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Element Solutions (ESI) Buys H.K. Wentworth for $60 Million

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Element Solutions Inc. (ESI - Free Report) recently announced the acquisition of H.K. Wentworth Limited (“HKW”) for roughly $60 million, funded through cash on hand. HKW is a U.K.-based producer of electro-chemicals for the electronics, LED, automotive and industrial manufacturing industries.

HKW is a global specialist in formulated chemical solutions that offers products like, thermal management materials, conformal coatings, encapsulation resins, electronic cleaning solutions and general maintenance products. The company has presence in more than 55 countries.

HKW has production facilities in the U.K., India and China and its products serve consumers world-wide across a diverse set of end-markets, including consumer electronics, telecommunications, medical, automotive, military and aerospace. HKW generated revenues of roughly $44 million in 2020.

HKW’s Electrolube product line is directly adjacent to Element Solutions’ electronics portfolio, offering high-quality solutions that address the important requirements to protect electronics hardware in demanding applications. Element Solutions’ global scale and relevant customer intimacy are expected to enable it to enable HKW’s business substantially in the near future.

Shares of Element Solutions have gained 129.9% in the past year against 1.6% decline of the industry.

The company, last month, increased its adjusted earnings per share guidance to at least $1.30, up from the prior view of $1.10-1.15. It currently expects adjusted EBITDA in the band of $500-$510 million. Moreover, it anticipates generating free cash flow of $285 million for 2021, up from $275 million expected earlier.

For the second quarter, the company sees adjusted EBITDA in the range of $125-$130 million. It expects higher raw material prices and other cost inflation to slightly impact profitability.

 

Zacks Rank & Other Key Picks

Element Solutions currently carries a Zacks Rank #2 (Buy).

Some top-ranked stocks in the basic materials space are Dow Inc. (DOW - Free Report) , Celanese Corporation (CE - Free Report) and Cabot Corporation (CBT - Free Report) .

Dow has a projected earnings growth rate of roughly 261.5% for the current year. The company’s shares have surged 103.4% in a year. It currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Celanese has an expected earnings growth rate of around 68.3% for the current year. The company’s shares have gained 114.7% in the past year. It currently sports a Zacks Rank #1.

Cabot has an expected earnings growth rate of 115.9% for the current fiscal. The company’s shares have surged 108.8% in the past year. It currently carries a Zacks Rank #2.

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