UPDATE: Element Solutions Inc (ESI) Tops Q2 EPS by 2c; Narrows FY19 EPS Outlook
Element Solutions Inc. (NYSE: ESI) reported Q2 EPS of $0.21, $0.02 better than the analyst estimate of $0.19. Revenue for the quarter came in at $457 million versus the consensus estimate of $468.94 million.
- Net sales from continuing operations of $457 million, a decline of 9% from last year on a reported basis or 6% on an organic basis
- GAAP diluted EPS from continuing operations of $0.06, compared to loss per share of $0.17 in the same period last year; adjusted EPS from continuing operations of $0.21, compared to adjusted EPS from continuing operations of $0.05 in the same period last year
- Reported net income from continuing operations of $15 million, compared to a loss of $50 million in the same period last year
- Adjusted EBITDA from continuing operations of $101 million, a decrease of 4% from last year on a constant currency basis
- Second quarter cash flows from operating activities of $37 million; year to date free cash flows on an adjusted basis of approximately $86 million
- Full year 2019 adjusted EPS guidance range narrowed to $0.83 to $0.86; adjusted EBITDA guidance range of 2% to 5% growth on a constant currency basis
- Net debt to trailing twelve month adjusted EBITDA ratio of 3.3x
Chief Executive Officer Benjamin Gliklich said, “In a challenging macroeconomic environment this quarter, we demonstrated the resilience of our business model and stability of our cash flow. Our end-markets were impacted by headwinds we expected entering the quarter in electronics and automotive, specifically in Asia. We anticipated this and have managed our cost footprint to reflect the commercial reality year to date. Through our continued execution against corporate cost savings and cost containment in the business, we were pleased to see our adjusted EBITDA margin increase despite the pressure on the top line. This is a testament to our team\'s experience and our nimble operating model.”
Mr. Gliklich continued, “While we still expect a seasonal pick-up in the third quarter, we are not counting on a strong recovery as geopolitical uncertainty continues to weigh on demand in the underlying market in the second half. Taking all of this into account, we are reducing our full-year net sales expectations to a decline of between 1% and 3% on an organic basis. While this is well below our expectation for long-term average growth, it reflects out-performance relative to our end-markets which we expect to decline in the mid-single digits this year. We still expect adjusted EBITDA to grow on a constant currency basis by 2% to 5% in 2019. We are maintaining the midpoint of our full-year adjusted EPS guidance, but narrowing the range to $0.83 to $0.86 which represents growth of approximately 24% year-over-year. Year to date, we have generated approximately $86 million of free cash flow on an adjusted basis and remain on track to generate approximately $200 million of free cash flow on an adjusted basis this year. This cash flow, the hallmark of our business in all markets, provides us flexibility and we plan to deploy it prudently to continue to drive earnings growth, while respecting a net debt to adjusted EBITDA ratio of 3.5 times or less.”
GUIDANCE:
ITT Educational Services sees FY2019 EPS of $0.83-$0.86, versus the consensus of $0.83.
The Company is updating its 2019 financial guidance, with adjusted EBITDA growth expected to be between 2% and 5% for this year on a constant currency basis and adjusted EPS expected to be between $0.83 to $0.86. The Company expects net sales to decline year-over-year between 1% and 3% on an organic basis.
For earnings history and earnings-related data on ITT Educational Services (ESI) click here.