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Element Solutions (ESI) Q1 Earnings and Sales Top Estimates

Zacks Equity Research

Element Solutions Inc. ESI recorded earnings from continuing operations of 3 cents per share in first-quarter 2020 against a loss of 2 cents per share in the year-ago quarter.

Adjusted earnings per share (“EPS”) of 25 cents for the quarter surpassed the Zacks Consensus Estimate of 20 cents.

The company generated net sales of $452.6 million, down 1.6% year over year. The figure, however, surpassed the Zacks Consensus Estimate of $438 million. Organic net sales, barring the impact of currency changes, specific pass-through metal prices and acquisitions, fell 3% year over year.

Revenues declined mainly due to the impact of the coronavirus in Asia, partly offset by strong sales in many of the company’s end markets.

Element Solutions Inc Price, Consensus and EPS Surprise

 

Element Solutions Inc Price, Consensus and EPS Surprise

Element Solutions Inc price-consensus-eps-surprise-chart | Element Solutions Inc Quote

Segment Highlights

Net sales in the Electronics segment rose 1% year over year to $269 million in the reported quarter. Organic net sales dipped 2% from the year-ago reported figure. Adjusted EBITDA was $67 million, up 18% year over year.

Net sales in the Industrial & Specialty unit fell 5% year over year to $184 million. Organic net sales declined 3%. Adjusted EBITDA in the segment was $44 million, up 3% year over year.

Financial Position

Element Solutions ended the quarter with cash and cash equivalents of $497.4 million, up 155.9% year over year. Long-term debt was $1,512.2 million at the end of the quarter, down 0.3% year over year.

The company generated cash flows from operating activities of $61 million in the reported quarter. Free cash flows for the first quarter was $51 million.

Element Solutions repurchased roughly 3.7 million shares of its common stock for around $33.1 million in the reported quarter.

Outlook

The company expects adjusted EBITDA of $70-$75 million for the second quarter of 2020. It noted that its adjusted EBITDA cannot be accurately predicted or quantified at this time due to the extent of the impact of the coronavirus outbreak.

Price Performance

Shares of Element Solutions moved down 10.6% in a year compared with the industry’s 17% decline.

 

 

Zacks Rank & Stocks to Consider

The company currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Equinox Gold Corp. EQX, Franco-Nevada Corporation FNV and Kinross Gold Corporation KGC.

Equinox Gold currently sports a Zacks Rank #1 (Strong Buy) and has a projected earnings growth rate of 231% for 2020. The company’s shares have gained 45.4% in a year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Franco-Nevada has a projected earnings growth rate of 22% for 2020. It currently carries a Zacks Rank #2 (Buy). The company’s shares have rallied 94% in a year.

Kinross has a projected earnings growth rate of 52.9% for 2020. The company’s shares have surged 122.8% in a year. It currently has a Zacks Rank #2.

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