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Versum Materials (VSM) Q3 Earnings & Revenues Top Estimates

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Versum Materials, Inc. (VSM - Free Report) recorded net income of $63.3 million or 58 cents per share in third-quarter fiscal 2018 (ended Jun 30, 2018), up from $52.7 million or 48 cents a year ago.

Barring one-time items, adjusted earnings came in at 63 cents per share, which beat the Zacks Consensus Estimate of 61 cents.

Sales rose around 20.3% year over year to $350 million, mainly driven by double-digit volume growth in its Advanced Materials product lines and strong volume gains in the Delivery Systems & Services (DS&S) segment. The figure also topped the Zacks Consensus Estimate of $344 million.

Versum Materials Inc. Price, Consensus and EPS Surprise

 

Segment Highlights

Revenues at the Materials segment climbed 6% year over year to $218.5 million in the reported quarter, mainly driven by double-digit volume growth in Advanced Materials.
 
Sales at the DS&S unit jumped 57% year over year to $130.7 million in the quarter on the back of continued strong growth in equipment and installation project, especially in China and Korea.

Financials

Versum Materials ended the quarter with cash and cash equivalents of $289.5 million, up around 23.4% year over year. Long-term debt was $975.2 million, down from $978 million a year ago.

Outlook

Versum Materials continues to develop technological improvement and investment opportunities which it believes will deliver above-market growth along with margin expansion in the coming years. After the successful completion of the separation process from Air Products, the company is now focused on driving profitable future growth.
 
For the fiscal, the company has narrowed its total sales guidance to the range of $1,330-$1,360 million (from the prior guidance of $1,320-$1,360 million) and adjusted EBITDA expectation to between $430 million and $445 million (from the prior view of $425-$445 million), excluding one-time costs of relocation of certain administrative and R&D personnel to Versum Materials site and implementation of its own enterprise resource planning system.

Price Performance

Shares of Versum Materials have lost 3.3% in the past three months against the industry’s 3.2% rise.



Zacks Rank & Stocks to Consider

Versum Materials currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks worth considering in the basic materials space are Celanese Corporation (CE - Free Report) , BHP Billiton Limited (BHP - Free Report) and Steel Dynamics Inc. (STLD - Free Report) .
 
Celanese has an expected long-term earnings growth rate of 10% and a Zacks Rank #1 (Strong Buy). The company’s shares have moved up 19.6% in a year. You can see the complete list of today’s Zacks #1 Rank stocks here.
 
BHP Billiton has an expected long-term earnings growth rate of 5.2% and a Zacks Rank #1. Its shares have rallied roughly 22.3% in a year’s time.
 
Steel Dynamics has an expected long-term earnings growth rate of 12% and a Zacks Rank #2 (Buy). The stock has gained 27% in the past year.

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