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MarketScreener Homepage  >  Equities  >  Nyse  >  Univar Inc       

UNIVAR INC

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Univar : Reports 2018 Fourth Quarter and Full Year Financial Results, Issues Guidance for First Quarter 2019 and Full Year

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02/11/2019 | 09:38am EST

DOWNERS GROVE - Univar Inc. (NYSE: UNVR) ('Univar'), a global chemical and ingredients distributor and provider of value-added services, announced today its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2018.

As previously announced, Univar has established a special meeting date of February 27, 2019 to consider and vote on the proposals necessary to complete its previously announced acquisition of Nexeo Solutions, Inc. (NASDAQ: NXEO) ('Nexeo Solutions'). Subject to customary closing conditions, including approval by certain regulatory authorities and approval of the transaction by Univar shareholders, the transaction is expected to be completed in the first quarter of 2019. The transaction has received regulatory approvals from the U.S., the EU, and Canada.

Upon completion of the merger, Univar intends to hold a webcast with investors to discuss its recent business results for 2018 and pro-forma 2019 guidance for the combined entities. The webcast will be accessible on the Investor Relations section of Univar's website at https://investor.univar.com.

Fourth Quarter 2018 Highlights

Univar reported net income of $1.2 million, or $0.01 per share, compared to net income of $27.0 million, or $0.19 per share in the prior year fourth quarter. Net income in the current year fourth quarter included a non-cash, pension mark-to-market loss of $34.2 million or $0.18 per share, and $15.1 million or $0.09 per share for acquisition and integration related expenses.

Adjusted earnings per share of $0.33 and Adjusted EBITDA of $144.0 million were essentially flat with the prior year.

Univar improved its leverage ratio to 3.5x from 4.1x in the prior year fourth quarter reflecting growth in Adjusted EBITDA and a $169.8 million reduction in net debt.

Full Year 2018 Financial, Operating and Strategic Highlights

Univar reported net income of $172.3 million, or $1.21 per share, compared to net income of $119.8 million, or $0.85 per share in the prior year.

Adjusted earnings per share increased 16.5 percent to $1.62 per share from $1.39 per share in the prior year.

Consolidated gross margin expanded by 10 basis points, improving gross profit by $94.6 million, or 5.2 percent compared to the prior year.

Adjusted EBITDA grew 7.8 percent to $640.4 million, and Adjusted EBITDA margin expanded 20 basis points to 7.4 percent from the prior year.

Adjusted EBITDA and Adjusted EBITDA margin increased in all operating segments with the exception of Canada, which was challenged by a second year of adverse weather conditions, impacting the Company's agriculture business.

Improved USA sales force execution resulted in USA volume growth for the first time since 2014.

Announced the acquisition of Nexeo Solutions, accelerating transformation and growth.

Reduced leverage ratio to 3.5x Net Debt / Adjusted EBITDA, strengthening the balance sheet.

'We continued to improve on our global execution in the fourth quarter despite challenges in Canada and softer than forecasted demand from most industrial end markets,' said David Jukes, president and chief executive officer. 'In particular, improved sales force and operational execution in our USA segment drove Adjusted EBITDA growth in a quarter when customer demand and purchasing behavior was dampened by macroeconomic uncertainty.'

'We remain focused on our strategic growth priorities,' Jukes continued, 'Including our ongoing USA transformation and progress toward the close of our Nexeo acquisition, which we expect will significantly enhance and accelerate our ability to grow and drive shareholder value. We are confident our strategy is working and is positioning Univar for long-term, sustainable growth.'

Company Performance

The results of Univar's operating performance are described below and, unless otherwise indicated, are a comparison of fourth quarter 2018 results with fourth quarter 2017 results, including Adjusted EBITDA, which is reconciled to reported net income in the accompanying supplemental financial information.

USA - Adjusted EBITDA increased 2.4 percent to $88.6 million, which was the eighth consecutive quarter of growth. USAsegment sales increased 2.8 percent on volumes that were equal to prior year primarily due to cautious buying behavior from customers throughout the quarter. The Company saw weak demand in October, followed by a small improvement in November, only to see demand soften again in December. Gross margin expanded 10 basis points to 23.1 percent reflecting continued margin management and improving execution, despite an unfavorable shift in product mix and out-performance in bulk commodity chemicals. Adjusted EBITDA margin decreased 10 basis points to 7.6 percent largely due to higher freight expense as a percentage of sales resulting from a higher mix of bulk chemical business. Excluding the impact of increased bulk chemical business on mix, outbound freight expense would have decreased as a percentage of sales.

Canada - Soft demand in Western Canada energy markets and persistent challenges in the weather-impacted agriculture business negatively effected results for the Canada segment. Gross margin decreased 190 basis points to 19.5 percent as a result of lower margins on certain commodity chemicals and agrochemical products. Adjusted EBITDA decreased 23.0 percent to $21.4 million, and Adjusted EBITDA margin decreased 210 basis points to 8.1 percent.

EMEA - Continued double digit growth in the segment's Focused Industries line of business and favorable product mix drove 7.9 percent Adjusted EBITDA growth, excluding the impact of currency, despite signs of economic uncertainty. Gross margin increased 30 basis points to 23.0 percent and Adjusted EBITDA margin expanded 20 basis points due to improved mix and effective cost management.

Rest of World - Strong performance in Mexico was offset by softness, particularly late in the quarter, in Brazil. Adjusted EBITDA grew 3.8 percent on a currency neutral basis, but fell 6.4 percent to $7.3 million on a reported basis reflecting the change in foreign exchange rates. Gross margin decreased 50 basis points to 22.3 percent and Adjusted EBITDA margin decreased 20 basis points to 7.9 percent as a result of lower margins on certain products.

Outlook

The following is an overview of management's expectations for Univar's financial performance for the first quarter and full year 2019 on a stand-alone basis. Upon completion of the Nexeo Solutions acquisition, Univar will issue pro-forma 2019 guidance for the combined Company.

For the full year 2019, on a stand-alone basis, Univar expects to generate Adjusted EBITDA roughly equal to its results for 2018 of $640.4 million. The Company expects a significant increase in Free Cash Flow from $195.3 million in 2018 to $250 million to $300 million.

Use of Non-GAAP Measures

The Company's management believes that certain financial measures that do not comply with accounting principles generally accepted in the United States ('GAAP') provide relevant and meaningful information concerning the ongoing operating results of the Company. These financial measures include gross profit (exclusive of depreciation), gross margin (exclusive of depreciation), Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income and Adjusted earnings per share. Such non-GAAP financial measures are used from time to time herein but should not be viewed as a substitute for GAAP measures of performance. Reconciliations of non-GAAP measures to GAAP are provided in Schedules B and E.

The Company's management has provided Adjusted earnings per share guidance which excludes certain nonrecurring costs and expenses. While the Company expects that these nonrecurring costs and expenses will occur in the future, due to the uncertain nature and variability of these items, such as market changes affecting our defined benefit plans and foreign currency movements, it is not possible at this time, without unreasonable efforts, to estimate the amount or significance of these nonrecurring costs and expenses that may be included in projected GAAP earnings per share. The Company's management believes that these nonrecurring costs and expenses are not representative of the Company's underlying business performance and that Adjusted earnings per share provides the best estimate of future performance.

About Univar

Founded in 1924, Univar (NYSE: UNVR) is a global chemical and ingredients distributor and provider of value-added services, working with leading suppliers worldwide. Supported by a comprehensive team of sales and technical professionals with deep specialty and market expertise, Univar operates hundreds of distribution facilities throughout North America, Western Europe, Asia-Pacific and Latin America. Univar delivers tailored customer solutions through a broad product and services portfolio sustained by one of the most extensive industry distribution networks in the world.

Forward-Looking Statements

This press release includes certain statements relating to future events and our intentions, beliefs, expectations, and predictions for the future which are 'forward-looking statements' within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control. We caution you that the forward-looking information presented in this press release is not a guarantee of future events or results, and that actual events or results may differ materially from those made in or suggested by the forward-looking information contained in this press release. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as 'may,' 'plan,' 'seek,' 'comfortable with,' 'will,' 'expect,' 'intend,' 'estimate,' 'anticipate,' 'believe' or 'continue' or the negative thereof or variations thereon or similar terminology. Any forward-looking information presented herein is made only as of the date of this press release, and we do not undertake any obligation to update or revise any forward-looking information to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

Contact:

David Lim

Tel: +1 844-632-1060

Email: IR@univar.com

(C) 2019 Electronic News Publishing, source ENP Newswire

Stocks mentioned in the article
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NEXEO SOLUTIONS INC 0.00%End-of-day quote.15.60%
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Managers
NameTitle
David C. Jukes President, Chief Executive Officer & Director
Stephen D. Newlin Executive Chairman
Carl J. Lukach Chief Financial Officer & Executive Vice President
Richard P. Fox Independent Director
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