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W. R. Grace (GRA) Tops Q4 Earnings Estimates, Lags Revenues

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W. R. Grace & Co. GRA slipped to a loss of $28.3 million or 42 cents per share in fourth-quarter 2019 from a profit of $69.1 million or $1.03 per share a year ago. The bottom line in the reported quarter was hurt by a mark-to-market pension adjustment and charges related to legacy liabilities.

Barring one-time items, adjusted earnings for the quarter were $1.31 per share, which surpassed the Zacks Consensus Estimate of $1.27.

The company’s revenues fell roughly 3% year over year to $504.5 million in the quarter. Moreover, it missed the Zacks Consensus Estimate of $508.2 million.

Revenues were hurt by reduced sales volumes and the weak global manufacturing environment that more than offset better pricing across all businesses.

W.R. Grace & Co. Price, Consensus and EPS Surprise


W.R. Grace & Co. Price, Consensus and EPS Surprise

W.R. Grace & Co. price-consensus-eps-surprise-chart | W.R. Grace & Co. Quote


Full-Year Results

For 2019, earnings were $1.89 per share, down from $2.49 per share a year ago. The decline is due to charges associated with pension adjustments and legacy liabilities. Adjusted earnings rose 5.8% year over year to $4.38 per share.

Revenues were $1,958.1 million for the full year, up around 1% year over year.

Segment Highlights

Revenues from the Catalysts Technologies unit fell around 4% year over year (down 3% on a constant currency basis) to $389.9 million in the reported quarter. Sales were impacted by lower volumes that more than offset higher pricing.

The Materials Technologies segment raked in sales of $114.6 million in the quarter, down 0.3% year over year. Sales rose 2% on constant currency, aided by better pricing.


The company ended 2019 with cash and cash equivalents of $282.5 million, up around 41% year over year. Long-term debt was $1,957.3 million at the end of the year, essentially flat year over year.

The company returned $102 million to shareholders through dividends and share repurchases in 2019.


Moving ahead, W. R. Grace sees slow sales growth in 2020 amid the uncertain global manufacturing environment. However, it expects stronger earnings and cash flow growth.

Factoring in the weak manufacturing environment and the potential effects of the coronavirus, the company expects flat to 3% sales growth in 2020.

W. R. Grace also expects adjusted earnings of $4.73-$4.91 per share for 2020, reflecting 8-12% year-over-year growth.

Price Performance

Shares of W. R. Grace have lost 14.2% over a year against the industry’s rise of 8.3%.



Zacks Rank & Key Picks

W. R. Grace currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the basic materials space include Daqo New Energy Corp. DQ, Royal Gold, Inc. RGLD and Pretium Resources Inc. (PVG - Free Report) .

Daqo New Energy has projected earnings growth rate of 326.3% for 2020 and sports a Zacks Rank #1 (Strong Buy). The company’s shares have rallied roughly 70% in a year’s time. You can see the complete list of today’s Zacks #1 Rank stocks here.

Royal Gold has estimated earnings growth rate of 83.5% for fiscal 2020 and carries a Zacks Rank #1. The company’s shares have shot up roughly 28% in a year’s time.

Pretium Resources has projected earnings growth rate of 106.9% for 2020 and carries a Zacks Rank #2 (Buy). The company’s shares have rallied around 31% over a year.

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