W.R. Grace & Co. Earnings: Revenue Falls After Four Straight Increases, Net Income Drops

W.R. Grace & Co. (NYSE:GRA) reported its results for the third quarter. W.R. Grace & Company is engaged in the production and sale of specialty chemicals and specialty materials on a global basis through its two operating segments, Grace Davison and Grace Construction Products.

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W.R. Grace & Co. Earnings Cheat Sheet

Results: Net income for W.R. Grace & Co. fell to $75.5 million (99 cents per share) vs. $81.3 million ($1.07 per share) a year earlier. This is a decline of 7.1% from the year-earlier quarter.

Revenue: Fell 10.1% to $776.6 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: W.R. Grace & Co. reported adjusted net income of $1.04 per share. By that measure, the company beat the mean estimate of $1 per share. It fell short of the average revenue estimate of $816.2 million.

Quoting Management: “Our results were in line with our plan,” stated Fred Festa, Grace’s Chairman and Chief Executive Officer. “All three of our operating segments improved base pricing and increased sales volumes as strong growth in the emerging regions offset weaker demand in the advanced economies. Our disciplined approach to productivity, cost control and working capital improved earnings and cash flow in the quarter.”

Key Stats:

A year-over-year revenue decrease last quarter breaks a four-quarter streak of revenue increases. The best quarter in that span was the third quarter of the last fiscal year, which saw revenue rise 26.7%.

The company has now surpassed analyst estimates for four quarters in a row. It beat the mark by 6 cents in the second quarter, by 7 cents in the first quarter, and by one cent in the fourth quarter of the last fiscal year.

The company has now seen net income fall in each of the last two quarters. In the second quarter, net income fell 8.6% from the year-earlier quarter.

The company’s cost of sales fell 10.4% from a year earlier to $491.8 million. Last quarter, cost of sales was 63.3% of revenue versus 63.5% a year earlier.

Looking Forward: Expectations for the company’s next-quarter performance are higher than they were ninety days ago. Over the past three months, the average estimate for the fourth quarter has risen to $1.09 per share from $1.05. Over the past three months, the average estimate for the fiscal year has climbed from $4.09 per to share to $4.10.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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