W.R. Grace Stock Spirals on 1Q18 Earnings and Revenue Beat

W.R. Grace (GRA) reported revenues of $431.5 million for 1Q18 today, reflecting growth of 8.4% from 1Q17. The company beat Wall Street analysts’ estimates of $419.76 million. Revenue growth was driven by a 14.2% increase in Specialty Catalysts sales. GRA’s Materials Technologies grew 11.0% while the Catalysts Technologies’ segments grew 7.5%.

GRA reported adjusted earnings per share of $0.82, an increase of 20.6% on a year-over-year basis. In 1Q17, GRA reported adjusted EPS of $0.68. It beat the consensus estimate of $0.73 for adjusted EPS significantly. The adjusted EPS mainly excluded a charge of $0.07 per share related to restructuring and repositioning expenses and another $0.07 related to Global Intangible Low Taxed Income (or GILTI). GRA spent $35 million on share repurchases during the quarter and bought back ~514,000 shares. As a result, GRA’s’s outstanding common shares stood at 67.70 million shares, compared to 68.5 million in 1Q17.

GRA’s strong 1Q18 earnings and revenue set the tone for fiscal 2018. As a result, GRA has raised its revenue guidance to improve by 9% to 11%, versus the earlier guidance of 8% to 10%. The adjusted EPS is expected to be in the range of $3.85 to $3.95. The previous guidance range was $3.72 to $3.82. The growth should be supported by the acquisition of Albemarle’s (ALB) polyolefin catalysts business. The acquisition completed on April 3.

GRA stock reacted positively to the 1Q18 earnings. The stock is up 4.1% and trading at $68.8.

The iShares US Basic Materials ETF (IYM) invests 0.7% of its total portfolio in GRA. IYM also provides exposure to Monsanto (MON) and Praxair (PX) with weights of 8.1% and 6.3%, respectively.