U.S. Markets closed

Versum Materials (VSM) Q2 Earnings Meet, Sales Lag Estimates

Zacks Equity Research

Versum Materials, Inc. VSM recorded profit of $50.4 million or 46 cents per share in second-quarter fiscal 2019 (ended Mar 31, 2019), down 18% from $61.6 million or 56 cents a year ago. The bottom line in the reported quarter was hurt by transaction- related expenses, higher taxes and lower revenues.

Barring one-time items, adjusted earnings came in at 57 cents per share, which matched the Zacks Consensus Estimate.

Sales fell around 4% year over year to $326.2 million for the quarter, affected by lower sales in both Materials and Delivery Systems & Services (DS&S) segments. The figure, trailed the Zacks Consensus Estimate of $337.5 million.

Versum Materials Inc. Price, Consensus and EPS Surprise

Versum Materials Inc. Price, Consensus and EPS Surprise

Versum Materials Inc. price-consensus-eps-surprise-chart | Versum Materials Inc. Quote

Segment Highlights

Revenues at the Materials segment edged down 1% year over year to $216.5 million in the reported quarter as volume growth was masked by unfavorable price/mix and currency impacts. Performance was impacted by weaker demand in foundry.

Sales at the DS&S unit dropped 10% year over year to $109.1 million in the quarter, affected by weaker demand and project timing.

Financials

Versum Materials ended the quarter with cash and cash equivalents of $390.8 million, up around 54% year over year. Long-term debt was $972.2 million, down 0.4% year over year.

Cash from operations was $73.3 million for six months ended Mar 31, up from $56.5 million a year-ago.

Outlook

Versum Materials, in April 2019, entered into a definitive merger deal with Merck KGaA. The merger is expected to create a leading electronic materials player focused on the semiconductor and display industries. The companies are working towards closing the transaction in second-half 2019.

Versum Materials sees sales in the range of $1.38-$1.43 billion for fiscal 2019 (up 1-4% year over year). Adjusted EBITDA has been forecast between $465 million and $485 million (up 4-9% year over year).

Price Performance

Shares of Versum Materials have gained 31.9% over a year compared with the industry’s 0.9% rise.



Zacks Rank and Stocks to Consider

Versum Materials currently carries a Zacks Rank #4 (Sell).

Better-ranked stocks in the basic materials space include AngloGold Ashanti Limited AU, Flexible Solutions International Inc. FSI and Air Products and Chemicals, Inc. APD.

AngloGold has an expected earnings growth rate of 86.8% for the current year and carries a Zacks Rank #1 (Strong Buy). The company’s shares have shot up around 38% over the past year. You can see the complete list of today’s Zacks #1 Rank stocks here .

Flexible Solutions has an expected earnings growth rate of 171.4% for the current year and carries a Zacks Rank #2 (Buy). Its shares have rallied roughly 88% in the past year.

Air Products has an expected earnings growth rate of 10.3% for the current fiscal year and carries a Zacks Rank #2. Its shares have gained around 24% in the past year.

Will you retire a millionaire?

One out of every six people retires a multimillionaire. Get smart tips you can do today to become one of them in a new Special Report, “7 Things You Can Do Now to Retire a Multimillionaire.”

Click to get it free >>