving adjusted EBITDA margins to 9% by the end of 2022 and expects to reduce leverage to 2.6x or lower by the end of 2021. Additionally, it expects to achieve the targeted $120 million in annual net synergies from the Nexeo acquisition by early 2022.
Price Performance
Univar’s shares have gained 44.1% over a year compared with the 24.2% rise of the industry.
Zacks Rank & Stocks to Consider
Currently, Univar carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the basic materials space include Methanex Corporation (MEOH - Free Report) , Olin Corporation (OLN - Free Report) , and Arkema S.A. (ARKAY - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Methanex has a projected earnings growth rate of 429% for the current year. The company’s shares have jumped 51.7% over a year.
Olin has a projected earnings growth rate of 740% for the current year. The company’s shares have grown 229.3% over a year.
Arkema has a projected earnings growth rate of 88.7% for the current year. The company’s shares have surged 110.3% over a year.