Cleaning and maintenance chemicals maker Zep, Inc. (ZEP) Tuesday reported a slight increase in second-quarter profit, that reflected higher sales and improved margins. Earnings per share beat analyst's expectations, while revenues missed view.
In the second quarter, the Atlanta-based company's net income increased to $2.79 million or $0.12 per share from $2.43 million or $0.11 per share in the previous year. On average, four analysts polled by Thomson Reuters expected earnings per share of $0.11 for the quarter. Analysts' estimates typically exclude one-time items.
Net sales for the quarter grew 7.7 percent to $163.39 million, but came below analysts' estimate of $167.06 million.
The company said its quarterly results reflected sales growth in retail, driven by automotive aftermarket and by sales to new retailers. Its distribution channel drove growth with industrial/MRO customers. In addition, acquisitions added about $17.4 million to net sales during the quarter.
Gross profit margin improved 260 basis points to 47.4 percent.
John Morgan, chairman, president and chief executive officer of the company said, "In the near term, we will continue to focus on the integration of Zep Vehicle Care, optimize our recent SAP implementation and utilize free cash flow to reduce debt."
In last October, Zep had agreed to purchase all of the assets of Ecolab Vehicle Care, a division of Ecolab Inc. (ECL) for about $120 million and establish a new entity known as Zep Vehicle Care. Ecolab is a Minnesota-based products supplier to foodservice and healthcare industries.
ZEP is currently trading at $14.8, down 1.73 percent.
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