Core Insights - Element Solutions (ESI) reported quarterly earnings of $0.41 per share, exceeding the Zacks Consensus Estimate of $0.39 per share, and showing an increase from $0.39 per share a year ago, resulting in an earnings surprise of +5.13% [1] - The company achieved revenues of $656.1 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 1.51% and increasing from $645 million year-over-year [2] Earnings Performance - Over the last four quarters, Element Solutions has surpassed consensus EPS estimates three times [2] - The company has topped consensus revenue estimates four times over the last four quarters [2] Stock Performance - Element Solutions shares have increased approximately 4.1% since the beginning of the year, while the S&P 500 has gained 16.9% [3] Future Outlook - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the coming quarter is $0.36 on revenues of $624.45 million, and for the current fiscal year, it is $1.45 on revenues of $2.49 billion [7] Industry Context - The Chemical - Specialty industry, to which Element Solutions belongs, is currently ranked in the bottom 35% of over 250 Zacks industries, indicating potential challenges for stock performance [8]

Financial Performance - Net sales for Q3 2025 were $656 million, a 2% increase on a reported basis and a 5% increase on an organic basis compared to Q3 2024[4]. - Adjusted EBITDA reached a record $147 million, up 3% from $143 million in Q3 2024, with a 10% year-over-year increase when excluding the divested MacDermid Graphics Solutions business[4][11]. - Reported net income for Q3 2025 was $39 million, a decrease of 3% from $40 million in Q3 2024, resulting in a net income margin of 6.0%[11]. - Earnings per share (EPS) for Q3 2025 was $0.16 on a GAAP basis, compared to $0.17 for the same period last year, while adjusted EPS rose to $0.41 from $0.39[5]. - Net income for Q3 2025 was $39.3 million, a decrease of 3% from $40.4 million in Q3 2024[20]. - Adjusted EBITDA for the total company was $146.9 million in Q3 2025, reflecting a 3% increase from $142.7 million in Q3 2024[20]. - For the nine months ended September 30, 2025, adjusted net income is $273.6 million, up from $266.2 million in 2024[34]. - Net income for the three months ended September 30, 2025, was $39.3 million, compared to $40.4 million in 2024, while for the nine months, it was $184.8 million versus $189.7 million[38]. Segment Performance - The Electronics segment reported net sales of $465 million, an 11% increase, while the Industrial & Specialty segment saw a 16% decrease in net sales to $191 million, primarily due to divestitures[5]. - Net sales for the Electronics segment reached $465.2 million in Q3 2025, an increase of 11% compared to $419.1 million in Q3 2024[20]. - The Industrial & Specialty segment saw a decline in net sales to $190.9 million in Q3 2025, down 16% from $225.9 million in Q3 2024[20]. Cash Flow and Assets - Cash flows from operating activities for Q3 2025 were $100 million, with adjusted free cash flow of $84 million[4]. - Total assets increased to $5,045.1 million as of September 30, 2025, up from $4,873.9 million at December 31, 2024, representing a growth of 3.5%[16]. - The total current assets rose to $1,526.2 million as of September 30, 2025, compared to $1,270.0 million at December 31, 2024, marking a 20.1% increase[16]. - The company reported a net cash flow from operating activities of $100.1 million for Q3 2025, compared to $72.6 million in Q2 2025[18]. - Cash and cash equivalents at the end of Q3 2025 were $594.3 million, up from $359.4 million at the end of Q4 2024, an increase of 65.3%[18]. - Free cash flow for the three months ended September 30, 2025, was $84.1 million, compared to $85.9 million in 2024, while for the nine months, it was $173.0 million versus $177.2 million[40]. Guidance and Future Outlook - The company narrowed its full-year 2025 adjusted EBITDA guidance to between $545 million and $550 million, with adjusted free cash flow expected to be approximately $280 million[6]. - The acquisition of Micromax is anticipated to contribute meaningfully to earnings growth in 2026, although it will not impact this year's results[3]. - The company continues to explore opportunities for earnings growth, including the commercialization of Kuprion and additional potential acquisitions[3]. - The company expects cash flows from operating activities for 2025 to be approximately $326 million, with capital expenditures projected at around $65 million[40]. - The company expects full year 2025 guidance for adjusted EBITDA, but specific figures are not disclosed due to the inherent difficulty in forecasting[25]. Debt and Liabilities - Total liabilities decreased to $2,376.4 million as of September 30, 2025, from $2,475.5 million at December 31, 2024, a reduction of 4%[16]. - Total debt as of September 30, 2025, is $1,636.2 million, with a cash balance of $594.3 million, resulting in net debt of $1,041.9 million[21]. - Approximately 100% of the company's debt was fixed as of September 30, 2025, following interest rate swaps[21]. Other Financial Metrics - The adjusted EBITDA margin increased by 30 basis points to 22.4% in Q3 2025[11]. - Interest expense for the three months ended September 30, 2025, is $17.9 million, compared to $17.4 million in 2024[22]. - Capital expenditures for the three months ended September 30, 2025, are $16.5 million, an increase from $12.6 million in 2024[22]. - The non-GAAP effective tax rate is set at 20%, reflecting long-term expectations for taxes on adjusted non-GAAP earnings, lower than the statutory average of 23.7%[37]. - The company reported a restructuring expense of $1.5 million for the three months ended September 30, 2025, compared to a restructuring income of $0.1 million in 2024[38]. - Acquisition, integration, and transaction expenses for the three months ended September 30, 2025, were $11.0 million, up from $6.3 million in 2024[38]. - Adjusted common shares outstanding as of September 30, 2025, were 244.0 million, slightly down from 244.6 million in 2024[35]. - Adjusted common shares outstanding for the year-to-date average as of September 30, 2025, were 244.3 million, compared to 244.5 million in 2024[35].

Core Viewpoint - Element Solutions Inc has announced a definitive agreement to acquire Micromax from Celanese Corporation for approximately $500 million in cash, with the transaction expected to close in the first quarter of 2026, pending regulatory approvals and customary closing conditions [1] Group 1: Acquisition Details - The acquisition price for Micromax is approximately $500 million in cash, subject to adjustments [1] - The transaction is anticipated to close in the first quarter of 2026, contingent on certain regulatory approvals and customary closing conditions [1]

Core Viewpoint - Element Solutions Inc plans to release its third quarter financial results for 2025 after market close on October 28, 2025 [1] - A webcast and dial-in conference call will be held on October 29, 2025, at 8:30 a.m. Eastern Time to discuss the financial results [1] - The call will feature CEO Benjamin Gliklich and CFO Carey J. Dorman [1]

Core Viewpoint - The article compares Element Solutions (ESI) and Hawkins (HWKN) to determine which stock is more attractive to value investors [1] Valuation Metrics - ESI has a forward P/E ratio of 17.56, while HWKN has a forward P/E of 38.08 [5] - ESI's PEG ratio is 1.68, indicating a more favorable expected earnings growth rate compared to HWKN's PEG ratio of 2.38 [5] - ESI's P/B ratio is 2.32, significantly lower than HWKN's P/B of 7.24, suggesting ESI is more undervalued [6] Analyst Outlook - ESI currently holds a Zacks Rank of 2 (Buy), indicating an improving earnings estimate revision activity, while HWKN has a Zacks Rank of 3 (Hold) [3][7] - Based on the valuation metrics and analyst outlook, ESI is considered the superior value option at this time [7]

Core Viewpoint - Element Solutions has shown a positive trend in its stock performance, gaining approximately 9.8% since the last earnings report, outperforming the S&P 500, raising questions about the sustainability of this trend leading up to the next earnings release [1] Financial Performance - For Q2 2025, Element Solutions reported earnings of $0.20 per share, down from $0.39 in the same quarter last year, but adjusted earnings were $0.37, surpassing the Zacks Consensus Estimate of $0.36 [2] - The company generated net sales of $625.2 million, reflecting a 2% year-over-year increase and exceeding the Zacks Consensus Estimate of $605 million, with organic net sales rising by 6% [2] - The Electronics segment saw net sales increase by 12% year over year to $439 million, beating the consensus estimate of $426 million, while the Industrial & Specialty segment experienced a 16% decline to $186 million, although it still surpassed the consensus estimate of $179 million [4] Financial Position - At the end of the quarter, Element Solutions had cash and cash equivalents of $529.9 million, a 47.4% increase from the previous quarter, while long-term debt rose slightly to $1,624.5 million [5] - Cash from operating activities was reported at $72.6 million, with free cash flow amounting to $58.8 million for the quarter [5] Outlook - The company projects adjusted EBITDA for 2025 to be between $530 million and $550 million, with free cash flow conversion expected to be similar to the previous year [6] - For Q3 2025, adjusted EBITDA is forecasted to be between $140 million and $145 million [6] Market Position - Element Solutions holds a Zacks Rank of 2 (Buy), indicating expectations for above-average returns in the coming months [10] - The company has a subpar Growth Score of D and a Momentum Score of F, but a value score of C, placing it in the middle 20% for value investors [8][9] Industry Performance - Element Solutions is part of the Zacks Chemical - Specialty industry, where RPM International, a peer, reported revenues of $2.08 billion for the quarter ended May 2025, reflecting a year-over-year increase of 3.7% [11] - RPM International is expected to post earnings of $1.88 per share for the current quarter, indicating a 2.2% increase from the previous year, with a Zacks Rank of 3 (Hold) [12]

Core Insights - Element Solutions Inc. (ESI) reported earnings of 20 cents per share for Q2 2025, down from 39 cents in the same quarter last year, but adjusted earnings were 37 cents per share, exceeding the Zacks Consensus Estimate of 36 cents [1][7] - The company achieved net sales of $625.2 million, a 2% increase year over year, surpassing the Zacks Consensus Estimate of $605 million, with organic net sales rising by 6% [1][7] Segment Performance - The Electronics segment saw net sales increase by 12% year over year to $439 million, with organic net sales up 9%, beating the consensus estimate of $426 million [3] - In contrast, the Industrial & Specialty segment experienced a 16% decline in net sales to $186 million, although it still exceeded the consensus estimate of $179 million, with organic net sales increasing by 1% [3] Financial Position - ESI ended the quarter with cash and cash equivalents of $529.9 million, a 47.4% increase from the previous quarter, while long-term debt rose slightly to $1,624.5 million [4] - Cash from operating activities was reported at $72.6 million, and free cash flow was $58.8 million for the quarter [4] Outlook - The company projects adjusted EBITDA for 2025 to be between $530 million and $550 million, with free cash flow conversion expected to be similar to the previous year [5] - For Q3 2025, adjusted EBITDA is forecasted to be between $140 million and $145 million [5] Stock Performance - ESI's shares have decreased by 1.6% over the past year, while the industry has seen a 1.3% increase [6]

[Glossary of Defined Terms](index=4&type=section&id=Glossary%20of%20Defined%20Terms) This section provides definitions for key terms and abbreviations used throughout the report | Terms | Definitions | | :--- | :--- | | Element Solutions; We; Us; Our; the Company | Element Solutions Inc, a Delaware corporation, and where the context requires, its subsidiaries or operating businesses. | | Credit Agreement | Credit Agreement, dated as of January 31, 2019, as amended from time to time, among, inter alia, Element Solutions and MacDermid, Incorporated, as borrowers, certain subsidiaries of Element Solutions and the lenders from time to time parties thereto. | | EBITDA | Earnings before interest, taxes, depreciation and amortization. | | Exchange Act | Securities Exchange Act of 1934, as amended. | | FDII | Foreign-derived intangible income. | | GAAP | U.S. Generally Accepted Accounting Principles. | | GILTI | Global intangible low-taxed income. | | Kuprion Acquisition | Element Solutions' acquisition of Kuprion, Inc. on May 19, 2023. | | MGS Transaction | Element Solutions' sale of its flexographic printing plate business, MacDermid Graphics Solutions on February 28, 2025. | | Quarterly Report | This quarterly report on Form 10-Q for the three and six months ended June 30, 2025. | | RSUs | Restricted stock units issued by Element Solutions from time to time under its Amended and Restated 2013 Incentive Compensation Plan. | | SEC | Securities and Exchange Commission. | | 2024 Annual Report | Element Solutions' annual report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on February 19, 2025. | | 3.875% USD Notes due 2028 | Element Solutions' $800 million aggregate principal amount of 3.875% senior notes due 2028, denominated in U.S. dollars, issued on August 18, 2020. | [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) This section outlines the nature of forward-looking statements and associated risks, emphasizing that actual results may differ materially - This Quarterly Report contains **forward-looking statements** identified by specific words and expressions, covering expectations regarding benefits from acquisitions and divestitures (ViaForm Distribution Rights, Kuprion Acquisition, MGS Transaction), tax implications, deferred payments, geopolitical conflicts (Ukraine, Israel-Hamas), tariffs, economic factors, capital requirements, financing availability, RSU performance targets, government regulations, accounting standards, dividend policy, hedging activities, environmental and legal matters, tax strategies, impairments, market volatility, inflation, foreign exchange rates, liquidity, cash flows, capital allocation, funding sources, capital expenditures, debt, share repurchases, debt/equity issuance/retirement, pension contributions, contractual obligations, operating results, sustainability goals, and future prospects[11](index=11&type=chunk) - The company cautions that actual results may **differ materially** from **forward-looking statements** due to various factors, including those discussed in the 'Risk Factors' section of its 2024 Annual Report. The company undertakes no obligation to update or revise any **forward-looking statement**[12](index=12&type=chunk) [Non-GAAP Financial Measures (Introductory Statement)](index=5&type=section&id=Non-GAAP%20Financial%20Measures%20(Introductory%20Statement)) This section introduces non-GAAP financial measures, clarifying their definitions, limitations, and reconciliation to GAAP measures - This Quarterly Report includes **non-GAAP financial measures** such as **Adjusted EBITDA** and **operating results** on a **constant currency** and **organic basis**. These measures should not be considered in isolation from, or as a substitute for, GAAP performance measures[13](index=13&type=chunk) - Further information, including definitions, limitations, and reconciliations to comparable GAAP measures, is provided in 'Non-GAAP Financial Measures' within Part I, Item 2, and Note 13, Segment Information, of the unaudited Condensed Consolidated Financial Statements[13](index=13&type=chunk) [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 related management discussion and analysis [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents the company's unaudited condensed consolidated financial statements and notes, detailing key financial changes [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section presents the company's unaudited condensed consolidated statements of operations, detailing revenues, expenses, and net income for the reported periods Key Financial Highlights (Q2 and YTD June 30) | Metric | Three Months Ended June 30, 2025 (in millions) | Three Months Ended June 30, 2024 (in millions) | Six Months Ended June 30, 2025 (in millions) | Six Months Ended June 30, 2024 (in millions) | | :--- | :--- | :--- | :--- | :--- | | Net sales | $625.2 | $612.7 | $1,218.9 | $1,187.7 | | Gross profit | $266.4 | $267.2 | $516.9 | $512.2 | | Operating profit | $94.3 | $96.2 | $171.7 | $174.0 | | Interest expense, net | $(12.9) | $(14.3) | $(27.2) | $(28.2) | | Foreign exchange (losses) gains | $(17.1) | $5.0 | $(23.4) | $12.9 | | (Loss) gain on divestitures | $(5.5) | — | $66.6 | — | | Income before income taxes and non-controlling interests | $63.3 | $74.2 | $179.1 | $143.7 | | Income tax (expense) benefit | $(15.8) | $17.5 | $(33.6) | $4.0 | | Net income from continuing operations | $47.5 | $91.7 | $145.5 | $147.7 | | Net income attributable to common stockholders | $47.4 | $93.2 | $145.4 | $149.2 | | Basic EPS attributable to common stockholders | $0.20 | $0.39 | $0.60 | $0.62 | | Diluted EPS attributable to common stockholders | $0.20 | $0.39 | $0.60 | $0.62 | - **Net income attributable** to common stockholders **decreased by 49%** for the three months ended June 30, 2025, and by **3%** for the six months ended June 30, 2025, compared to the prior year periods[15](index=15&type=chunk) - The company recorded an **income tax expense of $15.8 million** in Q2 2025, a **significant shift** from a **$17.5 million benefit** in Q2 2024, and an **expense of $33.6 million** YTD 2025 compared to a **$4.0 million benefit** YTD 2024[15](index=15&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents the company's unaudited condensed consolidated statements of comprehensive income, including net income and other comprehensive income items Comprehensive Income Highlights (Q2 and YTD June 30) | Metric | Three Months Ended June 30, 2025 (in millions) | Three Months Ended June 30, 2024 (in millions) | Six Months Ended June 30, 2025 (in millions) | Six Months Ended June 30, 2024 (in millions) | | :--- | :--- | :--- | :--- | :--- | | Net income | $47.5 | $93.3 | $145.5 | $149.3 | | Total foreign currency translation adjustments | $96.5 | $(28.4) | $164.6 | $(74.7) | | Total unrealized (loss) income on qualified hedging derivatives | $(5.0) | $(0.9) | $(15.6) | $7.1 | | Other comprehensive income (loss) | $91.5 | $(29.1) | $149.0 | $(67.4) | | Comprehensive income attributable to common stockholders | $138.9 | $64.2 | $294.5 | $81.9 | - **Comprehensive income attributable** to common stockholders **increased significantly by 116%** for the three months ended June 30, 2025, and by **260%** for the six months ended June 30, 2025, primarily driven by **positive foreign currency translation adjustments**[16](index=16&type=chunk) [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's unaudited condensed consolidated balance sheets, detailing assets, liabilities, and equity at specific dates Balance Sheet Highlights (June 30, 2025 vs. December 31, 2024) | Metric | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :--- | :--- | :--- | | Cash and cash equivalents | $529.9 | $359.4 | | Total current assets | $1,454.2 | $1,270.0 | | Total assets | $5,002.6 | $4,873.9 | | Total current liabilities | $354.9 | $379.7 | | Debt | $1,624.5 | $1,813.6 | | Total liabilities | $2,361.3 | $2,475.5 | | Total stockholders' equity | $2,626.2 | $2,383.0 | | Total equity | $2,641.3 | $2,398.4 | - **Cash and cash equivalents increased by 47.4%** to **$529.9 million** at June 30, 2025, from **$359.4 million** at December 31, 2024[18](index=18&type=chunk) - **Total debt decreased by 10.4%** to **$1,624.5 million** at June 30, 2025, from **$1,813.6 million** at December 31, 2024[18](index=18&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents the company's unaudited condensed consolidated statements of cash flows, categorizing cash movements from operating, investing, and financing activities Cash Flow Highlights (Six Months Ended June 30) | Metric | Six Months Ended June 30, 2025 (in millions) | Six Months Ended June 30, 2024 (in millions) | | :--- | :--- | :--- | | Net cash flows provided by operating activities | $98.6 | $124.8 | | Net cash flows provided by (used in) investing activities | $323.1 | $(43.8) | | Net cash flows used in financing activities | $(266.0) | $(54.1) | | Net increase in cash and cash equivalents | $170.5 | $20.0 | | Cash and cash equivalents at end of period | $529.9 | $309.3 | - **Net cash flows from investing activities significantly increased** to **$323.1 million** in YTD 2025, compared to a **$43.8 million** outflow in YTD 2024, primarily due to **proceeds from divestitures**[20](index=20&type=chunk) - **Net cash flows used in financing activities increased substantially** to **$266.0 million** in YTD 2025, mainly due to **repayments of borrowings** (**$202.6 million**) and **repurchases of common stock** (**$19.4 million**)[20](index=20&type=chunk) [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) This section presents the company's unaudited condensed consolidated statements of changes in stockholders' equity, detailing movements in capital accounts Stockholders' Equity Changes (Q2 and YTD June 30, 2025) | Metric | Q2 2025 (in millions) | YTD 2025 (in millions) | | :--- | :--- | :--- | | Balance at March 31, 2025 / December 31, 2024 | $2,519.8 | $2,383.0 | | Net income | $47.4 | $145.4 | | Other comprehensive income (loss), net of taxes | $91.5 | $149.1 | | Repurchases of common stock | $(19.5) | $(19.5) | | Dividends | $(19.7) | $(39.2) | | Balance at June 30, 2025 | $2,626.2 | $2,626.2 | - **Total stockholders' equity increased** to **$2,626.2 million** at June 30, 2025, from **$2,383.0 million** at December 31, 2024, driven by **net income** and **other comprehensive income**[25](index=25&type=chunk) - The company **repurchased $19.5 million** of common stock and **paid $19.7 million** in dividends during the three months ended June 30, 2025[22](index=22&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanatory notes to the unaudited condensed consolidated financial statements, offering additional context and disclosures [Note 1. Background and Basis of Presentation](index=12&type=section&id=Note%201.%20Background%20and%20Basis%20of%20Presentation) This note describes the company's business, organizational structure, and the basis for preparing the condensed consolidated financial statements - Element Solutions Inc is a leading global specialty chemicals company, providing solutions that enhance product performance in industries such as consumer electronics, automotive, and offshore energy[28](index=28&type=chunk) - The company's operations are organized into two **reportable segments**: **Electronics** and **Industrial & Specialty**[29](index=29&type=chunk) - The **Industrial & Specialty segment** completed the sale of its flexographic printing plate business, MacDermid Graphics Solutions on February 28, 2025[31](index=31&type=chunk) [Note 2. Divestitures](index=13&type=section&id=Note%202.%20Divestitures) This note details significant divestiture activities, including the sale of the MacDermid Graphics Solutions business and its financial impact - On February 28, 2025, the company completed the sale of its MacDermid Graphics Solutions business for **$323 million**, net of cash, resulting in a **gain of $70.9 million** recognized as 'Other income'[37](index=37&type=chunk) - The disposed business was classified as held for sale but did not meet the criteria for discontinued operations[38](index=38&type=chunk) - In Q2 2025, the company recognized a **loss on sale of $4.3 million** for other immaterial divestiture activity[40](index=40&type=chunk) [Note 3. Inventories](index=14&type=section&id=Note%203.%20Inventories) This note provides a breakdown of the company's inventory composition, including finished goods, work in process, and raw materials Inventory Composition (in millions) | Category | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Finished goods | $155.9 | $137.4 | | Work in process | $48.4 | $35.6 | | Raw materials and supplies | $79.5 | $73.2 | | **Total inventories** | **$283.8** | **$246.2** | - **Total inventories increased by $37.6 million** from December 31, 2024, to June 30, 2025[42](index=42&type=chunk) [Note 4. Property, Plant and Equipment, Net](index=14&type=section&id=Note%204.%20Property,%20Plant%20and%20Equipment,%20Net) This note details the composition of property, plant, and equipment, net of accumulated depreciation, and related depreciation expense Property, Plant and Equipment, Net (in millions) | Category | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Land and leasehold improvements | $50.3 | $48.0 | | Buildings and improvements | $195.8 | $180.0 | | Machinery, equipment, fixtures and software | $353.8 | $313.1 | | Construction in process | $54.0 | $55.5 | | Total property, plant and equipment | $653.9 | $596.6 | | Accumulated depreciation | $(357.3) | $(319.8) | | **Property, plant and equipment, net** | **$296.6** | **$276.8** | Depreciation Expense (in millions) | Period | 2025 | 2024 | | :--- | :--- | :--- | | Three Months Ended June 30, | $9.7 | $10.3 | | Six Months Ended June 30, | $19.7 | $20.4 | [Note 5. Goodwill and Intangible Assets, Net](index=14&type=section&id=Note%205.%20Goodwill%20and%20Intangible%20Assets,%20Net) This note provides information on the company's goodwill by segment and the net book value of various intangible assets Goodwill by Segment (in millions) | Segment | December 31, 2024 | June 30, 2025 | | :--- | :--- | :--- | | Electronics | $1,258.1 | $1,311.7 | | Industrial & Specialty | $873.9 | $929.9 | | **Total** | **$2,132.0** | **$2,241.6** | - **Goodwill increased by $109.6 million** from December 31, 2024, to June 30, 2025, primarily due to **foreign currency translation** and other adjustments (**$110.9 million**), partially offset by a divestiture (**$1.3 million**)[44](index=44&type=chunk) Intangible Assets, Net (in millions) | Category | June 30, 2025 Net Book Value | December 31, 2024 Net Book Value | | :--- | :--- | :--- | | Customer relationships | $375.0 | $382.7 | | Developed technology | $48.0 | $58.1 | | Trade names | $122.2 | $55.9 | | Reacquired distribution rights | $161.0 | $167.3 | | Indefinite-lived trade name | — | $68.0 | | **Total** | **$706.2** | **$732.0** | - In Q1 2025, the company began amortizing a previously indefinite-lived trade name over **20 years**[48](index=48&type=chunk) [Note 6. Debt](index=15&type=section&id=Note%206.%20Debt) This note details the company's debt obligations, including term loans and senior notes, and compliance with debt covenants Debt Obligations (in millions) | Debt Type | Maturity Date | Interest Rate | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Term Loans | 2030 | SOFR plus 1.75% | $829.7 | $1,030.0 | | Senior Notes - $800 million | 2028 | 3.875% | $794.8 | $794.0 | | **Total debt** | | | **$1,624.5** | **$1,824.0** | - On March 31, 2025, the company prepaid **$200 million** of its term loans B-3 using proceeds from the MGS Transaction, reducing the principal outstanding and ceasing required quarterly principal payments[53](index=53&type=chunk) - At June 30, 2025, the company was in **compliance** with all debt covenants and had **$368 million** of unused borrowing capacity under its revolving credit facility[57](index=57&type=chunk) [Note 7. Financial Instruments](index=17&type=section&id=Note%207.%20Financial%20Instruments) This note describes the company's use of derivative financial instruments to manage exposure to interest rate, foreign currency, and commodity price risks - The company uses derivative financial instruments (interest rate swaps, net investment hedges, foreign currency forward contracts, commodity derivative contracts) to **manage exposure** to interest rate, foreign currency, and commodity price risks[61](index=61&type=chunk) - In January 2025, upon maturity of **$286 million** in notional value of cross-currency swaps, the company received **$25.5 million** in cash proceeds and subsequently entered into new swaps for **$135 million** notional value[65](index=65&type=chunk) Notional Value of Derivatives (in millions) | Derivative Type | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Interest rate swaps and cross-currency swaps | $834 | $1,040 | | Foreign currency exchange forward contracts | $161 | $104 | | Commodity derivative contracts | $65.6 | $55.3 | [Note 8. Stockholders' Equity](index=19&type=section&id=Note%208.%20Stockholders'%20Equity) This note provides details on changes in stockholders' equity, including common stock repurchases and dividend payments - During the three months ended June 30, 2025, the company **repurchased** approximately **0.9 million shares** of its common stock for **$19.5 million**[78](index=78&type=chunk) - The **remaining authorization** under the company's stock repurchase program was approximately **$562 million** at June 30, 2025[78](index=78&type=chunk) [Note 9. Earnings Per Share](index=20&type=section&id=Note%209.%20Earnings%20Per%20Share) This note presents the calculation of basic and diluted earnings per share attributable to common stockholders Earnings Per Share Attributable to Common Stockholders | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Basic EPS | $0.20 | $0.38 | $0.60 | $0.61 | | Diluted EPS | $0.20 | $0.38 | $0.60 | $0.61 | - Basic and diluted EPS **decreased significantly** in Q2 2025 compared to Q2 2024, reflecting the lower net income[80](index=80&type=chunk) [Note 10. Contingencies, Environmental and Legal Matters](index=20&type=section&id=Note%2010.%20Contingencies,%20Environmental%20and%20Legal%20Matters) This note discusses the company's environmental liabilities and involvement in various legal proceedings - The company's **environmental liabilities** totaled **$11.0 million** at June 30, 2025, primarily for remediation, clean-up costs, and site monitoring[82](index=82&type=chunk) - The company does not currently anticipate any **material losses** in excess of the recorded environmental liabilities[82](index=82&type=chunk) - The company is involved in various legal proceedings but believes their resolutions will not have a **material adverse effect** on its consolidated financial position, results of operations, or cash flows[86](index=86&type=chunk) [Note 11. Income Taxes](index=21&type=section&id=Note%2011.%20Income%20Taxes) This note details the company's income tax expense or benefit, including factors influencing the effective tax rate Income Tax (Expense) Benefit (in millions) | Period | 2025 | 2024 | | :--- | :--- | :--- | | Three Months Ended June 30, | $(15.8) | $17.5 | | Six Months Ended June 30, | $(33.6) | $4.0 | - The **income tax expense** in 2025 includes a continued U.S. **benefit** from foreign tax credits and FDII deduction, partially offset by a **$7.7 million** multi-year tax settlement (YTD)[88](index=88&type=chunk)[89](index=89&type=chunk) - The 2024 **income tax benefit** included a **significant release of valuation allowances** (**$35.9 million** in Q2, **$37.1 million** YTD) related to U.K. tax attribute carryforwards due to improved profitability[92](index=92&type=chunk) [Note 12. Related Party Transactions](index=22&type=section&id=Note%2012.%20Related%20Party%20Transactions) This note describes transactions and agreements with related parties, including advisory services fees - The company has an **Advisory Services Agreement** with Mariposa Capital, LLC, an affiliate of one of its founder directors, entitling Mariposa Capital to an **annual fee of $2.0 million** and expense reimbursements[95](index=95&type=chunk) [Note 13. Segment Information](index=22&type=section&id=Note%2013.%20Segment%20Information) This note provides financial information by reportable segment, including net sales and Adjusted EBITDA, for performance evaluation - The company's operations are organized into two **reportable segments**: **Electronics** and **Industrial & Specialty**, with the CEO utilizing net sales and **Adjusted EBITDA** for resource allocation and performance evaluation[96](index=96&type=chunk)[97](index=97&type=chunk) Net Sales by Segment (in millions) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Electronics | $439.4 | $391.7 | $833.7 | $740.9 | | Industrial & Specialty | $185.8 | $221.0 | $385.2 | $446.8 | | **Total net sales** | **$625.2** | **$612.7** | **$1,218.9** | **$1,187.7** | Adjusted EBITDA by Segment (in millions) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Electronics | $96.5 | $92.2 | $185.4 | $176.1 | | Industrial & Specialty | $39.5 | $42.9 | $79.0 | $86.0 | | **Total Adjusted EBITDA** | **$136.0** | **$135.1** | **$264.4** | **$262.1** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes the company's financial condition, results of operations, and liquidity [Overview](index=25&type=section&id=Overview) This section provides a high-level description of Element Solutions' business model, segments, and recent strategic developments - Element Solutions is a global specialty chemicals company focused on product innovation and customer-centric solutions across its **Electronics** and **Industrial & Specialty segments**[106](index=106&type=chunk)[110](index=110&type=chunk) - The **Electronics segment** provides specialty chemicals for electronics hardware, including Assembly Solutions, Circuitry Solutions, and Semiconductor Solutions, with **growth driven** by increasing use of electronics, AI, and data center investments[110](index=110&type=chunk)[111](index=111&type=chunk) - The **Industrial & Specialty segment** offers chemicals for surface enhancement and industrial processes, including Industrial Solutions and Energy Solutions. The MacDermid Graphics Solutions business was sold on February 28, 2025[111](index=111&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk) - During Q2 2025, the company **repurchased 0.9 million shares** of common stock for approximately **$19.5 million**, with **$562 million remaining** under the stock repurchase program authorization[114](index=114&type=chunk) [Non-GAAP Financial Measures](index=28&type=section&id=Non-GAAP%20Financial%20Measures) This section defines and explains the company's non-GAAP financial measures, such as constant currency, organic net sales growth, and Adjusted EBITDA - The company uses **non-GAAP financial measures** such as **constant currency**, **organic net sales growth**, and **Adjusted EBITDA** to provide additional insights into performance and facilitate period-to-period comparisons[117](index=117&type=chunk) - **Constant currency** adjusts results to exclude the impact of foreign currency translation, while **organic net sales growth** further excludes pass-through metals pricing and acquisitions/divestitures[119](index=119&type=chunk)[121](index=121&type=chunk) - **Adjusted EBITDA** is defined as EBITDA, excluding items not representative of ongoing business or associated with the company's capital structure[123](index=123&type=chunk) [Results of Operations](index=30&type=section&id=Results%20of%20Operations) This section analyzes the company's consolidated and segment-level financial performance, including net sales, gross profit, and operating expenses [Net Sales](index=31&type=section&id=Net%20Sales) This section analyzes the company's net sales performance, including reported, constant currency, and organic growth rates by segment Consolidated Net Sales Growth (Q2 and YTD June 30) | Period | Reported Growth | Constant Currency Growth | Organic Growth | | :--- | :--- | :--- | :--- | | Three Months Ended June 30, 2025 | 2% | 1% | 6% | | Six Months Ended June 30, 2025 | 3% | 4% | 6% | - **Electronics' net sales increased 12% reported** (**9% organic**) in Q2 2025, driven by **volume growth** in high-performance computing, telecommunications, AI, data center investments, wafer plating, advanced packaging, and new EV customers[128](index=128&type=chunk)[130](index=130&type=chunk) - **Industrial & Specialty's net sales decreased 16% reported** (**increased 1% organic**) in Q2 2025, with divestitures negatively impacting reported sales by **$38.4 million**[127](index=127&type=chunk)[129](index=129&type=chunk) [Gross Profit](index=33&type=section&id=Gross%20Profit) This section analyzes the company's gross profit and gross margin performance by segment, highlighting factors influencing changes Gross Profit and Margin by Segment (Q2 June 30) | Segment | Gross Profit 2025 (in millions) | Gross Profit 2024 (in millions) | Gross Margin 2025 | Gross Margin 2024 | | :--- | :--- | :--- | :--- | :--- | | Electronics | $179.4 | $172.5 | 40.8% | 44.0% | | Industrial & Specialty | $87.0 | $94.7 | 46.9% | 42.9% | | **Total** | **$266.4** | **$267.2** | **42.6%** | **43.6%** | - **Electronics' gross profit increased by 4% reported** (**3% constant currency**) in Q2 2025, driven by **organic volume growth**, but **gross margin decreased** due to **higher prices** of pass-through tin and silver[138](index=138&type=chunk) - **Industrial & Specialty's gross profit decreased by 8% reported** (**8% constant currency**) in Q2 2025, primarily due to a **$13.1 million negative impact** from the MGS Transaction. However, **gross margin increased** due to the sale of the lower-margin Graphics Solutions business and **growth** in higher-margin Energy Solutions[139](index=139&type=chunk) [Operating Expenses](index=34&type=section&id=Operating%20Expenses) This section details the company's operating expenses, including selling, technical, general, administrative, and research and development costs Operating Expenses (Q2 and YTD June 30, in millions) | Expense Type | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Selling, technical, general and administrative | $155.9 | $155.4 | $313.1 | $304.5 | | Research and development | $16.2 | $15.6 | $32.1 | $33.7 | | **Total Operating Expenses** | **$172.1** | **$171.0** | **$345.2** | **$338.2** | - **Operating expenses increased 1% reported** (**0% constant currency**) in Q2 2025, reflecting **higher incentive compensation costs** partially offset by **$6.7 million lower operating expenses** due to the MGS sale[144](index=144&type=chunk) - Year-to-date **operating expenses increased 2% reported** (**3% constant currency**), driven by **higher incentive compensation** and **$3.6 million non-recurring MGS transaction costs**, partially offset by **$9.0 million lower expenses** from the MGS sale and **$3.9 million lower R&D costs** from the Kuprion Acquisition (due to a prior year charge)[145](index=145&type=chunk) [Other (Expense) Income](index=34&type=section&id=Other%20(Expense)%20Income) This section details other financial items, including interest expense, foreign exchange gains/losses, and gains/losses on divestitures Other (Expense) Income, Net (Q2 and YTD June 30, in millions) | Category | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Interest expense, net | $(12.9) | $(14.3) | $(27.2) | $(28.2) | | Foreign exchange (losses) gains | $(17.1) | $5.0 | $(23.4) | $12.9 | | Other income (expense), net | $4.5 | $(12.7) | $(8.6) | $(15.0) | | (Loss) gain on divestitures | $(5.5) | — | $66.6 | — | | **Total** | **$(31.0)** | **$(22.0)** | **$7.4** | **$(30.3)** | - **Interest expense, net, decreased** due to **higher interest income**, partially offset by a higher effective interest rate on a lower outstanding term loan principal balance[147](index=147&type=chunk) - **Foreign exchange losses increased significantly** in Q2 and YTD 2025, primarily driven by the remeasurement of intercompany loans[148](index=148&type=chunk) - The company recognized a **$70.9 million gain** from the MGS Transaction in Q1 2025, contributing to a **$66.6 million gain on divestitures** year-to-date[152](index=152&type=chunk) [Income Tax](index=35&type=section&id=Income%20Tax) This section analyzes the company's income tax expense or benefit, discussing key drivers and significant adjustments Income Tax (Expense) Benefit (Q2 and YTD June 30, in millions) | Period | 2025 | 2024 | | :--- | :--- | :--- | | Three Months Ended June 30, | $(15.8) | $17.5 | | Six Months Ended June 30, | $(33.6) | $4.0 | - The 2025 **income tax expense** includes U.S. **benefits** from foreign tax credits and FDII, partially offset by a **$7.7 million** multi-year tax settlement (YTD)[153](index=153&type=chunk)[154](index=154&type=chunk) - The 2024 **income tax benefit** included a **significant release of valuation allowances** (**$35.9 million** in Q2, **$37.1 million** YTD) related to U.K. tax attribute carryforwards[157](index=157&type=chunk) - The MGS Transaction resulted in a **nominal tax impact**, reducing the effective tax rate due to deferred tax asset realization and valuation allowance release[155](index=155&type=chunk) [Segment Adjusted EBITDA Performance](index=36&type=section&id=Segment%20Adjusted%20EBITDA%20Performance) This section analyzes the Adjusted EBITDA performance for each reportable segment, highlighting key drivers of change Adjusted EBITDA by Segment (Q2 and YTD June 30, in millions) | Segment | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Electronics | $96.5 | $92.2 | $185.4 | $176.1 | | Industrial & Specialty | $39.5 | $42.9 | $79.0 | $86.0 | | **Total** | **$136.0** | **$135.1** | **$264.4** | **$262.1** | - **Electronics' Adjusted EBITDA increased 5% reported** (**3% constant currency**) in Q2 2025, driven by **broad-based sales growth** across the segment[163](index=163&type=chunk) - **Industrial & Specialty's Adjusted EBITDA decreased 8% reported** (**7% constant currency**) in Q2 2025, primarily due to a **$7.5 million negative impact** from the MGS Transaction, partially offset by **growth** in the higher-margin Energy Solutions business[163](index=163&type=chunk) [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash flows from operating, investing, and financing activities, as well as its debt and capital structure [Operating Activities](index=37&type=section&id=Operating%20Activities) This section analyzes net cash flows provided by operating activities, detailing changes in working capital and other operational factors - **Net cash flows provided by operating activities decreased** by **$26.2 million** to **$98.6 million** for the six months ended June 30, 2025, primarily due to **higher incentive compensation payments**, partially offset by **lower working capital investment**[169](index=169&type=chunk)[170](index=170&type=chunk) [Investing Activities](index=37&type=section&id=Investing%20Activities) This section analyzes net cash flows from investing activities, including capital expenditures and proceeds from divestitures - **Net cash flows provided by investing activities significantly increased** to **$323.1 million** for the six months ended June 30, 2025, primarily driven by **$326 million** in **proceeds from divestitures** (mainly the MGS Transaction) and approximately **$4.8 million lower capital expenditures**[169](index=169&type=chunk)[171](index=171&type=chunk) [Financing Activities](index=37&type=section&id=Financing%20Activities) This section analyzes net cash flows used in financing activities, including debt repayments, stock repurchases, and dividend payments - **Net cash flows used in financing activities increased substantially** to **$266.0 million** for the six months ended June 30, 2025, primarily due to the **prepayment of $200 million of term loans B-3** and **$19.4 million in common stock repurchases**[169](index=169&type=chunk)[172](index=172&type=chunk) - The company **paid $39.1 million in cash dividends** on common stock during the six months ended June 30, 2025[172](index=172&type=chunk) [Financial Borrowings](index=39&type=section&id=Financial%20Borrowings) This section details the company's total indebtedness, including term debt and senior notes, and available credit facilities - At June 30, 2025, **total indebtedness** was **$1.62 billion**, comprising **$836 million** in term debt and **$800 million** in 3.875% USD Notes due 2028[173](index=173&type=chunk)[178](index=178&type=chunk) - **Availability** under revolving credit facilities and various lines of credit totaled **$390 million** at June 30, 2025[173](index=173&type=chunk) [Covenants](index=39&type=section&id=Covenants) This section confirms the company's compliance with debt covenants under its Credit Agreement and senior notes indenture - At June 30, 2025, the company was in **compliance** with the debt covenants contained in the Credit Agreement and the indenture governing its 3.875% USD Notes due 2028[174](index=174&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that there have been no material changes in the company's market risk disclosures from its prior annual report - The quantitative and qualitative disclosures about market risk have **not changed materially** from those disclosed in the company's 2024 Annual Report[175](index=175&type=chunk) [Item 4. Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures and reports no material changes to internal control over financial reporting - Based on management's evaluation, the company's disclosure controls and procedures were **effective** as of June 30, 2025[176](index=176&type=chunk) - There have been **no material changes** in the company's internal control over financial reporting during the quarter ended June 30, 2025[177](index=177&type=chunk) [Part II. Other Information](index=40&type=section&id=Part%20II.%20Other%20Information) This part provides other required disclosures, including legal proceedings, risk factors, equity security sales, and exhibits [Item 1. Legal Proceedings](index=40&type=section&id=Item%201.%20Legal%20Proceedings) This section details the company's involvement in various legal proceedings, including environmental matters, and refers to related financial statement notes - The company is involved in various legal proceedings, investigations, and claims, including environmental matters at current and former plant sites and waste management sites[179](index=179&type=chunk) - More information and updates on these matters can be found in Note 10, Contingencies, Environmental and Legal Matters, to the unaudited Condensed Consolidated Financial Statements[179](index=179&type=chunk) [Item 1A. Risk Factors](index=40&type=section&id=Item%201A.%20Risk%20Factors) This section states that there have been no material changes in the company's risk factors from those disclosed in its prior annual report - There have been **no material changes** in the risk factors from those set forth in Part I, Item 1A, Risk Factors of the company's 2024 Annual Report[180](index=180&type=chunk) [Item 2. 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) This section details the company's repurchases of common stock under its publicly announced program during the reporting period Purchases of Equity Securities (Three Months Ended June 30, 2025) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of a Publicly Announced Repurchase Program | Approximate Dollar Value of Shares that May Yet be Purchased Under the Repurchase Program (in millions) | | :--- | :--- | :--- | :--- | :--- | | April 1 - April 30 | 589,600 | $20.22 | 589,600 | $569 | | May 1 - May 31 | 360,198 | $20.81 | 360,198 | $562 | | June 1 - June 30 | — | — | — | $562 | | **Total** | **949,798** | **$20.45** | **949,798** | | - The company **repurchased 949,798 shares** of common stock for approximately **$19.5 million** during the three months ended June 30, 2025[181](index=181&type=chunk) - The **remaining authorization** under the company's stock repurchase program was approximately **$562 million** at June 30, 2025[181](index=181&type=chunk) [Item 3. Defaults Upon Senior Securities](index=40&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section confirms that no defaults upon senior securities were reported during the period - **No defaults** upon senior securities were reported[182](index=182&type=chunk) [Item 4. Mine Safety Disclosures](index=40&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section confirms that no mine safety disclosures were reported for the period - **No mine safety disclosures** were reported[182](index=182&type=chunk) [Item 5. Other Information](index=40&type=section&id=Item%205.%20Other%20Information) This section confirms that no Director and Officer 10b5-1 Trading Arrangements were reported - **No Director and Officer 10b5-1 Trading Arrangements** were reported[182](index=182&type=chunk) [Item 6. Exhibits](index=41&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed or furnished as part of the Quarterly Report, including corporate documents and certifications Key Exhibits Filed/Furnished | Exhibit Number | Description | | :--- | :--- | | 3.1(a), (b), (c) | Certificates of Incorporation and Amendments | | 3.2 | Amended and Restated By-laws | | 31.1* | Principal Executive Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | | 31.2* | Principal Financial Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | | 32.1** | Principal Executive Officer and Principal Financial Officer Certifications pursuant to 18 U.S.C. Section 1350 | | 101.SCH**, 101.CAL**, 101.DEF**, 101.LAB**, 101.PRE**, 101.INS** | Inline XBRL Taxonomy Extension Documents | | 104** | Cover Page Interactive Data File | [Signatures](index=42&type=section&id=Signatures) This section provides the official signatures confirming the submission of the report - The report was signed on behalf of Element Solutions Inc by Michael Russnok, Chief Accounting Officer, on July 31, 2025[186](index=186&type=chunk)[187](index=187&type=chunk)

Financial Data and Key Metrics Changes - Organic sales grew by 6% in Q2 2025, with adjusted EBITDA increasing by 7% when excluding the Graphics business divestiture [11][12] - Adjusted EBITDA reached $136 million, exceeding initial guidance of $120 million to $125 million [11][12] - Adjusted EBITDA margin declined by approximately 40 basis points year-over-year in constant currency terms, primarily due to higher pass-through metal prices [11][12] Business Line Data and Key Metrics Changes - Electronics business achieved a 9% organic growth, driven by strong demand in high-performance computing and telecommunications [11][12] - Sales from wafer-level packaging products grew over 20% in Q2, with robust order patterns from customers [7][12] - Industrial and Specialty organic net sales increased by 1% year-over-year, with core Industrial Surface Treatment business showing stable or growing adjusted EBITDA [16][12] Market Data and Key Metrics Changes - Offshore business experienced a 15% year-over-year organic sales growth due to the completion of several large projects [17][12] - The company noted macroeconomic weakness in Europe and the Americas, but automotive growth in Asia partially offset this [16][12] - Demand for power electronics remained strong, particularly from electric vehicle manufacturers in Asia and Europe [15][12] Company Strategy and Development Direction - The company is focused on penetrating fast-growing areas within its addressable markets while driving productivity through continuous improvement [6][12] - A new world-class research center was opened in Bangalore, India, to support global formulation research and local applications development [10][12] - The company is investing in technology and strategic initiatives, including the construction of a mid-scale active copper manufacturing site expected to be commissioned by the end of the year [9][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning despite macroeconomic uncertainties, emphasizing structural advantages for long-term growth [10][12] - The adjusted EBITDA outlook for the full year was increased to a range of $530 million to $550 million, reflecting strong performance in leading-edge electronics [20][12] - Management remains cautious about potential demand variability in the second half of the year, particularly regarding tariffs and consumer electronics [21][12] Other Important Information - The company generated $59 million of adjusted free cash flow in Q2 and invested $35 million into working capital [17][12] - The net leverage ratio at the end of the quarter was 2.1 times, with no debt maturities until 2028 [18][12] - The company repurchased approximately 1 million shares at an average price of $20.45 early in the quarter [19][12] Q&A Session Summary Question: Insights on customer demand and potential pull forward - Management indicated no signs of demand pull forward in Q2, with robust investment in data center capacity continuing [27][12] Question: Expectations for Power Electronics in the second half - Power Electronics had strong growth in Q2, but management anticipates a potential slowdown in growth rate due to specific customer issues [30][12] Question: Comparison of current electronics business to previous peaks - Electronics revenue reached a new peak, but volumes are not back to prior peak levels, particularly in the circuitry and assembly businesses [33][12] Question: Competition in power electronics and advanced packaging - Management noted established competition in wafer-level packaging but highlighted a growing competitive landscape in power electronics [36][12] Question: Guidance assumptions and risks - Guidance range reflects uncertainty around tariff impacts, with stronger EV and smartphone activity expected to drive the upper end of the range [64][12] Question: Updates on Cuprion production and capacity - The first production line for Cuprion is expected to be operational by the end of the year, with plans for additional capacity in the next 18 months [66][12]

Financial Data and Key Metrics Changes - Organic sales grew by 6% in Q2 2025, with adjusted EBITDA increasing by 7% when excluding the Graphics business divestiture [12] - Adjusted EBITDA of $136 million exceeded initial guidance of $120 million to $125 million for the quarter [12] - The net leverage ratio at the end of the quarter was 2.1 times, with no debt maturities until 2028 [19][20] Business Line Data and Key Metrics Changes - The Electronics business achieved a 9% organic growth, with significant contributions from wafer level packaging products, which grew over 20% [12][16] - The Industrial and Specialty segment saw organic net sales increase by 1% year over year, with core Industrial business volumes slightly down [17] - Offshore's organic sales grew by 15% year over year, driven by large project completions [18] Market Data and Key Metrics Changes - Demand for Electronics was driven by B2B customers in high-performance computing and telecommunications, with advanced solder paste volumes growing significantly [14] - The semiconductor solutions segment experienced a 20% organic net sales growth due to robust demand in wafer level packaging [15] - Industrial Solutions faced macro weakness in Europe and the Americas, but automotive growth in Asia partially offset this [17] Company Strategy and Development Direction - The company is focused on penetrating fast-growing areas within its addressable markets while driving productivity through continuous improvement [5] - A new world-class research center was opened in Bangalore, India, to support global formulation research and local applications development [10] - The company is investing in technology and strategic initiatives, including the construction of a mid-scale active copper manufacturing site expected to be commissioned by the end of the year [8][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning despite macroeconomic uncertainties, noting strong demand in data centers and high-performance computing [10][21] - The company is cautious about the second half of the year, particularly regarding the electric vehicle market and consumer electronics [21][22] - Management highlighted the importance of capital allocation and the potential for share repurchases and acquisitions to enhance shareholder value [23] Other Important Information - The company generated $59 million of adjusted free cash flow in Q2 and invested $35 million into working capital [18] - The adjusted EBITDA margin for the Electronics segment declined by roughly 40 basis points year over year, largely due to higher pass-through metal prices [12][13] Q&A Session Summary Question: Insights on customer demand and potential pull forward - Management indicated no signs of pull forward in Q2, with robust investment in data center capacity continuing [27][28] Question: Expectations for Power Electronics in the second half - Power Electronics had strong growth in Q2, but management expects some customer-specific production volume declines in the second half [30][31] Question: Comparison of current Electronics business to prior peak levels - Electronics revenue is at a new peak, but volumes are not back to prior peak levels, particularly in the circuitry and assembly businesses [33][34] Question: Competition in power electronics and advanced packaging - Management noted established competition in wafer level packaging but highlighted strong growth and differentiation in power electronics [37][38] Question: Guidance assumptions and risks - The guidance range allows for potential demand variability, with risks including macro deterioration and weaker smartphone activity [62][63] Question: Updates on Cuprion production and capacity - The first production line for Cuprion is expected to be operational by the end of the year, with plans for additional capacity in the next 18 months [65][66] Question: Growth dynamics in the electronics portfolio - The growth is driven by high-performance computing and emerging markets, with a shift towards B2B sales reducing cyclicality [70][71] Question: Margin dynamics in Industrial and Specialty - Management emphasized productivity and price discipline in maintaining margins despite a low growth environment [76][77]