Veritiv (VRTV) Shares Gain on Q1 Earnings Beat, Upbeat View
Shares of Veritiv Corporation VRTV have gained 5% since the company reported impressive first-quarter 2021 results on May 5. A raised 2021 guidance for 2021 and a record low leverage ratio have contributed to the upbeat sentiment. The company delivered earnings per share of $1.28 per share in the quarter, marking a turnaround from a loss per share of 2 cents in the year-ago quarter. The upside was driven by continued Packaging sales growth and operational efficiencies implemented across the company. Also, the bottom line beat the Zacks Consensus Estimate of 2 cents by a wide margin.
Veritiv’s total revenues declined 8.7% year over year to $1,559 million.
Cost of sales was down 8.9% year on year to $1,238 million during the reported quarter. Gross profit slid 8% year over year to $321.2 million. Gross margin was 20.6% in the first quarter of 2021 compared with 20.4% in the prior-year quarter.
Veritiv Corporation Price, Consensus and EPS Surprise
Veritiv Corporation price-consensus-eps-surprise-chart | Veritiv Corporation Quote
Adjusted EBITDA was a record $59.5 million, reflecting a 64% improvement from $36.2 million reported in the year-earlier quarter. Adjusted EBITDA margin expanded 170 basis points year over year to 3.8%.
Financial Position
Veritiv had cash and cash equivalents of $109 million as of Mar 31, 2021, down from $121 million held as on Dec 31, 2021. Long-term debt was at $600.7 million as of Mar 31, 2021, up from $589.1 million as of Dec 31, 2020. The company ended the quarter with record low net leverage ratio of 2.0x.
Net cash provided by operating activities for the first quarter of 2021 was $13.2 million compared with $84.8 million in the prior-year quarter. Veritiv repurchased approximately $25 million of its shares in the first quarter as part of its previously authorized share repurchase program.
Guidance for 2021
Backed by the strong first-quarter performance, Veritiv raised its guidance for 2021. The company expects income before taxes for 2021 in the range of $95 million to $115 million. It had reported income before taxes of $43 million in 2020. Veritiv expects adjusted EBITDA in the range of $220 million to $240 million this year. The mid-point of the EBITDA guidance indicates growth of 23% from $187.6 million in 2020.
Free cash flow for 2021 is expected to be at least $75 million with capital expenditures at around $35 million.
Price Performance
Shares of Veritiv have soared 380.3% over the past year, compared with the industry’s rally of 90.1%.
Zacks Rank & Other Stocks to Consider
Veritiv currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Some other top-ranked stocks in the basic materials space include Celanese Corp. CE, Dow Inc. DOW and Southern Copper Corporation SCCO. All of these stocks flaunt a Zacks Rank #1 currently.
Celanese has an expected earnings growth rate of 68.3% for the current fiscal year. The company’s shares have rallied around 109% over the past year.
Dow has a projected earnings growth rate of 261.6% for the current fiscal year. The company’s shares have gained roughly 103% in a year’s time.
Southern Copper has a projected earnings growth rate of 96.7% for the current fiscal year. The company’s shares have soared nearly 137% in the past year.
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