A month has gone by since the last earnings report for Univar (UNVR - Free Report) . Shares have lost about 2.4% 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 its most recent earnings report in order to get a better handle on the important catalysts.
Univar's Earnings Trounce Estimates in Q1, Sales Lag
Univar slipped to a loss (on a reported basis) of $63.9 million or 43 cents per share in first-quarter 2019, from a profit of $65.4 million or 46 cents a year ago. The bottom line in the reported quarter includes transaction-related fees of $50.1 million, integration-related expenses of $38.1 million and Saccharin legal settlement charges of $62.5 million.
Barring one-time items, earnings came in at 33 cents a share in the quarter, down from 42 cents a year ago. The results topped the Zacks Consensus Estimate of 23 cents.
The company’s revenues were $2,160 million in the quarter, essentially flat year over year, falling shy of the Zacks Consensus Estimate of $2,248.5 million.
On a constant currency basis, revenues rose around 3% year over year. Gains in the company’s U.S. business was masked by soft Canadian energy sector demand and unfavorable currency impacts.
Revenues at the USA division increased around 9% year over year on a reported basis to $1,307.2 million in the quarter, driven by the Nexeo acquisition, higher average selling prices and better sales force execution. Gross profit rose around 10% year over year to $307.3 million, helped by favorable product mix.
Revenues at the Canada segment dropped roughly 13% year over year to $273.8 million. Gross profit fell around 14% year over year to $53.5 million in the quarter owing to reduced margins on certain commodity chemicals. The segment faced headwinds from lower demand from the energy sector.
The EMEA segment raked in sales of $483.7 million, down 10% year over year. Gross profit was down 6% year over year to $116.2 million.
Sales from the LATAM unit declined roughly 6% to $95.3 million. Gross profit fell around 9% year over year to $19.4 million. Higher prices and better sales force execution were offset by reduced volumes due to weak economic conditions and certain product shortages.
Univar ended the quarter with cash and cash equivalents of $788 million, up nearly seven-fold year over year. Long-term debt was $3,694 million, up around 38% year over year.
For 2019, Univar continues to expect adjusted EBITDA of between $740 million and $760 million. The projected figure reflects 10-months earnings from the Nexeo Chemicals business and net realized synergies worth roughly $10 million. The company also expects to generate $300-$350 million in free cash flow in 2019.
Univar also expects adjusted EBITDA of between $195 million and $200 million for the second quarter of 2019, up from $173.1 million it earned a year ago.
How Have Estimates Been Moving Since Then?
Fresh estimates followed a flat path over the past two months.
Currently, Univar has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.
Univar has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.