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Element Solutions (ESI) Q3 Earnings Top, Revenues Up Y/Y

Element Solutions Inc. ESI recorded earnings (as reported) from continuing operations of 15 cents per share in third-quarter 2020 compared with a loss of 2 cents in the year-ago quarter.

Adjusted earnings per share of 22 cents for the quarter surpassed the Zacks Consensus Estimate of 20 cents.

The company generated net sales of $477.5 million, up around 3% year over year. Organic net sales, barring the impact of currency changes, specific pass-through metal prices and acquisitions, fell 2% year over year.

The company saw a strong rebound in its automotive and industrially oriented businesses from the second-quarter lows. Its high-end electronics business also continued its momentum in the quarter.

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 10% year over year to $307 million in the reported quarter. Organic net sales increased 2% from the year-ago reported figure. Adjusted EBITDA was $72 million, down 3% year over year.

Net sales in the Industrial & Specialty unit fell 8% year over year to $171 million. Organic net sales declined 10%. Adjusted EBITDA in the segment was $30 million, down 28% year over year.

Financial Position

Element Solutions ended the quarter with cash and cash equivalents of $248.4 million, up 24% year over year. Long-term debt was $1,509.7 million at the end of the quarter, down 0.3% year over year.

The company generated cash flows from operating activities of $70 million in the reported quarter. Free cash flows for the quarter was $63 million.

Outlook

The company expects adjusted EBITDA of $90-$95 million for the fourth quarter. Moreover, it anticipates generating free cash flow of roughly $215 million for 2020.

Element Solutions believes that it has ample growth opportunities based on the megatrends driving its markets and its ability to outperform its markets through sound strategic execution.

Price Performance

Shares of Element Solutions moved up 10.8% in a year compared with the industry’s 4.5% decline.

 

 

Zacks Rank & Key Picks

Element Solutions currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks worth considering in the basic materials space include Agnico Eagle Mines Limited AEM, Barrick Gold Corporation GOLD and Equinox Gold Corp. EQX.

Agnico Eagle has a projected earnings growth rate of 102.1% for the current year. The company’s shares have rallied around 36% in a year. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Barrick Gold has an expected earnings growth rate of 100% for the current year. The company’s shares have surged around 62% in the past year. It currently carries a Zacks Rank #1.

Equinox Gold has a projected earnings growth rate of 155.2% for the current year. The company’s shares have shot up roughly 83% in a year. It currently carries a Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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