ATLANTA (AP) -- Zep posted a 27 percent decline in net income for the third quarter Tuesday as the chemical maker repositions itself and cuts inventory.
Chairman and CEO John Morgan said the goal of diversifying the Atlanta company is on track and that investments in innovation and market expansion will precede higher sales.
"Despite these investments, we are currently experiencing organic revenue declines and expect this to continue over the next twelve months while we accelerate our focus on business complexity reduction," Morgan said. "We will therefore restructure the business to bring costs in-line with our revenue expectations and improve return on invested capital."
For the three-month period ended May 31, Zep earned $6.3 million, or 28 cents per share, down from $8.6 million, or 39 cents per share, last year and well short of the 42 cents per-share that Wall Street was looking for.
Revenue rose 5 percent to $186 million as $17.9 million in contributions from acquisitions helped to offset declining revenue in existing businesses. That too, however, was short of analyst projections for revenue of $196.5 million, according to a poll by FactSet.
Shares of Zep Inc. are up more than 14 percent this year and hit a 52-week high last month.