Element Solutions Agrees to Divest MacDermid Graphics Solutions

Element Solutions Inc. ESI has agreed to sell its flexographic printing plate business, MacDermid Graphics Solutions, to XSYS — a global specialist provider in the flexographic printing space — for an enterprise value of around $325 million. The transfer involves substantially all of Graphics Solutions reporting vertical of Element Solutions. An existing capital loss is expected to offset almost all of the taxable benefits from this transaction.

The net proceeds are intended to be used to further reduce leverage and for general company objectives. The acquisition is projected to close in late 2024 or the first half of 2025, depending on usual closing conditions, adjustments and regulatory approvals.

MacDermid Graphics is a quality business that is not core to Element Solutions' portfolio or long-term vision, ESI noted. XSYS provides an excellent environment for its exceptional workforce. ESI's portfolio will be more concentrated and better positioned for faster growth and higher cash flow conversion in the future, with a stronger balance sheet to explore future growth opportunities in its core markets.

Shares of Element Solutions have gained 23% over the past year against a 9.3% decline of its industry.

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ESI, on its second-quarter call, said that it now expects adjusted EBITDA in the range of $530-$545 million for 2024. The company anticipates generating a free cash flow in the range of $280-$300 million for the year.

Zacks Rank & Other Key Picks

ESI currently carries a Zacks Rank #1 (Strong Buy).

Other top-ranked stocks in the basic materials space include Carpenter Technology Corporation CRS, Eldorado Gold Corporation EGO and Newmont Corporation NEM.

Carpenter Technology currently carries a Zacks Rank #1. CRS beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 15.9%. The company's shares have soared 108.4% in the past year.

The Zacks Consensus Estimate for Eldorado's current-year earnings is pegged at $1.35 per share, indicating a year-over-year rise of 136.8%. The Zacks Consensus Estimate for EGO's current-year earnings has been going up in the past 30 days. EGO, a Zacks Rank #1 stock, beat the consensus estimate in each of the last four quarters, with the average earnings surprise being 430.3%. The company's shares have rallied roughly 71% in the past year.

The Zacks Consensus Estimate for Newmont's current-year earnings is pegged at $2.82, indicating a rise of 75% from the year-ago level. The consensus mark for NEM's earnings has increased 14% in the past 60 days. NEM, a Zacks Rank #1 stock, has gained nearly 32.9% in the past year. 

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