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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


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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.


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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