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Univar (UNVR) Earnings and Revenues Lag Estimates in Q4

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Univar Solutions Inc. UNVR slipped to a loss (on a reported basis) of $55.1 million or 33 cents per share in fourth-quarter 2019, from a profit of $1.2 million or a penny per share a year ago.

Barring one-time items, earnings were 29 cents a share in the quarter, down from 33 cents a year ago. It also lagged the Zacks Consensus Estimate of 33 cents. The results were impacted by reduced demand in global industrial markets.

The chemical maker’s revenues were $2,155 million in the quarter, up roughly 9% year over year. However, it lagged the Zacks Consensus Estimate of $2,273 million.

On a constant currency basis, revenues rose around 10% year over year. Contribution from the Nexeo buyout was partly offset by reduced demand for chemicals and ingredients from global industrial markets, softness in the energy markets and chemical price deflation in the United States, Canada and EMEA.

Segment Review

Revenues at the USA division rose around 17% year over year on a reported basis to $1,353.9 million in the quarter, driven by the contributions of the Nexeo acquisition, partly masked by chemical price deflation and reduced demand for chemicals. Gross profit rose around 23% year over year, aided by favorable product and end-market mix.

Revenues at the Canada segment fell roughly 3% year over year to $256.2 million, impacted by weakness in the Canadian energy markets and chemical price deflation. Gross profit rose around 9% year over year.

The EMEA segment raked in revenues of $418.9 million, down around 8% year over year, hurt by chemical price deflation. Gross profit was down around 4% year over year.

Revenues from the LATAM unit rose roughly 36% to $126 million. Gross profit jumped around 73% year over year. The segment gained from the Nexeo acquisition and an increase in Mexico's energy sales.

Full-Year Results

Loss (as reported) for 2019 was 61 cents per share, compared with earnings of $1.21 per share a year ago. Adjusted earnings were $1.40 per share, down from $1.62 in 2018.

Revenues were $9,286.9 million for the full year, up around 8% year over year.


Univar ended 2019 with cash and cash equivalents of $330.3 million, up around 172% year over year. Long-term debt was $2,688.8 million, up around 15% year over year.

Net cash provided by operating activities was $363.9 million for 2019, up from $289.9 million a year ago.


Moving ahead, Univar envisions sustained weakness in end markets and a challenging competitive environment in the first half of 2020. It expects the first quarter to be the weakest of the year.

For 2020, the company sees adjusted EBITDA of $700-$740 million. Univar expects adjusted EBITDA of $150-$160 million for the first quarter of 2020.

Univar also expects to generate free cash flow of $120-$170 million for full year 2020.

Price Performance

Univar’s shares have lost 16.5% over a year against roughly 32% decline recorded by its industry.



Zacks Rank & Stocks to Consider

Univar currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space include Daqo New Energy Corp. DQ, NovaGold Resources Inc. NG and Commercial Metals Company CMC.

Daqo New Energy has projected earnings growth rate of 353.7% for 2020 and sports a Zacks Rank #1 (Strong Buy). The company’s shares have rallied roughly 93% in a year’s time. You can see the complete list of today’s Zacks #1 Rank stocks here.

NovaGold has projected earnings growth rate of 11.1% for the current fiscal and carries a Zacks Rank #2 (Buy). The company’s shares have surged around 131% over a year.

Commercial Metals has estimated earnings growth rate of 20.7% for the current fiscal and carries a Zacks Rank #2. The company’s shares have shot up roughly 16% in a year’s time.

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