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Agrium (AGU) Earnings and Revenues Trail Estimates in Q3

Zacks
Agrium Inc. AGU posted net loss from continuing operations of $69 million or 52 cents per share in the third quarter of 2017, wider than the year-ago loss of $38 million or 28 cents. The bottom line was adversely affected by lower sales volumes and increased cost of product sold related to several scheduled maintenance turnarounds and higher share-based payments.
Barring one-time items, Agrium’s adjusted loss came in at 23 cents per share, wider than the Zacks Consensus Estimate of a loss of a penny.
Revenues increased 8.7% year over year to $2,382 million in the reported quarter. However, it missed the Zacks Consensus Estimate of $2,519 million.
Agrium Inc. Price, Consensus and EPS Surprise
Revenues from the Retail segment increased 11.3% year over year to $2.1 billion. Gross profit rose 7.5% year over year to $518 million, driven by higher crop protection product sales and related application services and recent acquisitions.
Sales from the Wholesale segment dipped 0.4% year over year to $443 million. Gross profit was $46 million in the reported quarter, declining from $84 million in the year-ago quarter, affected by a fall in realized selling prices of nitrogen. Higher natural gas input costs and several scheduled maintenance turnarounds led to higher cost of products sold.
Financial Position
Agrium ended the third quarter with cash and cash equivalents of $246 million, down roughly 21% year over year. Total long-term debt remained flat at $4.4 billion as of Sep 30, 2017. Cash used in operating activities was $265 million in the quarter.
Outlook
Agrium revised its earnings guidance for 2017 to the range of $4.65-$4.80 per share (compared with $4.75- $5.25 expected earlier). The company lowered its guidance due to lower production volumes and unfavorable weather conditions which impacted its Retail operations, particularly areas impacted by hurricanes.
Agrium also expects Retail EBITDA in the range of $1.16-$1.19 billion, and Retail nutrient sales volumes in the range of 9.9-10.2 million tons in 2017. The company anticipates nitrogen production to total 3.3-3.4 million tons. Agrium's expects potash production of 2.4-2.5 million tons in 2017.
Total capital expenditures for 2017 are expected in the range of $650-$700 million of which around $425-$475-million is expected to be sustaining capital expenditures. Agrium's effective tax rate for 2017 is expected in the range of 27-29%.
Price Performance
Agrium has underperformed the industry over a year. During this period, the company’s shares have moved up 9.4% while the industry witnessed 17.5% gain.
Zacks Rank & Key Picks
Agrium currently carries a Zacks Rank #3 (Hold).
Some better-ranked companies in the basic materials space include are BHP Billiton Limited BHP, FMC Corporation FMC and Koppers Holdings Inc. KOP.
BHP Billiton has expected long-term earnings growth of 5.3% and sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
FMC Corporation has expected long-term earnings growth of 11.3% and flaunts a Zacks Rank #1.
Koppers Holdings has expected long-term earnings growth of 18% and carries a Zacks Rank #2 (Buy).
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