Ferro Cuts 2018 Profit View; Stock Down

(RTTNews) - Ferro Corp. (FOE) said that it cut its adjusted earnings per share outlook for fiscal year 2018. It also expect slower economic growth in 2019 than in 2018, which it already is seeing in certain European markets.

FOE is currently trading at $15.41, down $1.15 or 6.94%.

The company lowered its fiscal year 2018 adjusted earnings per share to a range of $1.45 to $1.50 from the prior estimation of $1.55 to $1.60 per share. The company still expects annual revenue of about $1.6 billion. Analysts polled by Thomson Reuters expected the company to report earnings of $1.56 per share and revenues of $1.62 billion for fiscal year 2018. Analysts' estimates typically exclude special items.

Ferro expects to report full-year 2018 growth in revenue of approximately 14%, growth in adjusted earnings per share of 12% to 16%, and growth in adjusted EBITDA of 10% to 12%. Ferro also expects to report cash flow conversion of 45% to 50%.

"Ferro anticipates reporting solid gains in financial performance for full year 2018 relative to 2017. While we believe the improvement in our financial performance compares favorably to our industry peer group, we expect adjusted EBITDA and adjusted EPS to come in below the targets we set for 2018, so we are revising our full-year guidance on these metrics," said Peter Thomas, Chairman, President and CEO.

"Mix and customer order patterns negatively impacted margins during the fourth quarter of 2018. We experienced significantly more seasonal destocking by customers of our higher-margin Tile products than we anticipated. Also, capacity utilization and footprint optimization initiatives at certain of our European facilities resulted in orders for Performance Colors and Glass products being pushed into 2019. These were the primary factors that led to the change in our full-year guidance."

The company said it expects to see some near-term pressure within Pigments business due to softness in architectural coatings and automotive markets. It also expect slower economic growth in 2019 than in 2018, which it already is seeing in certain European markets. It expects these circumstances, together with updated guidance for 2018, to cause it to lower its organic earnings expectations for 2019.

Worldwide the company has consolidated six manufacturing facilities over the past two years, and it expects to consolidate an additional seven manufacturing facilities by the end of 2019 or early in 2020.