It has been about a month since the last earnings report for Univar . Shares have lost about 7.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Univar due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Univar’s Q3 Earnings and Revenues Surpass Estimates
Univar 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.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 18.67% due to these changes.
VGM Scores
At this time, Univar has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Univar has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Univar (UNVR) Down 7.2% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Univar . Shares have lost about 7.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Univar due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Univar’s Q3 Earnings and Revenues Surpass Estimates
Univar 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.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 18.67% due to these changes.
VGM Scores
At this time, Univar has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Univar has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.