Element Solutions (ESI) Q1 2021 earnings summary

Executive summary

• Record Q1 results: net sales $550.1M, up 22% reported and 11% organic; adjusted EBITDA $137.9M, up 25% reported and 20% constant currency.

• Adjusted EBITDA and margin reached records for a second consecutive quarter, supported by robust electronics demand and accelerating industrial activity.

Financial highlights

• GAAP operating profit was $99.9M vs. $54.6M; net income attributable to common stockholders was $82.3M vs. $8.6M.

• GAAP diluted EPS was $0.33 vs. $0.03; adjusted EPS was $0.37 vs. $0.25.

• Q1 operating cash flow was $32.6M and free cash flow was $24.1M, compared with $61.2M and $50.7M, respectively, in Q1 2020.

Outlook and guidance

• FY 2021 adjusted EBITDA guidance rose to $500M–$510M, implying ~20% YoY growth; adjusted EPS guidance increased to at least $1.30.

• FY 2021 free cash flow is expected to be $285M; Q2 adjusted EBITDA guidance is $125M–$130M, ~50% above Q2 2020.

• Q2 outlook reflects modest profitability pressure from higher raw material prices and other cost inflation.