Univar (UNVR) Reports In-Line Q3 EPS

Univar (NYSE: UNVR) reported Q3 EPS of $0.36, in-line with the analyst estimate of $0.36. Revenue for the quarter came in at $2.39 billion versus the consensus estimate of $2.45 billion.

Third Quarter 2019 Highlights

• Earnings per diluted share of $0.01, compared to $0.35 per diluted share, in the prior year third quarter. The current quarter increase from the addition of Nexeo\'s earnings and better operating performance was more than offset by the impact of taxes ($0.18), costs to integrate Nexeo ($0.07), and non-cash charges ($0.05).
• Adjusted earnings per diluted share of $0.36 compared to $0.40 in the prior year third quarter.
• Adjusted EBITDA grew 17.3 percent to $184.2 million, and Adjusted EBITDA margin expanded 30 basis points to 7.7 percent from the prior year.
• Net cash provided by operating activities increased to $214.7 million from $46.4 million, compared to third quarter last year, driven by lower net working capital as well as improved net working capital efficiency. Net debt decreased $165.4 million from the second quarter and leverage ratio of 3.9x decreased from 4.1x at June 30, 2019.
• Full year outlook for Adjusted EBITDA revised to a range of $700 million to $725 million from the previous estimate of $725 million to $740 million, as increased earnings from legacy Nexeo and synergies are partially offset by further contraction of global industrial market demand for chemicals and ingredients.

"During the quarter, we controlled the controllables, executed well and delivered solid financial results in a challenging, decelerating demand environment," said David Jukes, president and chief executive officer. "We made substantial progress on the integration of Nexeo, including a successful, seamless first wave systems migration, and roll-out of realigned sales territories to our newly consolidated, energized U.S. sales force. We remain focused on the multiple levers that are in our control to drive growth for the long term."

"Our operating efficiency continues to improve, reflecting the growing amount of cost savings from integrating the legacy Nexeo business, as well as strong margin management and prudent cost control," added Carl Lukach, executive vice president and chief financial officer. "Our resilient business model with counter-cyclical cash flow produced significantly higher net cash from operating activities in the quarter, allowing us to further reduce our debt despite weak end-market demand."

Outlook

The growth the Company is experiencing from the Nexeo acquisition, rising synergies, and its sustained improvement in operating performance is being partially offset by the current global industrial slowdown. At the beginning of 2019, the Company\'s outlook assumed demand for chemicals and ingredients from industrial end markets would be about equal to 2018. However, demand has contracted progressively to levels lower than 2018. Taking all of this into account, and the Company\'s sales results in October, the Company now projects full-year Adjusted EBITDA to be within a range of $700 million to $725 million compared to its prior forecast of $725 million to $740 million. Cash flow, however, remained strong in the third quarter, reflecting the counter-cyclical nature of the business model. The Company reaffirms its free cash flow forecast of $275 million to $325 million, including payment of the $62.5 million legal settlement reported in the first quarter and before integration and transaction costs.

For the fourth quarter of 2019, the Company expects Adjusted EBITDA to be between approximately $155 million and $180 million, up from $144.0 million earned in the fourth quarter of 2018.

For earnings history and earnings-related data on Univar (UNVR) click here.

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