Element Solutions Inc (ESI - Free Report) has announced the completion of the syndication of a seven-year secured term loan credit facility totaling $1.15 billion under its credit agreement.
Element Solutions prepaid its current $1,105 million term loan B-1 tranche and $150 million term loan A using the proceeds of the new $1,150 million term loan B-2 facility and cash on hand.
The new term loan B-2 tranche, with its applicable interest rate of SOFR plus a spread of 2.00% annually, has almost the exact same terms as the previous term loan B-1 tranche, with the exception of its maturity date.
ESI monetized existing interest rates and cross-currency swap arrangements originally set for maturity in 2024 and 2026 in connection with the funding of the new term loan B-2 tranche.
It then entered into new interest rate and cross-currency swap agreements, thereby converting $760 million of the term loan B-2 tranche, which was denominated in U.S. dollars, into fixed-rate euro-denominated debt at a fixed EUR all-in rate of 4.31%. These new swaps will mature in 2028. The remaining $390 million is subject to existing swaps that are slated to mature in 2025.
The company is extending the maturities of a large portion of its secured debt to 2030 and lowering gross debt by more than $100 million through this transaction — all without raising margin. With the new swaps in place, the company now has around 80% of its capital structure set until 2028, effectively minimizing interest rate risk in the current higher rate environment.
Shares of Element Solutions have gained 21.1% over the past year compared with 16.4% rise of its industry.
ESI, on its third quarter call, revised its adjusted EBITDA guidance to nearly $485 million for 2023.
It estimates full-year 2023 adjusted earnings per share of around $1.30. ESI anticipates generating a free cash flow of about $265 million for 2023.
Zacks Rank & Key Picks
Element Solutions currently carries a Zacks Rank #4 (Sell).
Better-ranked stocks in the basic materials space include Denison Mines Corp. (DNN - Free Report) , Axalta Coating Systems Ltd. (AXTA - Free Report) and Hawkins, Inc. (HWKN - Free Report) .
Denison Mines has a projected earnings growth rate of 100% for the current year. It currently carries a Zacks Rank #1 (Strong Buy). DNN delivered a trailing four-quarter earnings surprise of roughly 225%, on average. The stock is up around 60% in a year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Axalta has a projected earnings growth rate of 5.4% for the current year. It currently carries a Zacks Rank #1. AXTA delivered a trailing four-quarter earnings surprise of roughly 6.7%, on average. The stock is up around 35.3% in a year.
Hawkins has a projected earnings growth rate of 21% for the current year. It currently carries a Zacks Rank #2 (Buy). Hawkins delivered a trailing four-quarter earnings surprise of roughly 27.5%, on average. HWKN shares are up around 84.7% in a year.
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Element Solutions Inc (ESI - Free Report) has announced the completion of the syndication of a seven-year secured term loan credit facility totaling $1.15 billion under its credit agreement.
Element Solutions prepaid its current $1,105 million term loan B-1 tranche and $150 million term loan A using the proceeds of the new $1,150 million term loan B-2 facility and cash on hand.
The new term loan B-2 tranche, with its applicable interest rate of SOFR plus a spread of 2.00% annually, has almost the exact same terms as the previous term loan B-1 tranche, with the exception of its maturity date.
ESI monetized existing interest rates and cross-currency swap arrangements originally set for maturity in 2024 and 2026 in connection with the funding of the new term loan B-2 tranche.
It then entered into new interest rate and cross-currency swap agreements, thereby converting $760 million of the term loan B-2 tranche, which was denominated in U.S. dollars, into fixed-rate euro-denominated debt at a fixed EUR all-in rate of 4.31%. These new swaps will mature in 2028. The remaining $390 million is subject to existing swaps that are slated to mature in 2025.
The company is extending the maturities of a large portion of its secured debt to 2030 and lowering gross debt by more than $100 million through this transaction — all without raising margin. With the new swaps in place, the company now has around 80% of its capital structure set until 2028, effectively minimizing interest rate risk in the current higher rate environment.
Shares of Element Solutions have gained 21.1% over the past year compared with 16.4% rise of its industry.
ESI, on its third quarter call, revised its adjusted EBITDA guidance to nearly $485 million for 2023.
It estimates full-year 2023 adjusted earnings per share of around $1.30. ESI anticipates generating a free cash flow of about $265 million for 2023.
Zacks Rank & Key Picks
Element Solutions currently carries a Zacks Rank #4 (Sell).
Better-ranked stocks in the basic materials space include Denison Mines Corp. (DNN - Free Report) , Axalta Coating Systems Ltd. (AXTA - Free Report) and Hawkins, Inc. (HWKN - Free Report) .
Denison Mines has a projected earnings growth rate of 100% for the current year. It currently carries a Zacks Rank #1 (Strong Buy). DNN delivered a trailing four-quarter earnings surprise of roughly 225%, on average. The stock is up around 60% in a year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Axalta has a projected earnings growth rate of 5.4% for the current year. It currently carries a Zacks Rank #1. AXTA delivered a trailing four-quarter earnings surprise of roughly 6.7%, on average. The stock is up around 35.3% in a year.
Hawkins has a projected earnings growth rate of 21% for the current year. It currently carries a Zacks Rank #2 (Buy). Hawkins delivered a trailing four-quarter earnings surprise of roughly 27.5%, on average. HWKN shares are up around 84.7% in a year.
Zacks Naming Top 10 Stocks for 2024
Want to be tipped off early to our 10 top picks for the entirety of 2024?
History suggests their performance could be sensational.
From 2012 (when our Director of Research, Sheraz Mian assumed responsibility for the portfolio) through November, 2023, the Zacks Top 10 Stocks gained +974.1%, nearly TRIPLING the S&P 500’s +340.1%. Now Sheraz is combing through 4,400 companies to handpick the best 10 tickers to buy and hold in 2024. Don’t miss your chance to get in on these stocks when they’re released on January 2.
Be First to New Top 10 Stocks >>
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