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Element Solutions (ESI) Q3 Earnings Beat, Sales Lag Estimates


Element Solutions Inc ESI recorded net loss from continuing operations of $6 million or 2 cents per share in third-quarter 2019 compared with net loss of $4.3 million or 2 cents per share in the year-ago quarter.

Adjusted earnings per share (EPS) of 26 cents surpassed the Zacks Consensus Estimate of 21 cents.

The company generated net sales of $464.7 million, down nearly 5% year over year. The figure lagged the Zacks Consensus Estimate of $478 million. Organic net sales, barring the impact of currency changes and specific pass-through metal prices, fell 2%.

Per management, the downside can be attributed to the slowdown in the automotive market and strengthening of the U.S. dollar.

Adjusted EBITDA was $115 million, up 6% year over year. Adjusted EBITDA rose 9% on a constant currency basis.

Element Solutions Inc Price, Consensus and EPS Surprise

Segment Highlights

Net sales in the Electronics segment fell 4% year over year to $280 million. Organic net sales dipped 1%. Adjusted EBITDA amounted to $73.6 million, up 14% year over year.

Net sales in the Industrial & Specialty unit fell 6% to $184.7 million. Organic net sales declined 4%. Adjusted EBITDA in the segment was $41.8 million, down 4% year over year.

Financial Position

At the end of the third quarter, Element Solutions had cash and cash equivalents of $200.3 million, down roughly 20.6% year over year. Long-term debt was $1,514.2 million at the end of the reported quarter.


The company now expects adjusted EPS of 84-87 cents per share for 2019, up from 83-86 cents stated earlier. It reaffirmed its adjusted EBITDA growth outlook of 2-5% on a constant currency basis.

The company now expects a 4% organic net sales decline for 2019 compared with a decrease of 1-3% mentioned earlier.

Price Performance

Shares of Element Solutions have gained 3% in a year compared with the industry’s 6.2% growth.

Zacks Rank & Stocks to Consider

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

Some better-ranked stocks in the basic materials space are Impala Platinum Holdings Ltd. IMPUY, Franco-Nevada Corporation FNV and Agnico Eagle Mines Limited AEM, currently flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Impala Platinum has an expected earnings growth rate of 248.3% for the current fiscal year. The company’s shares have surged 284.7% in the past year.

Franco-Nevada has a projected earnings growth rate of 39.3% for 2019. The company’s shares have rallied 46.6% in a year.

Agnico Eagle has an estimated earnings growth rate of 168.6% for the current year. Its shares have moved up 63.9% in the past year.

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