Element Solutions (ESI) Q3 Earnings In Line, Revenues Up Y/Y
Element Solutions Inc. ESI recorded earnings (as reported) from continuing operations of 15 cents per share in third-quarter 2021, unchanged from the year-ago quarter.
Adjusted earnings per share (EPS) were 35 cents for the quarter, up from 22 cents a year ago. The figure was in line with the Zacks Consensus Estimate.
The company generated net sales of $616.2 million, up around 29% year over year. Organic net sales, barring the impact of currency changes, specific pass-through metal prices and acquisitions, rose 13% year over year. The company delivered top line growth and strong margins despite headwinds from supply chain constraints and raw material procurement issues as well as challenges in the automotive market in the reported quarter.
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 30% year over year to $399 million in the reported quarter. Organic net sales increased 11% from the year-ago quarter’s reported figure. Adjusted EBITDA was $92 million, up 28% year over year.
Net sales in the Industrial & Specialty unit rose 27% year over year to $218 million. Organic net sales moved up 15% year over year. Adjusted EBITDA in the segment was $39 million, up 31% year over year.
Financial Position
Element Solutions ended the quarter with cash and cash equivalents of $279.3 million, up around 12% year over year. Long-term debt was $1,897.4 million at the end of the quarter, up around 26% year over year.
The company generated cash flows from operating activities of $92 million in the reported quarter. Free cash flows for the quarter were $81 million.
Outlook
The company raised its adjusted EBITDA guidance for 2021 to the band of $515-$525 million, from $505-$520 million it expected earlier. It also expects adjusted EPS of more than $1.35 for the year. Free cash flow for the full year is projected to be at least $265 million.
For the fourth quarter, the company sees adjusted EBITDA to be around $118 million. It expects headwinds from supply chain disruptions to continue in the fourth quarter.
Price Performance
Shares of Element Solutions have surged 90.9% in a year compared with 28.2% rise of the industry.
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Zacks Rank & Key Picks
Element Solutions currently carries a Zacks Rank #1 (Strong Buy).
Other top-ranked stocks worth considering in the basic materials space include Nutrien Ltd. NTR, Methanex Corporation MEOH and Steel Dynamics, Inc. STLD, each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Nutrien has an expected earnings growth rate of 180% for the current year. The stock has also rallied around 70% over a year.
Methanex has a projected earnings growth rate of 429% for the current year. The company’s shares have shot up around 50% in a year.
Steel Dynamics has a projected earnings growth rate of 477.5% for the current year. The company’s shares have surged around 104% in a year.
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