It has been about a month since the last earnings report for Platform Specialty Products . Shares have added about 7.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Platform Specialty due for a pullback? 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.
Platform Specialty Q3 Earnings Meet, Revenues Miss
Platform Specialty recorded a loss from continuing operations of $4.3 million or 2 cents per share in the third quarter of 2018 compared with a loss of $36.9 million or 13 cents a year ago.
Adjusted earnings per share in the quarter came in at 4 cents, which matched the Zacks Consensus Estimate.
Net sales of $489 million increased 2% year over year on 3% growth in organic sales. However, the figure missed the Zacks Consensus Estimate of $502 million.
The company’s Performance Solutions businesses achieved organic sales growth in all end markets amid certain challenges. The company witnessed weakness in some of its end-markets, especially in Asia. Currency fluctuations also unfavorably affected its results. Platform Specialty also faced unfavorable product mix pressure in the quarter.
Financial Position
Platform Specialty ended the third quarter with $252.2 million of cash and cash equivalents, down 35.4% year over year. Long-term debt was $5,390 million, up 1%.
In the third quarter, cash used in operating activities were $13.7 million. Capital expenditures totaled $8.6 million, down from $12.7 million.
Outlook
Platform Specialty said that it has made significant progress towards closing the sale of its Agricultural Solutions segment, Arysta, and expects to complete the transaction on Dec 31, 2018. The company’s Performance Solutions segment will form the foundation of the new Element Solutions.
Platform Specialty has reaffirmed its EBITDA guidance in the range of $425-$445 million for 2018. It includes $5 million of savings that will be realized in the year associated with its reorganization into a one-company structure. Savings of $20 million related to Arysta sale are forecast to be realized on a run-rate basis in 2019. However, platform specialty is facing currency headwinds and market softness in Asia, due to which the company expects EBITDA at the lower end of its guided range for 2018. Its top priorities for the rest of the year are achieving financial and operating results and finalizing its restructuring plans.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -12.5% due to these changes.
VGM Scores
At this time, Platform Specialty has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise Platform Specialty has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Why Is Platform Specialty (PAH) Up 7.7% Since Last Earnings Report?
It has been about a month since the last earnings report for Platform Specialty Products . Shares have added about 7.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Platform Specialty due for a pullback? 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.
Platform Specialty Q3 Earnings Meet, Revenues Miss
Platform Specialty recorded a loss from continuing operations of $4.3 million or 2 cents per share in the third quarter of 2018 compared with a loss of $36.9 million or 13 cents a year ago.
Adjusted earnings per share in the quarter came in at 4 cents, which matched the Zacks Consensus Estimate.
Net sales of $489 million increased 2% year over year on 3% growth in organic sales. However, the figure missed the Zacks Consensus Estimate of $502 million.
The company’s Performance Solutions businesses achieved organic sales growth in all end markets amid certain challenges. The company witnessed weakness in some of its end-markets, especially in Asia. Currency fluctuations also unfavorably affected its results. Platform Specialty also faced unfavorable product mix pressure in the quarter.
Financial Position
Platform Specialty ended the third quarter with $252.2 million of cash and cash equivalents, down 35.4% year over year. Long-term debt was $5,390 million, up 1%.
In the third quarter, cash used in operating activities were $13.7 million. Capital expenditures totaled $8.6 million, down from $12.7 million.
Outlook
Platform Specialty said that it has made significant progress towards closing the sale of its Agricultural Solutions segment, Arysta, and expects to complete the transaction on Dec 31, 2018. The company’s Performance Solutions segment will form the foundation of the new Element Solutions.
Platform Specialty has reaffirmed its EBITDA guidance in the range of $425-$445 million for 2018. It includes $5 million of savings that will be realized in the year associated with its reorganization into a one-company structure. Savings of $20 million related to Arysta sale are forecast to be realized on a run-rate basis in 2019. However, platform specialty is facing currency headwinds and market softness in Asia, due to which the company expects EBITDA at the lower end of its guided range for 2018. Its top priorities for the rest of the year are achieving financial and operating results and finalizing its restructuring plans.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -12.5% due to these changes.
VGM Scores
At this time, Platform Specialty has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise Platform Specialty has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.