Element Solutions Inc. (ESI) reported Q4 earnings of 32 cents per share, consistent with the Zacks Consensus Estimate. The company’s fourth-quarter 2023 earnings marked a significant improvement compared to the year-ago quarter, when it reported 5 cents per share.
The quarterly net sales stood at $573.4 million, remaining flat year over year, but failing to meet the Zacks Consensus Estimate of $588.6 million. Organic net sales experienced a 3% decline.
Despite the revenue miss, the company’s circuitry and semiconductor businesses witnessed a return to organic growth in the reported quarter. Additionally, ESI achieved an 11% growth in adjusted EBITDA during the quarter.
Key Insights
Net sales in the Electronics segment grew by 4% to $352 million compared to the year-ago quarter, although organic net sales dipped by 1%. On the other hand, the Industrial & Specialty segment experienced a 6% decline in net sales, totaling $221 million, with a 7% drop in organic net sales.
The full-year 2023 results indicate a decrease in earnings to 48 cents per share from 75 cents per share in the previous year, while net sales suffered an approximately 8% year-over-year decline, amounting to $2,333.2 million.
The company’s financial position revealed a 9% year-over-year increase in cash and cash equivalents, reaching $289.3 million by the end of 2023. However, long-term debt also rose by around 2% to $1,921 million during the same period. Notably, cash from operating activities for 2023 was reported at $334 million, with a free cash flow of $282 million for the year.
Projections and Stock Performances
ESI has set its sights on achieving adjusted EBITDA within the range of $510-$530 million for 2024. For the first quarter of 2024, the company anticipates adjusted EBITDA in the band of $120-$125 million. Furthermore, ESI foresees generating a free cash flow in the range of $280-$300 million for 2024.
The company’s shares have demonstrated a 20.6% increase over the past year, although slightly trailing the industry’s 24.9% rise in the same period.
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Rankings and Recommendations
As of now, ESI possesses a Zacks Rank #3 (Hold). Moreover, other notable stocks in the basic materials space that investors may consider include Carpenter Technology Corporation (CRS), Alpha Metallurgical Resources Inc. (AMR), and Hawkins, Inc. (HWKN).
CRS, currently holding a Zacks Rank #1 (Strong Buy), has been demonstrating robust performance, with its fiscal year earnings estimated to increase by a whopping 250.9% year over year. AMR and HWKN, both carrying favorable outlooks, also present lucrative investment opportunities.
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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.
