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]

Q2 2025 Performance - Net sales increased by 2% year-over-year to $625 million, compared to $613 million in Q2 2024[6] - Electronics net sales increased by 12% year-over-year to $439 million[6] - Industrial & Specialty net sales decreased by 16% year-over-year to $186 million[6] - Adjusted EBITDA increased by 1% year-over-year to $136 million[6] - Adjusted EPS increased by 3% year-over-year to $037[6] - Organic net sales increased by 6% year-over-year[6] Segment Performance - Electronics organic growth was 9%, driven by Assembly, Circuitry and Semiconductor[6, 9] - Industrial & Specialty organic growth was 1%[6, 11] Balance Sheet and Cash Flow - Q2 2025 adjusted free cash flow was $59 million[15] - Net debt to adjusted EBITDA ratio was 21x as of June 30, 2025[15] - Repurchased approximately $20 million of shares in Q2 2025 at an average price of $2045 per share[15] FY 2025 Guidance - The company expects adjusted EBITDA to be in the range of $530 million to $550 million[17] - The company expects adjusted EPS to be approximately $145[17]

Core Insights - Element Solutions (ESI) reported revenue of $625.2 million for the quarter ended June 2025, marking a year-over-year increase of 2% and a surprise of +3.35% over the Zacks Consensus Estimate of $604.97 million [1] - The earnings per share (EPS) for the same period was $0.37, compared to $0.36 a year ago, resulting in an EPS surprise of +2.78% against the consensus estimate of $0.36 [1] Financial Performance Metrics - Net Sales in the Industrial & Specialty segment were $185.8 million, exceeding the average estimate of $178.67 million by three analysts, but reflecting a year-over-year decline of -15.9% [4] - Net Sales in the Electronics segment reached $439.4 million, surpassing the average estimate of $426.27 million, with a year-over-year increase of +12.2% [4] - Adjusted EBITDA for the Industrial & Specialty segment was $39.5 million, above the average estimate of $34 million [4] - Adjusted EBITDA for the Electronics segment was $96.5 million, slightly below the average estimate of $97.03 million [4] Stock Performance - Shares of Element Solutions have returned +2.6% over the past month, compared to a +3.4% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating potential for outperformance in the near term [3]

[Executive Summary](index=1&type=section&id=Item%201.%20Executive%20Summary) Element Solutions reported strong Q2 2025 results with organic growth, increased adjusted EBITDA guidance, and solid cash flow [CEO Commentary](index=1&type=section&id=Item%201.1.%20CEO%20Commentary) CEO highlighted outstanding Q2 2025 performance, driven by strong Electronics segment growth and increased adjusted EBITDA guidance - Element Solutions had an outstanding second quarter, executing well against its strategy of penetrating fast-growing niches and driving continuous improvement[3](index=3&type=chunk) - The Electronics segment achieved its **fifth consecutive quarter of high-single digit organic growth**[3](index=3&type=chunk) - The recently increased 2025 adjusted EBITDA guidance range demonstrates the company's ability to navigate the current tariff environment without sacrificing growth[3](index=3&type=chunk) [Second Quarter 2025 Highlights](index=1&type=section&id=Item%201.2.%20Second%20Quarter%202025%20Highlights) Element Solutions reported Q2 2025 net sales of $625 million (6% organic growth) and adjusted EBITDA of $136 million Q2 2025 Financial Highlights | Metric | Q2 2025 | Q2 2024 | Change (Reported) | Organic Growth | | :-------------------------------- | :------ | :------ | :---------------- | :------------- | | Net Sales | $625M | $612.7M | +2% | +6% | | Reported Net Income | $48M | $93M | -49% | N/A | | Adjusted EBITDA | $136M | $135M | +1% | N/A | | Adjusted EBITDA (excl. divested MGS) | $136M | $127.6M | +7% | N/A | | Cash flows from operating activities | $73M | N/A | N/A | N/A | | Adjusted free cash flow | $59M | N/A | N/A | N/A | | GAAP diluted EPS | $0.20 | $0.38 | -47.4% | N/A | | Adjusted EPS | $0.37 | $0.36 | +2.8% | N/A | - Electronics segment net sales increased **12% to $439 million**, with organic net sales up **9%**[5](index=5&type=chunk) - Industrial & Specialty net sales decreased **16% to $186 million** (17% from divestitures), with organic net sales up **1%**[5](index=5&type=chunk) [2025 Guidance](index=2&type=section&id=Item%201.3.%202025%20Guidance) Element Solutions updated its full-year 2025 adjusted EBITDA guidance to $530-$550 million, with Q3 adjusted EBITDA projected at $140-$145 million 2025 Financial Guidance | Metric | Guidance | | :-------------------------- | :-------------------- | | Full Year 2025 Adjusted EBITDA | $530M - $550M | | Full Year 2025 Free Cash Flow Conversion | Comparable to prior year | | Q3 2025 Adjusted EBITDA | $140M - $145M | [Company Overview](index=2&type=section&id=Item%202.%20Company%20Overview) Element Solutions is a global specialty chemicals technology company providing innovative solutions across diverse industries [About Element Solutions](index=2&type=section&id=Item%202.1.%20About%20Element%20Solutions) Element Solutions Inc is a global specialty chemicals technology company providing innovative solutions that enhance product performance across various key industries - Element Solutions Inc is a leading global specialty chemicals technology company providing solutions that enhance product performance[11](index=11&type=chunk) - The company's innovative solutions enable manufacturing processes in key industries such as consumer electronics, power electronics, semiconductor fabrication, communications and data storage infrastructure, automotive systems, industrial surface finishing, and offshore energy[11](index=11&type=chunk) [Consolidated Financial Results](index=4&type=section&id=Item%203.%20Consolidated%20Financial%20Results) Consolidated financial results for Q2 2025 show increased net sales, stable gross profit, and a decrease in net income [Condensed Consolidated Statements of Operations](index=4&type=section&id=Item%203.1.%20Condensed%20Consolidated%20Statements%20of%20Operations) Q2 2025 net sales increased to $625.2 million, but net income decreased significantly to $47.4 million due to foreign exchange losses and divestitures Condensed Consolidated Statements of Operations (dollars in millions) | Metric (dollars in millions) | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :--------------------------------- | :------ | :------ | :------------ | :------------ | | 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 | | Income before income taxes | $63.3 | $74.2 | $179.1 | $143.7 | | Income tax (expense) benefit | $(15.8) | $17.5 | $(33.6) | $4.0 | | Net income attributable to common stockholders | $47.4 | $93.2 | $145.4 | $149.2 | | Diluted EPS | $0.20 | $0.38 | $0.60 | $0.61 | - Foreign exchange losses were **$(17.1) million** in Q2 2025, compared to gains of $5.0 million in Q2 2024[16](index=16&type=chunk) - A loss on divestitures of **$(5.5) million** was recorded in Q2 2025, compared to zero in Q2 2024[16](index=16&type=chunk) [Condensed Consolidated Balance Sheets](index=5&type=section&id=Item%203.2.%20Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to $5,002.6 million, total liabilities decreased to $2,361.3 million, and total equity rose to $2,641.3 million Condensed Consolidated Balance Sheets (dollars in millions) | Metric (dollars in millions) | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :------------ | :---------------- | | 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 equity | $2,641.3 | $2,398.4 | - Goodwill increased to **$2,241.6 million** from $2,132.0 million[18](index=18&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Item%203.3.%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flows decreased to $98.6 million, while investing activities generated $323.1 million, primarily from divestitures Condensed Consolidated Statements of Cash Flows (dollars in millions) | Metric (dollars in millions) | 6 Months 2025 | 6 Months 2024 | | :--------------------------------- | :------------ | :------------ | | Net cash flows provided by operating activities | $98.6 | $124.8 | | Net cash flows (used in) provided by 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 | - Proceeds from divestitures (net of cash) amounted to **$325.5 million** for the six months ended June 30, 2025[20](index=20&type=chunk) - Repayments of borrowings totaled **$202.6 million** for the six months ended June 30, 2025[20](index=20&type=chunk) [Segment Performance and Key Metrics](index=7&type=section&id=Item%204.%20Segment%20Performance%20and%20Key%20Metrics) This section details net sales, net income, adjusted EBITDA, and EPS performance across the Electronics and Industrial & Specialty segments [Net Sales by Segment](index=7&type=section&id=Item%204.1.%20Net%20Sales%20by%20Segment) Total net sales increased 2% reported (6% organic) to $625.2 million, driven by strong 9% organic growth in the Electronics segment Net Sales by Segment (dollars in millions) | Segment (dollars in millions) | Q2 2025 Net Sales | Q2 2024 Net Sales | Reported Change | Organic Change | | :---------------------------- | :---------------- | :---------------- | :-------------- | :------------- | | Electronics | $439.4 | $391.7 | +12% | +9% | | Industrial & Specialty | $185.8 | $221.0 | -16% | +1% | | Total | $625.2 | $612.7 | +2% | +6% | - For the six months ended June 30, 2025, Electronics organic net sales grew **9%**, and Industrial & Specialty organic net sales were flat at **0%**[22](index=22&type=chunk) [Net Income and Adjusted EBITDA](index=7&type=section&id=Item%204.2.%20Net%20Income%20and%20Adjusted%20EBITDA) Reported net income decreased 49% to $47.5 million, while total adjusted EBITDA increased 1% to $136.0 million Net Income and Adjusted EBITDA by Segment (dollars in millions) | Metric (dollars in millions) | Q2 2025 | Q2 2024 | Reported Change | Constant Currency Change | | :--------------------------------- | :------ | :------ | :-------------- | :----------------------- | | Net Income | $47.5 | $93.3 | -49% | N/A | | Adjusted EBITDA (Total) | $136.0 | $135.1 | +1% | 0% | | Adjusted EBITDA (Electronics) | $96.5 | $92.2 | +5% | +3% | | Adjusted EBITDA (Industrial & Specialty) | $39.5 | $42.9 | -8% | -7% | - Excluding the divested MacDermid Graphics Solutions business, Adjusted EBITDA for Industrial & Specialty would have grown **10%**[13](index=13&type=chunk) [Earnings Per Share (EPS)](index=1&type=section&id=Item%204.3.%20Earnings%20Per%20Share%20(EPS)) GAAP diluted EPS decreased to $0.20, while Adjusted EPS slightly increased to $0.37 in Q2 2025 Earnings Per Share (EPS) Summary | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :---------------------- | :------ | :------ | :------------ | :------------ | | GAAP Diluted EPS | $0.20 | $0.38 | $0.60 | $0.61 | | Adjusted EPS | $0.37 | $0.36 | $0.71 | $0.70 | - Adjusted net income for Q2 2025 was **$90.8 million**, up from $88.7 million in Q2 2024[35](index=35&type=chunk) [Margins (Net Income & Adjusted EBITDA)](index=2&type=section&id=Item%204.4.%20Margins%20(Net%20Income%20%26%20Adjusted%20EBITDA)) Net income margin decreased by 760 basis points to 7.6%, while total Adjusted EBITDA margin decreased by 40 basis points to 21.7% Profit Margins (Net Income & Adjusted EBITDA) | Metric | Q2 2025 | Q2 2024 | Change (bps) | | :-------------------------- | :------ | :------ | :----------- | | Net Income Margin | 7.6% | 15.2% | (760) bps | | Adjusted EBITDA Margin (Total) | 21.7% | 22.1% | (40) bps | | Adjusted EBITDA Margin (Electronics) | 22.0% | 23.6% | (160) bps | | Adjusted EBITDA Margin (Industrial & Specialty) | 21.2% | 19.4% | +180 bps | [Capital Structure and Liquidity](index=7&type=section&id=Item%205.%20Capital%20Structure%20and%20Liquidity) This section details the company's debt, cash position, net debt, market capitalization, and free cash flow [Capital Structure Details](index=7&type=section&id=Item%205.1.%20Capital%20Structure%20Details) Total debt was $1,636.2 million, with net debt at $1,106.3 million, and 100% of debt fixed through interest rate swaps Capital Structure as of June 30, 2025 (dollars in millions) | Metric (dollars in millions) | June 30, 2025 | | :--------------------------- | :------------ | | Term Loans | $836.2 | | Senior Notes due 2028 | $800.0 | | Total Debt | $1,636.2 | | Cash Balance | $529.9 | | Net Debt | $1,106.3 | | Market Capitalization | $5,526.6 | | Total Capitalization | $6,632.9 | - As of June 30, 2025, **100% of the Company's debt was fixed** through interest rate swaps[23](index=23&type=chunk) [Free Cash Flow](index=12&type=section&id=Item%205.2.%20Free%20Cash%20Flow) Q2 2025 free cash flow increased to $58.8 million, while six-month free cash flow decreased slightly to $88.9 million Free Cash Flow Summary (dollars in millions) | Metric (dollars in millions) | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :--------------------------------- | :------ | :------ | :------------ | :------------ | | Cash flows from operating activities | $72.6 | $66.6 | $98.6 | $124.8 | | Capital expenditures | $(17.7) | $(14.5) | $(28.7) | $(33.5) | | Proceeds from disposal of property, plant and equipment | $0.6 | $0.0 | $0.7 | $0.0 | | Free cash flow | $58.8 | $52.1 | $88.9 | $91.3 | [Recent Corporate Developments](index=2&type=section&id=Item%206.%20Recent%20Corporate%20Developments) This section covers recent stock repurchase activities and the filing of a universal shelf registration statement [Stock Repurchase Program](index=2&type=section&id=Item%206.1.%20Stock%20Repurchase%20Program) Element Solutions repurchased 0.9 million shares for $19.5 million in Q2 2025, with $562 million remaining authorization - During Q2 2025, the Company repurchased **0.9 million shares** of common stock for approximately **$19.5 million** at an average price of **$20.45**[7](index=7&type=chunk) - The remaining authorization under its stock repurchase program was approximately **$562 million** at June 30, 2025[7](index=7&type=chunk) [Shelf Registration Statement](index=2&type=section&id=Item%206.2.%20Shelf%20Registration%20Statement) Element Solutions filed a routine universal shelf registration statement on Form S-3, effective upon filing, for future securities offerings - On July 30, 2025, the Company filed a universal shelf registration statement on Form S-3 with the SEC to replace an expired statement[8](index=8&type=chunk) - This registration statement was a routine filing and became effective upon filing[8](index=8&type=chunk) [Non-GAAP Financial Measures Definitions and Reconciliations](index=8&type=section&id=Item%207.%20Non-GAAP%20Financial%20Measures%20Definitions%20and%20Reconciliations) This section defines and reconciles various non-GAAP financial measures used by management to evaluate performance and liquidity [Overview of Non-GAAP Measures](index=8&type=section&id=Item%207.1.%20Overview%20of%20Non-GAAP%20Measures) Management uses non-GAAP measures like adjusted EBITDA and free cash flow to evaluate performance and liquidity, excluding disproportionate items - Management internally reviews non-GAAP measures to evaluate performance and liquidity on a comparative period-to-period basis[25](index=25&type=chunk) - Non-GAAP measures include EBITDA, adjusted EBITDA, adjusted EPS, free cash flow, and organic net sales growth, among others[24](index=24&type=chunk) - Reconciliations for forward-looking non-GAAP measures are excluded due to the inherent difficulty in forecasting and quantifying certain necessary adjustments[26](index=26&type=chunk) [Constant Currency](index=8&type=section&id=Item%207.2.%20Constant%20Currency) Constant currency results adjust financial performance to exclude foreign currency translation impacts, aiding consistent period-to-period comparisons - Constant currency basis adjusts results to exclude the impact of changes due to the translation of foreign currencies into U.S. dollar[27](index=27&type=chunk) - The impact of foreign currency translation is calculated by converting current-period local currency financial results into U.S. dollar using prior period's exchange rates[28](index=28&type=chunk) [Organic Net Sales Growth](index=9&type=section&id=Item%207.3.%20Organic%20Net%20Sales%20Growth) Organic net sales growth excludes foreign currency, pass-through metals pricing, and acquisitions/divestitures to show underlying sales trends Organic Net Sales Growth Reconciliation | Metric | Reported Net Sales Growth | Impact of Currency | Constant Currency | Change in Pass Through Metals Pricing | Divestitures | Organic Net Sales Growth | | :--------------------- | :------------------------ | :----------------- | :---------------- | :------------------------------------ | :----------- | :----------------------- | | Q2 2025 Total | 2% | (1)% | 1% | (2)% | 6% | 6% | | Q2 2025 Electronics | 12% | (1)% | 11% | (3)% | —% | 9% | | Q2 2025 Industrial & Specialty | (16)% | 0% | (16)% | —% | 17% | 1% | - For Q2 2025, Electronics' results were positively impacted by **$9.9 million** of pass-through metals pricing, while Industrial & Specialty's results were negatively impacted by **$38.4 million** of divestitures[31](index=31&type=chunk) [Adjusted Earnings Per Share (EPS)](index=9&type=section&id=Item%207.4.%20Adjusted%20Earnings%20Per%20Share%20(EPS)) Adjusted EPS is calculated by modifying net income for specific non-recurring items and applying a fixed non-GAAP effective tax rate of 20% - Adjusted EPS is a key metric used by management to measure operating performance and trends by excluding certain expenses[32](index=32&type=chunk) - A non-GAAP effective tax rate of **20%** is used, reflecting estimated long-term expectations for taxes and tax benefits from U.S. tax attribute carryforwards[33](index=33&type=chunk)[36](index=36&type=chunk) Adjusted Earnings Per Share Reconciliation (dollars in millions, except per share) | Metric (dollars in millions, except per share) | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :--------------------------------------------- | :------ | :------ | :------------ | :------------ | | Net income | $47.5 | $93.3 | $145.5 | $149.3 | | Reversal of amortization expense | $28.5 | $29.8 | $55.7 | $60.0 | | Restructuring expense | $2.1 | $3.5 | $3.2 | $5.8 | | Acquisition, integration and transaction expenses | $3.3 | $3.3 | $11.6 | $5.0 | | Foreign exchange losses (gains) on intercompany loans | $10.6 | $(3.9) | $16.6 | $(10.7) | | Loss (gain) on divestitures | $5.5 | — | $(66.6) | — | | Adjusted net income | $90.8 | $88.7 | $174.3 | $171.3 | | Adjusted earnings per share | $0.37 | $0.36 | $0.71 | $0.70 | | Adjusted common shares outstanding | 244.0 | 244.5 | 244.5 | 244.5 | [EBITDA and Adjusted EBITDA](index=11&type=section&id=Item%207.5.%20EBITDA%20and%20Adjusted%20EBITDA) EBITDA is earnings before interest, taxes, depreciation, and amortization, with Adjusted EBITDA further excluding non-recurring or capital structure-related items - EBITDA represents earnings before interest, provision for income taxes, depreciation and amortization[38](index=38&type=chunk) - Adjusted EBITDA excludes items not representative of ongoing business or associated with capital structure, such as restructuring and acquisition expenses[38](index=38&type=chunk) EBITDA and Adjusted EBITDA Reconciliation (dollars in millions) | Metric (dollars in millions) | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :--------------------------------- | :------ | :------ | :------------ | :------------ | | Net income | $47.5 | $93.3 | $145.5 | $149.3 | | Income tax expense (benefit) | $15.8 | $(17.5) | $33.6 | $(4.0) | | Interest expense, net | $12.9 | $14.3 | $27.2 | $28.2 | | Depreciation expense | $9.7 | $10.3 | $19.7 | $20.4 | | Amortization expense | $28.5 | $29.8 | $55.7 | $60.0 | | EBITDA | $114.4 | $128.6 | $281.7 | $252.3 | | Adjustments to reconcile to Adjusted EBITDA | $21.6 | $6.5 | $(17.3) | $4.8 | | Adjusted EBITDA | $136.0 | $135.1 | $264.4 | $262.1 | [Free Cash Flow and Adjusted Free Cash Flow](index=12&type=section&id=Item%207.6.%20Free%20Cash%20Flow%20and%20Adjusted%20Free%20Cash%20Flow) Free cash flow is operating cash less capital expenditures, with adjusted free cash flow further excluding non-recurring tax and divestiture payments - Free cash flow is defined as net cash flows from operating activities less net capital expenditures[40](index=40&type=chunk) - Adjusted free cash flow excludes non-recurring payments for tax settlements and professional fees/taxes associated with divestitures[40](index=40&type=chunk) Free Cash Flow Reconciliation (dollars in millions) | Metric (dollars in millions) | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :--------------------------------- | :------ | :------ | :------------ | :------------ | | Cash flows from operating activities | $72.6 | $66.6 | $98.6 | $124.8 | | Capital expenditures | $(17.7) | $(14.5) | $(28.7) | $(33.5) | | Proceeds from disposal of property, plant and equipment | $0.6 | — | $0.7 | — | | Adjustments | $3.3 | — | $18.3 | — | | Free cash flow | $58.8 | $52.1 | $88.9 | $91.3 | [Additional Information](index=3&type=section&id=Item%208.%20Additional%20Information) This section includes important disclosures regarding forward-looking statements, conference call details, and investor contacts [Forward-Looking Statements](index=3&type=section&id=Item%208.1.%20Forward-Looking%20Statements) The release contains forward-looking statements, subject to various risks like global conflicts and economic factors, and are not updated - The release contains 'forward-looking statements' intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995[14](index=14&type=chunk) - Examples include statements regarding strategy execution, market trends, demand, profits, global trade dynamics, tariff mitigation, demand variability, foreign exchange rates, and 2025 guidance[14](index=14&type=chunk) - Actual results could differ materially due to factors such as global conflicts (Ukraine, Israel-Hamas), tariffs, economic factors, capital requirements, government regulations, and the impact of acquisitions/divestitures[14](index=14&type=chunk) [Conference Call Information](index=2&type=section&id=Item%208.2.%20Conference%20Call%20Information) Element Solutions will host a webcast/dial-in conference call on July 31, 2025, at 8:30 a.m. ET to discuss Q2 2025 results - Element Solutions will host a webcast/dial-in conference call on **Thursday, July 31, 2025, at 8:30 a.m. (Eastern Time)** to discuss Q2 2025 financial results[9](index=9&type=chunk) - Participants will include President and CEO Benjamin H. Gliklich and CFO Carey J. Dorman[9](index=9&type=chunk) - The call will be simultaneously webcast at www.elementsolutionsinc.com, where a replay will also be available[10](index=10&type=chunk) [Investor Relations Contact](index=13&type=section&id=Item%208.3.%20Investor%20Relations%20Contact) For investor relations, contact Varun Gokarn at 1-203-952-0369 or IR@elementsolutionsinc.com; media inquiries go to Collected Strategies - Investor Relations Contact: **Varun Gokarn**, Vice President, Strategy and Integration, Element Solutions Inc, **1-203-952-0369**, IR@elementsolutionsinc.com[42](index=42&type=chunk) - Media Contact: **Scott Bisang / Ed Hammond / Tali Epstein**, Collected Strategies, **1-212-379-2072**, esi@collectedstrategies.com[42](index=42&type=chunk)

Core Viewpoint - Wall Street anticipates flat earnings for Element Solutions (ESI) in the upcoming quarter, with earnings expected to be $0.36 per share and revenues projected at $604.97 million, reflecting a 1.3% decline year-over-year [3][12]. Earnings Expectations - The consensus EPS estimate has been revised 1.75% higher in the last 30 days, indicating a positive reassessment by analysts [4]. - The stock may experience upward movement if actual earnings exceed expectations, while a miss could lead to a decline [2][12]. Earnings Surprise Prediction - Element Solutions has an Earnings ESP of +1.41%, suggesting a likelihood of beating the consensus EPS estimate [12]. - The company holds a Zacks Rank of 2, which further supports the potential for a positive earnings surprise [12][10]. Historical Performance - In the last reported quarter, Element Solutions had an earnings surprise of +3.03%, with actual earnings of $0.34 per share compared to an expected $0.33 [13]. - Over the past four quarters, the company has surpassed consensus EPS estimates three times [14]. Industry Context - In the Zacks Chemical - Specialty industry, Ashland (ASH) is expected to report earnings of $1.15 per share, reflecting a year-over-year decline of 22.8% [18]. - Ashland's consensus EPS estimate has been revised down by 2% in the last 30 days, and it currently has an Earnings ESP of -8.62% with a Zacks Rank of 5, indicating challenges in beating the consensus estimate [19].

Group 1 - The stock of Element Solutions Inc. (ESI) is experiencing significant attention due to high implied volatility in the options market, particularly the Aug 15, 2025 $15 Put option [1] - Implied volatility indicates the market's expectation of future price movement, suggesting that investors anticipate a significant change in the stock's price, potentially due to an upcoming event [2] - Element Solutions holds a Zacks Rank 2 (Buy) in the Chemical - Specialty industry, which is in the top 23% of the Zacks Industry Rank, indicating a positive outlook [3] Group 2 - Recent analyst activity shows that two analysts have raised their earnings estimates for Element Solutions for the current quarter, increasing the Zacks Consensus Estimate from 33 cents per share to 35 cents [3] - The high implied volatility may signal a developing trading opportunity, as options traders often seek to sell premium on options with elevated implied volatility, aiming to benefit from time decay [4]

Core Viewpoint - Element Solutions (ESI) is currently positioned as a more attractive investment option compared to Hawkins (HWKN) based on various valuation metrics and earnings outlook [1][3][7]. Valuation Metrics - ESI has a forward P/E ratio of 16.98, significantly lower than HWKN's forward P/E of 36.02, indicating that ESI may be undervalued [5]. - The PEG ratio for ESI is 1.75, while HWKN's PEG ratio stands at 2.63, suggesting that ESI offers better value relative to its expected earnings growth [5]. - ESI's P/B ratio is 2.32 compared to HWKN's P/B of 7.16, further highlighting ESI's relative undervaluation [6]. Earnings Outlook - ESI is experiencing an improving earnings outlook, which enhances its attractiveness in the Zacks Rank model [7]. - ESI holds a Zacks Rank of 2 (Buy), while HWKN has a Zacks Rank of 3 (Hold), indicating a stronger earnings improvement for ESI [3]. Value Grades - ESI has a Value grade of B, whereas HWKN has a Value grade of D, reflecting ESI's superior valuation metrics [6].

Summary of Element Solutions Conference Call Company Overview - **Company**: Element Solutions Inc. (ESI) - **CEO**: Ben Gluklich - **Focus**: Electronics and industrial solutions, particularly in semiconductor and advanced packaging markets Key Points Portfolio Evolution - The company has been refining its portfolio over the past six years, focusing on upgrading technology towards the semiconductor market, particularly in semi-assembly and front-end processes [4][3] - A divestment of a high-quality but less core graphics business was made last year, improving the balance sheet [4] Market Dynamics - **Electronics Sector**: - The company has a nimble supply chain, allowing it to navigate trade tensions and tariffs effectively [6] - Demand for data centers and high-performance computing, including AI applications, remains strong, with no pause in investment [7][8] - The semiconductor business has outperformed the market by over 1000 basis points in the past year and a half [8] - The company remains cautiously optimistic about the durability of demand trends in electronics [9] - **Industrial Sector**: - Demand has been weak, but the company has managed to drive profits through improved procurement and supply chain management [10] - The industrial business has grown profits despite soft revenues, indicating effective cost management [53] Technology and Innovation - The company is well-positioned in advanced packaging, which is crucial for the semiconductor industry as it shifts from scaling down to architectural innovations [20][21] - The introduction of Cuprion, a new active copper technology, is expected to address emerging challenges in the electronics ecosystem, with manufacturing capabilities anticipated to be online by 2025 [31][33] Market Share and Growth Potential - The company has gained market share in the EV sector, particularly in power electronics, with a focus on differentiated technologies that enhance efficiency [46][48] - The printed circuit board market is expected to accelerate over the next four to five years, driven by data center growth [43] Financial Outlook - The balance sheet is in the best position since the company's IPO, providing flexibility for future investments [62] - The company emphasizes prudent capital allocation and operational excellence as key frameworks for growth [62] Risks and Considerations - The visibility of demand remains uncertain, particularly concerning potential demand destruction and the impact of tariffs on industrial activity [57][58] - The company is closely monitoring macroeconomic conditions, especially in Europe and Asia, for signs of recovery in industrial demand [55][60] Additional Insights - The company’s incumbency in the market, characterized by high barriers to entry and established relationships with customers, positions it favorably for future growth [29][30] - The cash flow characteristics and stability of the business may be underappreciated by the investment community [63] This summary encapsulates the key insights from the Element Solutions conference call, highlighting the company's strategic focus, market dynamics, technological advancements, and financial outlook.

It has been about a month since the last earnings report for Element Solutions (ESI) . Shares have added about 5.2% in that time frame, underperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is Element Solutions due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.How Have Estimates Been Moving Si ...