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Univar (UNVR) Selected as Distributor for BASF's Baxxodur

Zacks Equity Research

Univar Inc. UNVR announced that it has been selected as BASF's authorized Midwest United States distributor for Baxxodur polyetheramine curing agents and chain extenders.

Notably, BASF markets a wide array of amine-based curing agents for professional epoxy resin and polyurea processing under the Baxxodur brand.

Univar’s expansive distribution network along with in-depth industry knowledge enables it to represent these specialty products in the coatings, adhesives, sealants and elastomers (CASE) markets.

Moreover, the distribution deal provides a great opportunity to Univar for adding a highly complementary product to its CASE portfolio.

Univar’s shares have lost 32.8% in the past year compared with the 44.1% decline recorded by its industry.

In second-quarter 2019 earnings call, the company revised its adjusted EBITDA forecast considering lower-than-expected demand for chemicals and ingredients, higher-than-expected net cost synergies from Nexeo and outlook from many supplier partners. It now expects adjusted EBITDA between $725 million and $740 million compared with the previous view of $740 million and $760 million.

Univar is progressing well with the integration of Nexeo's chemical distribution customers, suppliers and support functions. The company now sees higher cost-saving synergies from Nexeo than what it had originally anticipated. It has raised guidance for annual net synergy from $100 million to $120 million (before tax). Univar expects to achieve $20 million in net synergies this year, higher than the initial expectations of $10 million.

Zacks Rank & Key Picks

Univar currently carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the basic materials space are Kinross Gold Corp. KGC, Alamos Gold Inc. AGI and Arconic Inc. ARNC, all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Kinross has an expected earnings growth rate of 150% for 2019. The company’s shares have surged 72.3% in the past year.

Alamos Gold has projected earnings growth rate of 320% for the current year. The company’s shares have rallied 68.6% in a year’s time.

Arconic has an estimated earnings growth rate of 50% for the current year. Its shares have moved up 15.2% in the past year.

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