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Mar 31, 2020
Element Solutions Q1 2020 Earnings Report
Element Solutions' financial performance reflected a decrease in net sales but an increase in adjusted EPS and EBITDA, despite challenges posed by COVID-19.
Key Takeaways
Element Solutions reported a decrease in net sales by 2% to $453 million, but an increase in adjusted EPS by 25% to $0.25 and adjusted EBITDA by 14% to $110 million. The company generated $51 million in free cash flow and repurchased approximately 3.7 million shares of common stock. The company expects adjusted EBITDA in the second quarter of between $70 million and $75 million.
Net sales decreased by 2% year-over-year to $453 million, with organic sales down 3%.
Adjusted EPS increased by 25% to $0.25, compared to $0.20 in the same period last year.
Adjusted EBITDA grew by 14% to $110 million, with margin expansion of over 300 basis points.
Free cash flow generation was strong at $51 million, despite an increase in working capital for safety stocks.
Revenue by Segment
Forward Guidance
The Company expects adjusted EBITDA to be in the range of $70 million to $75 million for the second quarter of 2020.
Positive Outlook
- Variable cost model should preserve profitability
- Diversification should preserve profitability
- Variable cost model should preserve cash flow generation
- Diversification should preserve cash flow generation
- Expect to continue to outperform against end-markets
Challenges Ahead
- Many of customers’ supply chains have largely shut down in the Americas and Europe
- Economic indicators are increasingly negative
- Impact of COVID-19 on the Company's adjusted EBITDA cannot be accurately predicted or quantified
- The unknowable impact of COVID-19 makes it difficult to forecast
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
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Avg. Return Before/After Earnings
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