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Element Solutions (ESI) Q2 Earnings Beat, Sales Lag Estimates

Zacks Equity Research

Element Solutions Inc ESI recorded net income from continuing operations of $14.7 million or 6 cents per share in second-quarter 2019 against a net loss of $49.6 million or 17 cents in the year-ago quarter.

Adjusted earnings per share (EPS) of 21 cents surpassed the Zacks Consensus Estimate of 20 cents.

The company generated net sales of $456.7 million, down nearly 9% year over year. The figure lagged the Zacks Consensus Estimate of $471 million. Organic net sales, barring the impact of currency changes, specific pass-through metal prices and acquisitions, fell 6%.

Adjusted EBITDA came in at $101 million, down 8% year over year. Adjusted EBITDA fell 4% on a constant-currency basis.

Per management, end-markets were impacted by headwinds in automotive and electronics, especially in Asia.

Element Solutions Inc Price, Consensus and EPS Surprise

 

Platform Specialty Products Corporation 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 fell 9% year over year to $267.9 million. Organic net sales dipped 6%. Adjusted EBITDA amounted to $60.4 million, down 7% year over year.

Net sales in the Industrial & Specialty unit fell 8% to $188.8 million. Organic net sales declined 5%. Adjusted EBITDA in the segment was $40.1 million, down 10% year over year.

Financial Position

At the end of second quarter, Element Solutions had cash and cash equivalents of $247.6 million, down roughly 44.6% year over year. Long-term debt was $1,515.3 million at the end of the second quarter.

Outlook

The company updated its guidance for 2019. It expects adjusted EPS in the range of 83-86 cents per share compared with 82-87 cents expected earlier.

Adjusted EBITDA growth is now projected in the band of 2-5% at constant currency, down from 5-8% expected earlier. The company expects 1-3% organic net sales growth compared with previous projection of flat to 2% growth.

Price Performance

Shares of Element Solutions have lost 23.9% in a year’s time against the industry’s 3.2% rise.



Zacks Rank & Key Picks

Element Solutions currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the basic materials space are SSR Mining Inc SSRM, Alamos Gold Inc AGI and Arconic Inc ARNC, all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

SSR Mining has an expected earnings growth rate of 134.8% for 2019. The company’s shares have surged 62.3% in the past year.

Alamos Gold has projected earnings growth rate of 260% for the current year. The company’s shares have gained 46.1% in a year’s time.

Arconic has an estimated earnings growth rate of 38.2% for the current year. Its shares have moved up 11.3% in the past year.

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