Shares of Essendant (ESND) closed down 23.8% on Thursday after the company reported earnings a day earlier. The distributor of janitorial, breakroom, and other office supplies, formerly known as United Stationers, basically matched Wall Street's expectation for sales of $1.2 billion in the fiscal first quarter, but its GAAP loss -- $1.40 per share -- was far worse than the $0.07-per-share profit that Wall Street analysts had predicted.
Essendant's sales fell 2% year over year to $1.2 billion. The company's other decline was better news -- a $1.40 decrease in losses, versus the $5.15 per share that Essendant lost last year.
Even so, on an adjusted basis Essendant lost $0.07 per share, when Wall Street was expecting at least a pro forma profit, and it seems that didn't sit well with investors.
Nevertheless, Essendant management urged investors to sit tight and stay the course. Declines were "anticipated" in Q1, said CEO Ric Phillips. Later in the year, however, management is still anticipating "stronger earnings performance in the second half."
"Cost improvement efforts will take time to scale through 2018," reminded the CEO. Ultimately, management says it remains "confident we will deliver more than half of our expected cost savings in 2018, building to a run rate of more than $50 million by 2020." For its part, Wall Street still seems to be on board, predicting Essendant will end the year with sales down no more than 4%, profits stabilizing at $0.67 per share -- flat against next year.
Investors, however, are having none of it.