Element Solutions reports Q1 EPS 30c, consensus 29c

Reports Q1 revenue $574M, consensus $594.5M. CEO Benjamin Gliklich said: "Element Solutions delivered on its financial commitments with sequential adjusted EBITDA growth in the first quarter of 2023 despite worse end-markets than expected. Demand in the first quarter reflected a continuation of weakness in the smartphone and broader electronics supply chain at the end of 2022. Activity in China, both in our Electronics and our Industrial businesses, did not recover exiting lunar New Year and following COVID-related lockdowns as anticipated at the outset of 2023. Nonetheless, we continued to gain traction on our key breakthrough strategic objectives and to grow our sales pipeline. I am pleased with how our team is executing against what remains a difficult backdrop. We do not expect a material sequential improvement in our end-markets in the second quarter; however, we do expect sequential earnings growth. Our guidance for adjusted EBITDA in the second quarter is approximately $120 million which includes a benefit from more selling days and modest sequential gross profit margin expansion due to certain ongoing pricing activity, commercial execution and raw material deflation. A second half recovery, albeit off a lower first half level, appears increasingly likely based on our ongoing customer and industry interactions. On this basis, we expect full year 2023 adjusted EBITDA at the lower end of our prior guidance range. In the meantime, we are managing our portfolio to preserve profitability and generate strong free cash flow without undermining our ability to disproportionately benefit from the inevitable recovery in our end-markets."