UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _______________ FORM 10-Q _______________ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-36272 Element Solutions Inc (Exact name of Registrant as specified in its charter) Delaware 37-1744899 ...

Second Quarter 2022 Earnings Presentation Enabling Technology. Growing Sustainably. Legal Notices SAFE HARBOR Please note that in this presentation, we may discuss events or results that have not yet occurred or been realized, commonly referred to as forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or on behalf of the Company. Such discussion and statements will often contain words such as "expect," "anticipate," " ...

Financial Data and Key Metrics Changes - Organic net sales grew 6% in Q2 2022, consistent with Q1 performance, despite a challenging comparison to the strong COVID recovery in the first half of 2021 [12] - Adjusted EBITDA grew by 13% year-on-year on a constant currency basis, with adjusted EBITDA margin declining by 170 basis points due to higher metal prices [10][13] - Adjusted EPS increased by 9% on a reported basis, despite a negative 7% impact from foreign exchange translation [13] Business Line Data and Key Metrics Changes - Electronics segment saw organic growth of 8% year-over-year, with Circuitry Solutions growing 14% and Semiconductor Solutions growing 13% [14] - Industrial & Specialty segment experienced a 2% organic growth, with Industrial Solutions growing 1% and Energy Solutions also growing 2% [17][18] - Adjusted EBITDA in the Industrial & Specialty segment grew 13% on a constant currency basis, but margins declined by approximately 3 percentage points due to increased logistics and freight costs [18] Market Data and Key Metrics Changes - The strengthening U.S. dollar negatively impacted sales by 7% in Q2 2022, with expectations of continued headwinds into the second half of the year [10][23] - Demand in the electronics segment remained healthy, driven by electric vehicle (EV) and 5G penetration, while the automotive market showed signs of recovery [11][29] - The company expects a modest recovery in the automotive market, with underlying structural demand remaining higher than production levels [11] Company Strategy and Development Direction - The company is focused on long-term strategic growth while managing near-term volatility, emphasizing the importance of sustainable chemistry and integration of recent acquisitions [9][24] - The management highlighted the importance of maintaining a strong sales pipeline and new business wins, indicating confidence in future growth opportunities [40][41] - The company is positioned to benefit from secular growth trends in electronics, particularly in EVs, internet infrastructure, and data storage [28][29] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the complicated macro environment, including supply chain challenges and geopolitical volatility, but expressed confidence in the resilience of many end markets [7][10] - The company revised its adjusted EBITDA guidance to a range of $565 million to $575 million, reflecting expectations of sustained strength in electronics and a modest recovery in automotive production [23][25] - Management indicated that they have cost levers available to manage profitability in case of adverse market conditions [24][53] Other Important Information - The company generated $56 million of free cash flow in Q2 2022, with a total cash flow guidance revised to $270 million for the year [19][20] - Share repurchase activity accelerated, with approximately $43 million of stock bought back, representing nearly 1% of shares outstanding [20] - The net leverage ratio remained steady at 3.2x, with term loans swapped to fixed rates to mitigate the impact of rising interest rates [21] Q&A Session Summary Question: How did your volumes for auto manufacturers in Q2 compare to industry bill rates? - Auto bill rates were down 14%, while the company's auto business was up 1% on sales, primarily driven by price [31] Question: How flexible are the PCB and semiconductor fabs in shifting between markets? - PCB fabs have some variability in end markets, and many are running close to full capacity [32] Question: Can you parse out the organic performance in the quarter and your outlook? - Price was a larger driver than volume in Q2, but there was volume growth in certain end markets, with expectations for organic growth in the second half [34] Question: How much are you under-earning at this point versus normalized production levels? - There is a significant unit deficit in auto production, indicating substantial earnings opportunity when production normalizes [36] Question: Have you seen evidence of inventory building in the automotive supply chain? - No evidence of inventory building has been found in the automotive supply chain [39] Question: Can you elaborate on the record sales pipeline and new business wins? - The company won more business in value in the first half than in all of 2019 or 2020, indicating strong medium-term momentum [40] Question: What is your exposure to different chip makers in the semiconductor market? - The business is disproportionately in the logic side of the semiconductor market, which remains strong despite weakness in the memory market [43] Question: How much of the pricing pushed through in the last 12 months can be retained when costs subside? - Pricing is broken into three buckets, with negotiated prices historically retained, while metal pass-through and commodity surcharges are more variable [45] Question: Are you seeing any pent-up demand from the lockdowns in China? - The electronics business did not see significant impacts from lockdowns, while the automotive market is expected to recover in Q4 [47] Question: How sensitive is the company to a potential recession? - The company has proven the ability to grow in mixed markets and has a highly variable operating cost model to manage profitability [49] Question: How confident are you in your smartphone customers' orders for the rest of the year? - The company has accounted for a softer smartphone ramp in its guidance and has multiple ways to deliver on its commitments [50]

[Part I. Financial Information](index=6&type=section&id=Part%20I.%20Financial%20Information) [Condensed Consolidated Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20%28Unaudited%29) These unaudited statements detail Element Solutions Inc's financial position, operations, and cash flows, showing increased sales and gross profit but reduced net income due to a prior-year tax benefit [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q2 2022 net sales increased to **$676.9 million**, with operating profit up, but net income decreased to **$65.2 million** due to a prior-year tax benefit Condensed Consolidated Statements of Operations ($ millions) | Financial Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | **Net Sales** | $676.9 M | $586.6 M | $1,357.1 M | $1,136.7 M | | **Gross Profit** | $249.8 M | $238.5 M | $512.8 M | $479.5 M | | **Operating Profit** | $90.5 M | $71.0 M | $186.0 M | $170.9 M | | **Net Income Attributable to Common Stockholders** | $65.2 M | $81.1 M | $121.3 M | $163.4 M | | **Diluted EPS** | $0.26 | $0.33 | $0.49 | $0.66 | [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets were **$5.01 billion** as of June 30, 2022, slightly down from year-end 2021, with total liabilities at **$2.59 billion** Condensed Consolidated Balance Sheets ($ millions) | Balance Sheet Item | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Total Current Assets** | $1,237.8 M | $1,214.5 M | | **Goodwill** | $2,425.4 M | $2,526.3 M | | **Total Assets** | $5,009.7 M | $5,138.4 M | | **Total Current Liabilities** | $395.0 M | $415.2 M | | **Total Debt (Long-term)** | $1,889.9 M | $1,894.2 M | | **Total Liabilities** | $2,594.5 M | $2,637.6 M | | **Total Stockholders' Equity** | $2,398.2 M | $2,480.7 M | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities decreased to **$68.7 million** for H1 2022, primarily due to higher working capital, with significant cash used in financing activities Condensed Consolidated Statements of Cash Flows ($ millions) | Cash Flow Activity (Six Months Ended June 30) | 2022 | 2021 | | :--- | :--- | :--- | | **Net Cash from Operating Activities** | $68.7 M | $113.0 M | | **Net Cash used in Investing Activities** | $(46.0) M | $(49.1) M | | **Net Cash used in Financing Activities** | $(129.4) M | $(37.3) M | | **Net (Decrease) Increase in Cash** | $(114.5) M | $26.5 M | | **Cash at End of Period** | $215.6 M | $318.4 M | [Notes to the Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) Detailed notes cover accounting policies, the **$23 million** HSO acquisition, **$1.90 billion** in debt, derivative usage, and **$61.7 million** in share repurchases - On January 26, 2022, the Company completed the acquisition of HSO, a developer of technology for surface finishing, for approximately **$23 million**[34](index=34&type=chunk) - Total debt obligations stood at **$1.90 billion** as of June 30, 2022, primarily consisting of **$1.11 billion** in term loans and **$790 million** in senior notes[38](index=38&type=chunk)[149](index=149&type=chunk) - The company actively uses derivative financial instruments, including interest rate swaps, cross-currency swaps, and commodity contracts, to manage risks associated with interest rates, foreign currency, and metal prices[48](index=48&type=chunk)[50](index=50&type=chunk)[58](index=58&type=chunk) - During the six months ended June 30, 2022, the company repurchased approximately **3.0 million shares** of its common stock for **$61.7 million**, with approximately **$670 million** remaining authorized under the stock repurchase program[64](index=64&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 2022 performance, noting a **15%** reported net sales increase, gross margin decline due to higher costs, and **7%** Adjusted EBITDA growth to **$140.4 million** [Overview](index=22&type=section&id=Overview) Element Solutions operates as a global specialty chemicals company with two core segments: Electronics and Industrial & Specialty, serving diverse industries - The company operates through two reportable segments: **Electronics** and **Industrial & Specialty**[87](index=87&type=chunk) - The **Electronics segment** formulates specialty chemicals for electronics hardware, including printed circuit boards and semiconductor packaging[87](index=87&type=chunk)[89](index=89&type=chunk) - The **Industrial & Specialty segment** provides chemicals that enhance surfaces and improve industrial processes in sectors like automotive, construction, printing, and offshore energy[89](index=89&type=chunk)[90](index=90&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) Q2 2022 net sales increased **15%** to **$676.9 million**, with gross margin declining **380 bps** to **36.9%** due to higher costs, while Adjusted EBITDA grew **7%** to **$140.4 million** Results of Operations (Q2 2022 vs Q2 2021) ($ millions) | Metric (Q2 2022 vs Q2 2021) | Q2 2022 | Q2 2021 | Reported Change | Organic Change | | :--- | :--- | :--- | :--- | :--- | | **Net Sales** | $676.9 M | $586.6 M | +15% | +6% | | **Gross Profit** | $249.8 M | $238.5 M | +5% | N/A | | **Gross Margin** | 36.9% | 40.7% | -380 bps | N/A | | **Operating Profit** | $90.5 M | $71.0 M | +27% | N/A | | **Adjusted EBITDA** | $140.4 M | $131.8 M | +7% | N/A | - Electronics segment net sales grew **11% reported (8% organic)** in Q2 2022, driven by growth across all business lines, particularly Circuitry and Semiconductor Solutions[112](index=112&type=chunk) - Industrial & Specialty segment net sales grew **24% reported (2% organic)** in Q2 2022, largely due to the positive impact of the Coventya and HSO acquisitions[113](index=113&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is supported by cash from operations and credit facilities, with **$1.90 billion** in debt and **$346 million** available credit as of June 30, 2022 - Primary uses of cash in H1 2022 included funding operations, share repurchases (**$59.7 million**), dividend payments (**$39.6 million**), and the HSO Acquisition (**~$23 million**)[137](index=137&type=chunk)[146](index=146&type=chunk)[148](index=148&type=chunk) - As of June 30, 2022, total indebtedness was **$1.90 billion**, with the first significant principal payment of **~$1.08 billion** not due until 2026[137](index=137&type=chunk)[149](index=149&type=chunk) - Total availability under the revolving credit facility and other lines of credit was **$346 million** at the end of the quarter[150](index=150&type=chunk) - Of the **$216 million** in cash and cash equivalents, **$180 million** was held by foreign subsidiaries[143](index=143&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes occurred in the quantitative and qualitative disclosures about market risk compared to the 2021 Annual Report on Form 10-K - Disclosures about market risk have not changed materially from the 2021 Annual Report[152](index=152&type=chunk) [Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures are **effective** to provide reasonable assurance[153](index=153&type=chunk) - **No material changes** in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[154](index=154&type=chunk) [Part II. Other Information](index=34&type=section&id=Part%20II.%20Other%20Information) [Legal Proceedings](index=34&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings, primarily related to environmental matters at current and former operational sites - The company is involved in various legal proceedings, including claims related to **environmental matters** at current and former plant and waste management sites[156](index=156&type=chunk) [Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors) No material changes occurred in the company's risk factors compared to those disclosed in the 2021 Annual Report on Form 10-K - There have been **no material changes** in risk factors from those set forth in the 2021 Annual Report[157](index=157&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=34&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2022, the company repurchased **2,162,646 shares** at an average price of **$19.84**, with **$670 million** remaining for future repurchases Common Stock Repurchases (Q2 2022) | Period (2022) | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April | 493,522 | $20.69 | | May | 883,985 | $20.31 | | June | 785,139 | $18.78 | | **Total Q2** | **2,162,646** | **$19.84** | - The remaining authorization under the company's stock repurchase program was approximately **$670 million** at the end of June 2022[158](index=158&type=chunk) [Exhibits](index=35&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the quarterly report, including corporate governance documents, officer certifications, and Inline XBRL data - The report includes standard corporate governance documents, **CEO/CFO certifications** (Sections 302 and 906), and **XBRL data files** as exhibits[161](index=161&type=chunk)

Financial Data and Key Metrics Changes - The company reported a 7% organic revenue growth year-over-year and a 9% increase in constant currency adjusted EBITDA compared to Q1 of the previous year [10][22] - Adjusted EBITDA margin declined by 370 basis points year-over-year but improved sequentially by 240 basis points from Q4 2021 [11][22] - The company consumed approximately $15 million in cash during the first quarter, contrasting with a cash generation of $24 million in Q1 2021 [17] Business Line Data and Key Metrics Changes - Organic sales for the electronics segment grew by 8% year-over-year, with Circuitry Solutions growing 13% and Semiconductor Solutions growing 11% [12][14] - The Assembly business saw a 5% organic growth, driven by strong demand in power electronics related to electric vehicles [13] - Industrial and Specialty segment increased by 4% year-over-year, with Industrial Solutions growing 5% despite softness in the auto-related end markets [15] Market Data and Key Metrics Changes - The company noted mixed performance in industrial end markets, with robust demand in general industrial and energy markets, while the auto industry faced continued supply chain challenges [6][15] - The company’s exposure to Russia and Ukraine was minimal, with less than 20 basis points of total sales in 2021, and it is actively requalifying additional sources of supply [9] Company Strategy and Development Direction - The company is focused on long-term investments in culture, capabilities, and people while delivering on short-term commitments [5] - The strategy includes targeting growth markets such as electric vehicles, 5G-enabled electronics, and sustainable chemistry solutions [8][24] - The company plans to increase its adjusted EBITDA guidance for the year, reflecting confidence in sustained strength in electronics and a recovery in automotive production [22] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by raw material scarcity, ongoing COVID lockdowns, and logistics issues but expressed confidence in navigating these challenges [5][8] - The outlook for the second quarter includes expectations of approximately $140 million in adjusted EBITDA, despite slightly softer margins due to elevated raw material and freight costs [23] - Management emphasized the importance of maintaining strong relationships with customers through effective supply chain management and pricing strategies [17][60] Other Important Information - The company has raised tens of thousands of dollars for humanitarian efforts related to the crisis in Ukraine through its ESI Cares Giving Programs [8] - The company’s net leverage ratio at the end of the quarter was 3.2x, with expectations to reduce it to approximately 2.5x by year-end [19] Q&A Session Summary Question: Expectations for sales growth in Q2 - Management expects organic revenue growth in Q2, with a combination of metals impact and volume growth contributing to the top line [27] Question: Incremental margins and pricing - Management noted that organic growth includes price tied to inflation in raw materials, impacting margins [29] Question: Weakness in Asian markets - Management identified specific countries with weaker demand due to product launch delays and COVID lockdowns, but overall growth in the Circuitry business is expected [33][34] Question: Operating rates in end markets - Management indicated high utilization rates in electronics but mixed performance in industrial sectors, particularly in automotive [39] Question: Capital allocation priorities - Management is opportunistic regarding capital allocation, focusing on stock buybacks and strategic acquisitions [43] Question: Organic growth by sub-segments - Management provided insights on organic growth being driven by volume in the Assembly business and a mix of price and volume in the Circuitry business [45] Question: Logistics and raw material headwinds - Management acknowledged significant logistics cost increases and ongoing efforts to protect margin dollars through pricing actions [51] Question: State of business in China - Management reported challenges due to lockdowns but maintained local manufacturing capabilities to support customers [58] Question: Customer reactions to price increases - Management stated that customers are generally understanding of price increases due to commodity price volatility and have adapted to new surcharge mechanisms [60]

Part I. [Financial Information](index=6&type=section&id=Part%20I.%20Financial%20Information) [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) Net sales increased to **$680.2 million** in Q1 2022, but net income decreased to **$56.1 million** and operating cash flow turned negative due to higher costs and working capital needs [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q1 2022 net sales grew to **$680.2 million**, but gross profit saw a smaller increase, and net income attributable to common stockholders fell to **$56.1 million** due to higher costs Q1 2022 vs Q1 2021 Statement of Operations (in millions, except per share data) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | **Net sales** | $680.2 | $550.1 | | **Gross profit** | $263.0 | $241.0 | | **Operating profit** | $95.5 | $99.9 | | **Net income attributable to common stockholders** | $56.1 | $82.3 | | **Diluted EPS** | $0.23 | $0.33 | [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2022, total assets remained stable at **$5.13 billion**, with a decrease in cash to **$218.8 million** offset by increases in receivables and inventories Balance Sheet Highlights (in millions) | Account | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Total current assets** | $1,216.9 | $1,214.5 | | Cash & cash equivalents | $218.8 | $330.1 | | Inventories | $323.4 | $274.4 | | **Goodwill** | $2,518.6 | $2,526.3 | | **Total assets** | $5,128.8 | $5,138.4 | | **Total liabilities** | $2,615.3 | $2,637.6 | | **Total equity** | $2,513.5 | $2,500.8 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q1 2022 saw net cash used in operating activities of **$5.6 million**, a significant decline from prior year, driven by increased working capital and HSO acquisition-related investing activities Q1 2022 vs Q1 2021 Cash Flows (in millions) | Cash Flow Category | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | **Net cash flows (used in) provided by operating activities** | $(5.6) | $32.6 | | **Net cash flows (used in) provided by investing activities** | $(37.1) | $10.5 | | **Net cash flows used in financing activities** | $(67.1) | $(14.2) | | **Net (decrease) increase in cash and cash equivalents** | $(111.3) | $25.6 | [Notes to the Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the **$23 million** HSO acquisition, stable **$1.91 billion** total debt, **$18.8 million** in share repurchases, and segment revenue growth with compressed margins due to higher costs - On January 26, 2022, the Company completed the acquisition of HSO for approximately **$23 million**, recording **$11.7 million** of finite-lived intangible assets and **$7.1 million** of goodwill[31](index=31&type=chunk)[32](index=32&type=chunk) - Total debt obligations stood at approximately **$1.91 billion** as of March 31, 2022, primarily consisting of **$1.11 billion** in term loans and **$790 million** in senior notes[35](index=35&type=chunk)[132](index=132&type=chunk) - The company repurchased **0.8 million** shares of its common stock for **$18.8 million** during Q1 2022 under its stock repurchase program, with approximately **$713 million** remaining authorized for future repurchases[61](index=61&type=chunk) Segment Performance Q1 2022 vs Q1 2021 (in millions) | Segment | Net Sales 2022 | Net Sales 2021 | Adjusted EBITDA 2022 | Adjusted EBITDA 2021 | | :--- | :--- | :--- | :--- | :--- | | **Electronics** | $426.9 | $353.5 | $97.3 | $92.4 | | **Industrial & Specialty** | $253.3 | $196.6 | $47.5 | $45.4 | | **Total** | $680.2 | $550.1 | $144.8 | $137.8 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management reported **24%** net sales growth in Q1 2022, driven by acquisitions and pricing, but gross and Adjusted EBITDA margins declined due to higher raw material and logistics costs Q1 2022 vs Q1 2021 Key Metrics | Metric | Q1 2022 | Q1 2021 | Reported % Change | Constant Currency % Change | Organic % Change | | :--- | :--- | :--- | :--- | :--- | :--- | | **Net sales** | $680.2M | $550.1M | 24% | 28% | 7% | | **Gross profit** | $263.0M | $241.0M | 9% | 12% | N/A | | **Gross margin** | 38.7% | 43.8% | (510) bps | (540) bps | N/A | | **Adjusted EBITDA** | $144.8M | $137.8M | 5% | 9% | N/A | | **Adjusted EBITDA margin** | 21.3% | 25.0% | (370) bps | (370) bps | N/A | [Results of Operations](index=25&type=section&id=Results%20of%20Operations) Q1 2022 net sales grew **24%** to **$680.2 million**, with both Electronics and Industrial & Specialty segments showing growth but experiencing margin compression due to higher costs - Electronics' net sales increased **21%** on a reported basis and **8%** organically, with Semiconductor Solutions showing strong organic growth of **11%** due to demand in advanced packaging[106](index=106&type=chunk) - Industrial & Specialty's net sales grew **29%** on a reported basis and **4%** organically, with acquisitions contributing **44%** to Industrial Solutions' reported net sales[107](index=107&type=chunk) - Gross margin for the total company decreased by **510 basis points**, primarily due to increased raw material prices, logistics costs, and the impact of pass-through metals[110](index=110&type=chunk)[111](index=111&type=chunk) - Operating expenses increased by **19%** (**21%** constant currency), mainly driven by **$21.2 million** in expenses related to recent acquisitions[112](index=112&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) Q1 2022 cash uses included the **$23 million** HSO acquisition, **$19.9 million** in dividends, and **$18.3 million** in share repurchases, with total debt at **$1.91 billion** and **$349 million** in available liquidity - Primary uses of cash in Q1 2022 were the HSO Acquisition, dividend payments, and share repurchases[121](index=121&type=chunk) - The decrease in operating cash flow was primarily driven by a build of safety inventory, higher raw materials costs, and higher annual incentive compensation payments[129](index=129&type=chunk) - As of March 31, 2022, the company had **$1.91 billion** of indebtedness and **$349 million** of availability under its revolving credit facilities[132](index=132&type=chunk)[133](index=133&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes were reported regarding quantitative and qualitative disclosures about market risk from the 2021 Annual Report - Disclosures about market risk have not changed materially from the 2021 Annual Report[135](index=135&type=chunk) [Item 4. Controls and Procedures](index=31&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2022, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures are effective[137](index=137&type=chunk) - No material changes to internal control over financial reporting occurred during the first quarter of 2022[138](index=138&type=chunk) Part II. [Other Information](index=32&type=section&id=Part%20II.%20Other%20Information) [Item 1. Legal Proceedings](index=32&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings, including environmental claims, which are considered incidental to its business operations - The company is involved in various legal proceedings and claims, particularly concerning environmental matters, which are considered incidental to its business operations[140](index=140&type=chunk) [Item 1A. Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the company's risk factors were reported from those disclosed in its 2021 Annual Report on Form 10-K - No material changes to the risk factors from the 2021 Annual Report were reported[141](index=141&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=32&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q1 2022, the company repurchased **830,448** shares for approximately **$18.8 million**, with **$713 million** remaining authorized for future repurchases Share Repurchases for Q1 2022 | Period | Total Shares Purchased | Average Price Paid Per Share | Remaining Authorization (in millions) | | :--- | :--- | :--- | :--- | | Jan 2022 | 328,374 | $23.00 | $725 | | Feb 2022 | 220,403 | $23.52 | $719 | | Mar 2022 | 281,671 | $21.29 | $713 | | **Total** | **830,448** | **$22.56** | **$713** | [Item 6. Exhibits](index=33&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the quarterly report, including officer certifications and XBRL data files - The report includes a list of filed exhibits, such as officer certifications and XBRL interactive data files[145](index=145&type=chunk)

Element Solutions Inc. (NYSE:ESI) Q4 2021 Earnings Conference Call February 23, 2022 8:30 AM ET Company Participants Varun Gokarn – Senior Director of Strategy and Finance Sir Martin Franklin – Executive Chairman Ben Gliklich – Chief Executive Officer Carey Dorman – Chief Financial Officer Conference Call Participants Mike Harris – Goldman Chris Kapsch – Loop Capital Markets Steve Byrne – Bank of America Angel Castillo – Morgan Stanley Jon Tanwanteng – CJS Securities Josh Spector – UBS Kieran de Brun – Mizu ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to _______ Commission file number: 001-36272 Element Solutions Inc (Exact name of Registrant as specified in its charter) Delaware 37-1744899 (State or other jurisdi ...

| --- | --- | --- | --- | |-------|-------|-------|-----------------------| | | | | Third Quarter 2021 | | | | | Earnings Presentation | | | | | October 1 | 2021 Legal Notices SAFE HARBOR Please note that in this presentation, we may discuss events or results that have not yet occurred or been realized, commonly referred to as forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or on behalf of the Company. Such discus ...

Financial Data and Key Metrics Changes - The company achieved record net sales, growing 13% organically year-over-year, and adjusted EBITDA increased by 29% on a reported basis [16][36] - Adjusted EBITDA margins were roughly flat year-over-year, with a slight improvement on a metals-adjusted basis [14][20] - Free cash flow for the quarter was $81 million, with a year-to-date total exceeding $175 million [32] Business Line Data and Key Metrics Changes - The electronics segment grew net sales by 11% organically, with all three verticals achieving double-digit growth [22] - Circuitry solutions grew 14% organically, driven by strength in high-end electronics and memory disk markets [22] - The industrial and specialty segment grew net sales by 15% organically, with graphics solutions growing by 19% [26][27] Market Data and Key Metrics Changes - The electronics industry continued to grow, supported by expansion in communications infrastructure, consumer electronics, and automotive electronics [10] - The industrial business faced challenges from automotive supply chain constraints but still grew year-over-year [11] - Offshore solutions saw a decline in net sales by 9% organically, attributed to lower energy prices and stagnant investment in drilling and production [30] Company Strategy and Development Direction - The company is focusing on strategic growth priorities, including power electronics for electric vehicles and sustainability solutions [7] - The acquisition of Coventya is expected to provide growth opportunities and cost savings, with integration efforts already underway [8][34] - The company anticipates continued growth in the electronics business, driven by secular trends and increased content per vehicle in the automotive sector [40] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about long-term prospects despite current supply chain challenges, indicating strong underlying demand [6][8] - The automotive market is expected to recover, but the timing remains uncertain, impacting the industrial segment's performance [36][56] - The company expects to deliver adjusted EBITDA in the range of $515 million to $525 million for the full year 2021, despite a challenging automotive backdrop [37][39] Other Important Information - The company has built safety stocks in inventory to meet customer demand amid ongoing supply chain shortages, which is expected to impact cash flow conversion temporarily [15][32] - The net leverage ratio at the end of the quarter was 3.1 times, reflecting the financing of the Coventya acquisition [34] Q&A Session Summary Question: Outlook on Coventya acquisition - Management sees opportunities for both productivity improvements and cross-selling, with strong momentum in the Coventya business despite a weaker automotive backdrop [42][43] Question: Potential lag in automotive production recovery - Management does not expect a material lag when the automotive market recovers, citing strong performance in other industrial segments [47][48] Question: Supply chain constraints visibility - Customers are optimistic about recovery, but management acknowledges that the recovery in automotive will be delayed into 2022 [56] Question: Price increases and customer pushback - Management has been effective in taking price increases, but there is a lag in passing through logistics costs [57] Question: Growth expectations for electronics business - Management expects to outperform the market due to increased content per vehicle and strong commercial execution [62] Question: Safety stock levels and inventory days - Typical inventory days are in the mid to high 60s, with a slight increase due to safety stock buildup to support customer demand [72]