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, 2020 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 2020 | | | | Earnings Presentation | | | | 1 October 2020 | 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 ...

[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(Unaudited)) Presents Element Solutions Inc.'s unaudited condensed consolidated financial statements for Q3 and 9M 2020 and 2019, including key financial statements and notes [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Net sales reached $477.5 million in Q3 2020, with net income attributable to common stockholders at $36.0 million, a significant improvement from a $6.9 million loss in Q3 2019 Condensed Consolidated Statements of Operations (Q3 & 9M 2020 vs 2019) | (in millions, except per share) | Three Months Ended Sep 30, 2020 | Three Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | **Net sales** | **$477.5** | **$464.7** | **$1,317.1** | **$1,381.2** | | Gross profit | $203.5 | $205.7 | $563.3 | $597.0 | | Operating profit | $58.6 | $66.9 | $152.7 | $167.5 | | Net income (loss) from continuing operations | $36.2 | $(6.0) | $46.9 | $5.2 | | **Net income (loss) attributable to common stockholders** | **$36.0** | **$(6.9)** | **$45.8** | **$17.8** | | **Diluted EPS attributable to common stockholders** | **$0.15** | **$(0.03)** | **$0.19** | **$0.07** | [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets remained stable at $4.33 billion as of September 30, 2020, with cash increasing to $248.4 million and total equity rising to $2.24 billion Condensed Consolidated Balance Sheet Highlights | (in millions) | September 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | **Total current assets** | $946.6 | $833.4 | | Goodwill | $2,189.6 | $2,179.6 | | **Total assets** | **$4,326.8** | **$4,324.4** | | Total current liabilities | $302.4 | $293.8 | | Debt | $1,509.7 | $1,513.2 | | **Total liabilities** | **$2,083.8** | **$2,105.1** | | **Total equity** | **$2,243.0** | **$2,219.3** | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities significantly increased to $194.3 million for 9M 2020, while investing and financing activities used $31.4 million and $87.8 million respectively Cash Flow Summary (Nine Months Ended Sep 30) | (in millions) | 2020 | 2019 | | :--- | :--- | :--- | | **Net cash flows provided by operating activities** | **$194.3** | **$92.1** | | Net cash flows (used in) provided by investing activities | $(31.4) | $4,270.3 | | Net cash flows used in financing activities | $(87.8) | $(4,425.0) | | **Net increase (decrease) in cash** | **$58.3** | **$(215.2)** | [Notes to the Condensed Consolidated Financial Statements](index=14&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the DMP Acquisition, debt refinancing, segment performance, and a significant tax benefit from new U.S. Treasury regulations - On July 1, 2020, the Company completed the DMP Acquisition, a provider of wastewater treatment solutions, which was integrated into the Industrial & Specialty segment[42](index=42&type=chunk) - In August 2020, the company issued **$800 million** of **3.875%** senior notes due 2028 and used the proceeds to redeem its **$800 million 5.875%** senior notes due 2025, incurring a **$45.7 million** expense for the make-whole premium and write-off of debt costs[58](index=58&type=chunk) - During Q3 2020, the company repurchased approximately **0.2 million** shares for **$2.6 million**. For the first nine months of 2020, it repurchased **4.0 million** shares for **$35.7 million**[80](index=80&type=chunk) - New U.S. Treasury regulations related to GILTI and interest expense limitations resulted in an estimated **$42 million** tax benefit for the 2018 and 2019 tax years, which was recorded in the third quarter of 2020[94](index=94&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q3 2020 performance, highlighting 3% net sales growth, debt refinancing, COVID-19 impact, and a 12% decrease in Adjusted EBITDA to $101.8 million [Recent Developments](index=28&type=section&id=Recent%20Developments) Recent developments include senior note refinancing, the launch of MacDermid Envio Solutions, and ongoing share repurchases - Completed a private offering of **$800 million** in **3.875%** notes due 2028 to redeem the **5.875%** notes due 2025, reducing annual interest payments by **$16.0 million**[112](index=112&type=chunk) - Launched MacDermid Envio Solutions, a new business within the Industrial & Specialty segment focused on environmental impact reduction and wastewater treatment[113](index=113&type=chunk) - Repurchased **0.2 million** shares for **$2.6 million** in Q3 2020 and an additional **1.5 million** shares for **$17.3 million** on October 6, 2020[117](index=117&type=chunk) [Results of Operations](index=31&type=section&id=Results%20of%20Operations) Q3 2020 net sales grew 3% reported, with Electronics showing organic growth and Industrial & Specialty declining, leading to a 12% fall in Adjusted EBITDA Q3 2020 Net Sales Growth vs. Q3 2019 | Segment | Reported Growth | Organic Growth | | :--- | :--- | :--- | | **Total Company** | **3%** | **(2)%** | | Electronics | 10% | 2% | | - Assembly Solutions | 13% | 1% | | - Circuitry Solutions | (1)% | (3)% | | - Semiconductor Solutions | 26% | 19% | | Industrial & Specialty | (8)% | (10)% | | - Industrial Solutions | (4)% | (7)% | | - Graphics Solutions | (16)% | (16)% | | - Energy Solutions | (16)% | (14)% | Q3 2020 Adjusted EBITDA Performance | (in millions) | Q3 2020 | Q3 2019 | % Change (Reported) | | :--- | :--- | :--- | :--- | | **Total Adjusted EBITDA** | **$101.8** | **$115.4** | **(12)%** | | Electronics | $72.0 | $73.6 | (3)% | | Industrial & Specialty | $29.8 | $41.8 | (28)% | - Gross margin for Q3 2020 decreased to **42.6%** from **44.3%** in Q3 2019, a contraction of **170 basis points**, primarily due to lower sales volumes and unfavorable product mix in the Industrial & Specialty segment[146](index=146&type=chunk)[147](index=147&type=chunk) [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity is strong with $194.3 million in operating cash flow for 9M 2020, $248 million cash, and $349 million available credit, with no major debt payments until 2028 - Net cash from operating activities for the nine months ended Sep 30, 2020, was **$194.3 million**, a significant increase from **$92.1 million** in the same period of 2019[171](index=171&type=chunk)[172](index=172&type=chunk) - As of September 30, 2020, the company had **$248 million** in cash and cash equivalents and **$349 million** available under its revolving credit facilities[170](index=170&type=chunk)[177](index=177&type=chunk) - The company expects to pay a quarterly dividend of **5 cents per share**, subject to Board approval[166](index=166&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes to market risk disclosures from the 2019 Annual Report on Form 10-K - Disclosures about market risk have not changed materially from those disclosed in the 2019 Annual Report[180](index=180&type=chunk) [Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective as of September 30, 2020, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of the end of the period covered by the report[182](index=182&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal controls[184](index=184&type=chunk) [Part II. Other Information](index=40&type=section&id=Part%20II.%20Other%20Information) [Legal Proceedings](index=40&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings and environmental claims, with further details in Note 11 - The company is involved in various legal proceedings and environmental claims incidental to its business; more information is available in Note 11[186](index=186&type=chunk) [Risk Factors](index=40&type=section&id=Item%201A.%20Risk%20Factors) A new risk factor addresses the uncertain and potentially adverse impact of the COVID-19 pandemic on operations and financial condition - A new risk factor was added highlighting that the extent of the impact of the COVID-19 pandemic on the company's results of operations and overall financial performance remains uncertain and subject to change[187](index=187&type=chunk) - Potential adverse effects from the pandemic include disruptions to global supply chains, reduced customer demand, increased operating costs, and potential impairment of goodwill or intangible assets[188](index=188&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=40&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In Q3 2020, the company repurchased 237,629 shares for $2.6 million, with $207 million remaining under the $750 million repurchase program Share Repurchases for Q3 2020 | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | July 1 - July 31 | — | — | | August 1 - August 31 | — | — | | September 1 - September 30 | 237,629 | $11.24 | | **Total** | **237,629** | **$11.24** | - As of September 30, 2020, **$207 million** remained authorized for repurchase under the company's **$750 million** program[190](index=190&type=chunk) [Defaults Upon Senior Securities](index=41&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) None - None[192](index=192&type=chunk) [Mine Safety Disclosures](index=41&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) None - None[192](index=192&type=chunk) [Other Information](index=41&type=section&id=Item%205.%20Other%20Information) None - None[192](index=192&type=chunk) [Exhibits](index=42&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the quarterly report, including corporate governance documents and required certifications - Lists exhibits filed with the report, including corporate governance documents, debt agreements, and required certifications[193](index=193&type=chunk)

Element Solutions Inc. (NYSE:ESI) Q3 2020 Earnings Conference Call October 28, 2020 8:30 AM ET Company Participants Yash Nehete - Associate Director, Corporate Development & Investor Relations Sir Martin Franklin - Executive Chairman Ben Gliklich - Chief Executive Officer Carey Dorman - Chief Financial Officer Conference Call Participants Steve Byrne - Bank of America Josh Spector - UBS Chris Kapsch - Loop Capital Markets Bob Court - Goldman Sachs Duffy Fischer - Barclays Jon Tanwanteng - CJS Securities Ope ...

Financial Data and Key Metrics Changes - The company generated $387 million in net sales, a 15% organic decline year-over-year, but adjusted EBITDA was $85 million, maintaining adjusted EBITDA margin year-over-year [10][12][14] - Adjusted EPS for the quarter was $0.18, reflecting the company's ability to preserve profit despite significant topline pressure [10][12] - Free cash flow for Q2 was $61 million, nearly double compared to Q2 2019, with a total of more than $109 million in the first half of 2020, up 29% year-over-year [14][21][22] Business Line Data and Key Metrics Changes - In the Electronics segment, organic net sales declined only 6% year-over-year, with strong performance in circuitry and semiconductor businesses, the latter growing nearly 20% year-over-year [15][16][11] - The Industrial & Specialty segment saw a 26% decline in organic net sales, primarily driven by a 35% decline in the Industrial Solutions vertical due to COVID-related automotive shutdowns [16][17] - The graphics business experienced a small decline in Q2 after double-digit growth in Q1, as consumer packaged goods companies delayed new product launches [17] Market Data and Key Metrics Changes - The automotive sector faced significant demand declines, impacting the company's industrial and assembly businesses, particularly in Europe and the Americas [9][10] - The semiconductor business benefited from wireless infrastructure investment and data center demand, which helped offset declines in other areas [11][12] - The company noted mixed performance in Asia, with China showing strength while India experienced softness [15] Company Strategy and Development Direction - The company intends to continue focusing on long-term growth and innovation, despite the challenges posed by COVID-19, and has not fundamentally restructured its workforce [14][30] - The management emphasized the importance of maintaining a strong workforce to support recovery in markets and to continue delivering on commitments [66] - The company is evaluating modest bolt-on acquisitions to enhance growth and capabilities while maintaining a targeted net leverage ceiling of 3.5 times adjusted EBITDA [30][31] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about recovery in markets, with July showing a 5% improvement over June, but still down 10% year-over-year [25][26] - The company expects adjusted EBITDA for Q3 to be at least $80 million, with a focus on managing costs prudently while anticipating some cost benefits from the second quarter will not repeat [27][28] - The long-term macro trends in the electronics business are viewed as robust, with expectations for continued strength in high-end electronics driven by infrastructure investments [27][46] Other Important Information - The company generated $61 million of free cash flow in Q2, with a focus on managing working capital effectively [21][22] - The company has not repurchased shares during the quarter, prioritizing employee welfare and maintaining liquidity [23] - The management highlighted the importance of innovation and local operations to mitigate risks associated with U.S.-China trade relations [72][73] Q&A Session Summary Question: Trends in metallization technology - The company noted that metallization is a core focus area, with incremental developments rather than radical changes, and is positioned as a market leader in this space [35][36] Question: R&D expense variability - The CEO clarified that R&D spending has not been cut year-over-year, and the company continues to invest in long-term growth despite some temporary reductions in compensation [38][39] Question: Impact of 5G developments on sales - The company is benefiting from infrastructure investments, particularly in the semiconductor business, which is expected to continue driving growth in the coming years [44][46] Question: Inventory destocking effects - Management acknowledged that while there has been some strength in sales, they remain cautious about potential inventory destocking impacting future performance [47][50] Question: Headcount maintenance during downturn - The company maintained its workforce to preserve expertise and capability, believing in the eventual recovery of markets [66][67] Question: Outlook for return on capital - The company expects to improve returns on capital as it grows organically without significant capital investments, focusing on continuous improvement [69][70]

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 June 30, 2020 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 (Sta ...

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 March 31, 2020 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 https://files.reportify.cc/media/production/ESI8 Element Solutions Inc (Exact name of Registrant as ...

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, 2019 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 ...

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, 2019 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 ...

[Front Matter](index=4&type=section&id=Front%20Matter) This section provides foundational information for the report, including definitions, scope of financial reporting, forward-looking statement disclaimers, and non-GAAP measure explanations [Glossary of Defined Terms](index=4&type=section&id=Glossary%20of%20Defined%20Terms) This section provides definitions for key terms used throughout the report, including company-specific terms like 'Arysta Sale' and standard financial and legal acronyms such as GAAP, SEC, and EBITDA - The **'Arysta Sale'** refers to the sale of 100% of the shares of Arysta LifeScience Inc. to UPL for net cash proceeds of approximately **$4.28 billion**, completed on January 31, 2019[9](index=9&type=chunk) [Discontinued Operations](index=5&type=section&id=Discontinued%20Operations) This section clarifies that unless specified otherwise, all results and disclosures in the report exclude the discontinued operations of the former Agricultural Solutions business (Arysta), which was sold on January 31, 2019 - The former Agricultural Solutions business (Arysta) has been classified as discontinued operations following its sale on January 31, 2019, with all financial statements adjusted to reflect this separation[10](index=10&type=chunk) [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) This section contains a standard safe harbor statement, warning that the report includes forward-looking statements subject to risks and uncertainties, and advises readers that actual results may differ materially [Non-GAAP Financial Measures](index=5&type=section&id=Non-GAAP%20Financial%20Measures) The report utilizes non-GAAP financial measures such as operating results on a constant currency and organic basis, stating these measures should not be considered substitutes for GAAP measures [Part I. Financial Information](index=6&type=section&id=Part%20I.%20Financial%20Information) This part presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements for the three and six months ended June 30, 2019 and 2018, reflecting the significant structural change from the Arysta sale Condensed Consolidated Statements of Operations Highlights | Metric (in millions) | Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | **Net sales** | $456.7 | $501.6 | $916.5 | $994.1 | | **Operating profit** | $55.5 | $59.2 | $100.6 | $118.1 | | **Net income (loss) from continuing operations** | $14.7 | $(49.6) | $11.2 | $(58.5) | | **(Loss) income from discontinued operations, net of tax** | $(13.3) | $61.4 | $14.1 | $108.3 | | **Net income attributable to common stockholders** | $1.5 | $12.0 | $24.7 | $49.3 | | **Diluted EPS attributable to common stockholders** | $0.01 | $0.04 | $0.09 | $0.17 | Condensed Consolidated Balance Sheets Highlights | Metric (in millions) | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | **Total current assets** | $926.3 | $2,482.2 | | **Total assets** | $4,440.3 | $9,401.5 | | **Total current liabilities** | $338.0 | $1,142.5 | | **Total debt (long-term)** | $1,515.3 | $5,350.7 | | **Total liabilities** | $2,209.1 | $7,220.4 | | **Total stockholders' equity** | $2,232.8 | $2,109.2 | Condensed Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30) | Metric (in millions) | 2019 | 2018 | | :--- | :--- | :--- | | **Net cash provided by (used in) operating activities** | $5.3 | $(12.7) | | **Net cash provided by (used in) investing activities** | $4,278.3 | $(11.8) | | **Net cash (used in) provided by financing activities** | $(4,322.2) | $59.1 | [Notes to the Condensed Consolidated Financial Statements](index=15&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) The notes provide detailed explanations of accounting policies and financial figures, including the Arysta Sale, debt restructuring, share repurchases, and segment performance - On January 31, 2019, the company completed the sale of its Agricultural Solutions business (Arysta) for net cash proceeds of approximately **$4.28 billion**, now presented as a discontinued operation[40](index=40&type=chunk)[51](index=51&type=chunk) - Following the Arysta Sale, the company entered into a New Credit Agreement for **$1.08 billion**, paid down its prior credit facilities, and redeemed all outstanding Prior Senior Notes, decreasing total long-term debt from **$5.35 billion** at year-end 2018 to **$1.52 billion** at June 30, 2019[70](index=70&type=chunk)[71](index=71&type=chunk)[78](index=78&type=chunk) - The company repurchased **37 million shares** of its common stock for **$434 million** on February 8, 2019, with an additional **1.2 million shares** repurchased for **$11.4 million** during Q2 2019, leaving approximately **$305 million** remaining authorization at June 30, 2019[105](index=105&type=chunk)[106](index=106&type=chunk)[109](index=109&type=chunk) Segment Net Sales (in millions) | Segment | Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | **Electronics** | $267.9 | $295.7 | $533.8 | $583.7 | | **Industrial & Specialty** | $188.8 | $205.9 | $382.7 | $410.4 | | **Total net sales** | **$456.7** | **$501.6** | **$916.5** | **$994.1** | Segment Adjusted EBITDA (in millions) | Segment | Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | **Electronics** | $60.4 | $65.0 | $116.8 | $125.1 | | **Industrial & Specialty** | $40.1 | $44.4 | $82.3 | $88.4 | | **Total Adjusted EBITDA** | **$100.5** | **$109.4** | **$199.1** | **$213.5** | [Item 2. 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 the company's financial performance, condition, and outlook, focusing on the Arysta Sale's impact, debt reduction, share repurchases, and segment analysis [Overview and Recent Developments](index=22&type=section&id=Overview%20and%20Recent%20Developments) This section outlines the company's business model, operating segments, and key recent events including the Arysta Sale, debt recapitalization, and common stock repurchases - The company operates in two segments: **Electronics** (specialty chemicals for hardware manufacturing) and **Industrial & Specialty** (solutions for surface finishing, graphics, and energy)[139](index=139&type=chunk) - The **Arysta Sale proceeds** were primarily used to pay down existing credit facilities[143](index=143&type=chunk) - The company recapitalized its debt by entering a new **$1.08 billion credit agreement** and redeeming prior senior notes[144](index=144&type=chunk)[145](index=145&type=chunk) - During the first six months of 2019, the company repurchased **38.2 million shares** of its common stock for approximately **$445 million**[147](index=147&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) This section analyzes Q2 and H1 2019 operating results, noting net sales declines due to market softness, but improved Adjusted EBITDA margin from cost controls Q2 2019 vs Q2 2018 Performance | Metric | Q2 2019 | Q2 2018 | Reported Change | Constant Currency Change | Organic Change | | :--- | :--- | :--- | :--- | :--- | :--- | | **Net Sales** | $456.7M | $501.6M | (9)% | (5)% | (6)% | | **Gross Profit** | $193.0M | $214.7M | (10)% | (7)% | N/A | | **Operating Profit** | $55.5M | $59.2M | (6)% | (1)% | N/A | | **Adjusted EBITDA** | $100.5M | $109.4M | (8)% | (4)% | N/A | - The Q2 organic net sales decline of **6%** was driven by a **6% decline** in Electronics and a **5% decline** in Industrial & Specialty[167](index=167&type=chunk) - The decline in the Electronics segment was primarily due to weakness in **mobile phone markets in Asia** and **automotive markets in North America**[168](index=168&type=chunk) - The decline in the Industrial & Specialty segment was driven by softness in **European industrial and automotive markets**, as well as weakness in the **Energy Solutions business**[169](index=169&type=chunk)[170](index=170&type=chunk) - Operating expenses in Q2 2019 decreased by **12%** (**9% constant currency**), driven by lower corporate expenses, reduced incentive compensation, and cost containment initiatives[182](index=182&type=chunk) - Net interest expense decreased significantly to **$18.2 million** in Q2 2019 from **$78.3 million** in Q2 2018, due to the substantial debt paydown following the Arysta Sale[185](index=185&type=chunk)[186](index=186&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) This section details the company's liquidity, cash sources and uses, highlighting the Arysta Sale proceeds and new term loan for debt paydown and share repurchases - Primary sources of liquidity in H1 2019 were the **Arysta Sale proceeds** and a new **$750 million term loan**[204](index=204&type=chunk) - Primary uses of cash were the paydown of approximately **$4.60 billion in debt** and **$445 million in share repurchases**[204](index=204&type=chunk) - As of June 30, 2019, the company had **$248 million in cash and cash equivalents**, of which **$229 million** was held by foreign subsidiaries[209](index=209&type=chunk) - Total indebtedness was **$1.57 billion** at June 30, 2019, and availability under revolving credit facilities was approximately **$303 million**[214](index=214&type=chunk)[215](index=215&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that there have been no material changes to the company's market risk disclosures from those presented in its 2018 Annual Report on Form 10-K [Item 4. Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2019, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of the end of the reporting period[220](index=220&type=chunk) - No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[222](index=222&type=chunk) [Part II. Other Information](index=35&type=section&id=Part%20II.%20Other%20Information) This part includes information on legal proceedings, risk factors, equity security sales, and a list of exhibits filed with the report [Item 1. Legal Proceedings](index=35&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings and environmental matters incidental to its business, with further details referenced in Note 12 of the financial statements [Item 1A. Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) This section indicates that there have been no material changes to the risk factors previously disclosed in the company's 2018 Annual Report on Form 10-K [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=35&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's repurchases of its own equity securities during Q2 2019, totaling 1,154,585 shares at an average price of $9.89 per share Share Repurchases (Q2 2019) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | May 1 - May 31 | 742,391 | $9.70 | | June 1 - June 30 | 412,194 | $10.21 | | **Total** | **1,154,585** | **$9.89** | - As of June 30, 2019, the approximate dollar value of shares that may yet be purchased under the repurchase program is **$305 million**[226](index=226&type=chunk) [Item 6. Exhibits](index=36&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of the quarterly report, including corporate governance documents, agreements, and certifications required by the Sarbanes-Oxley Act