Element Solutions (ESI) Q2 Earnings Beat Estimates, Sales Up Y/Y
Element Solutions Inc. ESI recorded earnings (as reported) from continuing operations of 32 cents per share in second-quarter 2021, up from a penny per share in the year-ago quarter.
Adjusted earnings per share (EPS) of 35 cents for the quarter beat the Zacks Consensus Estimate of 34 cents.
The company generated net sales of $586.6 million, up around 52% year over year. Organic net sales, barring the impact of currency changes, specific pass-through metal prices and acquisitions, climbed 30% year over year. While the company faced headwinds from supply chain constraints and raw material shortages, it benefited from strong demand in its end markets.
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 jumped 51% year over year to $382 million in the reported quarter. Organic net sales increased 25% from the year-ago quarter’s reported figure. Adjusted EBITDA was $91 million, up 56% year over year.
Net sales in the Industrial & Specialty unit shot up 53% year over year to $205 million. Organic net sales moved up 41% year over year. Adjusted EBITDA in the segment was $42 million, up 58% year over year.
Financial Position
Element Solutions ended the quarter with cash and cash equivalents of $318.4 million, up around 34% year over year. Long-term debt was $1,505.8 million at the end of the quarter, down 0.3% year over year.
The company generated cash flows from operating activities of $80 million in the reported quarter. Free cash flows for the quarter were $72 million.
Outlook
The company raised its adjusted EBITDA guidance for 2021 to the band of $505-$520 million from $500-$510 million it expected earlier. It also expects adjusted EPS of at least $1.35 for the year.
For the third quarter, the company sees adjusted EBITDA to be in the range of $125-$130 million. It expects the impact of rising logistics costs to persist in the third quarter. However, it expects its pricing actions in the wake of raw material inflation to support margins.
Price Performance
Shares of Element Solutions have surged 114.4% in a year compared with 15.9% decline of the industry.
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Zacks Rank & Key Picks
Element Solutions currently carries a Zacks Rank #2 (Buy).
Other top-ranked stocks worth considering in the basic materials space include Nucor Corporation NUE, ArcelorMittal MT and Cabot Corporation CBT, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Nucor has a projected earnings growth rate of 490.1% for the current year. The company’s shares have surged around 120% in a year.
ArcelorMittal has an expected earnings growth rate of 1,484.4% for the current year. The company’s shares have shot up around 197% in the past year.
Cabot has an expected earnings growth rate of around 137.5% for the current fiscal. The company’s shares have gained roughly 40% in the past year.
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