A month has gone by since the last earnings report for Univar (UNVR). Shares have added about 31.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Univar due for a pullback? 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 Beats Earnings and Revenue Estimates in Q1
Univar recorded a profit (on a reported basis) of $55.9 million or 33 cents per share in first-quarter 2020 against a loss of $63.9 million or 43 cents per share a year ago.
The results were driven mainly due to lower acquisition and integration-related expenses, reduced employee severance costs, the absence of the saccharin legal settlement, and the fair value adjustment on warrants.
Barring one-time items, earnings were 31 cents a share in the quarter, down from 33 cents a year ago. However, the metric surpassed the Zacks Consensus Estimate of 26 cents.
The company’s revenues were $2,211.2 million in the quarter, up 2.4% year over year. Moreover, it surpassed the Zacks Consensus Estimate of $2,076 million.
On a constant currency basis, revenues rose 3.6% year over year. Contribution from the Nexeo buyout and higher demand for products in essential end markets were partly offset by reduced demand in the global industrial markets, lower sales on account of Environmental Sciences divestiture and price deflation.
Segment Review
Revenues at the USA division rose 3.8% year over year on a reported basis to $1,357.5 million in the quarter, driven by the contributions from the Nexeo acquisition and higher demand for products in essential end markets. Gross profit rose 7.8% year over year, aided by favorable product mix.
The EMEA segment raked in revenues of $460.3 million, down 4.8% year over year, hurt by reduced demand in certain end markets. Gross profit was down 0.2% year over year.
Revenues at the Canada segment rose 4.4% year over year to $285.8 million, driven by the contributions of the Nexeo acquisition, higher demand for products in essential end markets and a more normal start to the agriculture season. Gross profit rose 15.1% year over year.
Revenues from the LATAM unit rose 12.9% to $107.6 million. Gross profit grew 21.6% year over year. The segment gained from the Nexeo acquisition and higher demand for products in essential end markets and Brazil’s agriculture sector.
Financials
Univar ended the quarter with cash and cash equivalents of $379.7 million, down 51.8% year over year. Long-term debt was $2,860.8 million, down 22.5% year over year.
Outlook
The company withdrew its 2020 adjusted EBITDA guidance due to the impacts of the coronavirus outbreak.
For 2020, it reduced its expected capital expenditure to $95-$115 million from $120-$130 million.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
VGM Scores
Currently, Univar has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, 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 D. If you aren’t focused on one strategy, this score is the one you should be interested in.
Outlook
Univar has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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