Elkem ASA, trading under the symbol ELKEF on the OTC exchange, is a company involved in the production of advanced materials. It operates in various sectors, including silicones, silicon products, and carbon solutions. The company competes with other global players in the materials industry, striving to maintain a strong market position.On February 13, 2026, ELKEF reported an earnings per share (EPS) of -$0.02, which was below the estimated EPS of -$0.003. This indicates that the company is currently experi ...

Core Viewpoint - Elkem is conducting a NOK 1,500 million underwritten equity issue through a bookbuilding process, with careful consideration of shareholder interests in the allocation of new shares [1]. Group 1: Equity Issue Details - The NOK 1,500 million equity issue will be subject to market conditions and terms, with a minimum application amount and allocation criteria to be determined by the Board [1]. - A repair offering will follow, allowing existing shareholders to subscribe for new shares at the same subscription price [1]. Group 2: Company Overview - Elkem is a leading provider of advanced silicon-based materials, focusing on sustainable solutions in various sectors including electric mobility and digital communications [1]. - The company reported an operating income of NOK 31 billion in 2025 and has a workforce of over 7,000 people [1]. - Elkem has received high scores for environmental performance, including an A on Forests and Water Security and a B on Climate Change from CDP [1].

Core Viewpoint - Elkem ASA has entered into a Share Purchase Agreement to sell the majority of its Silicones division to Bluestar, with a subsequent extraordinary general meeting scheduled for March 9, 2026, to vote on the approval of this transaction [1]. Group 1: Transaction Details - The Share Purchase Agreement involves the sale of the majority of Elkem's Silicones division to Bluestar, which will be settled with all Elkem shares held by Bluestar through Bluestar Elkem International Co. Ltd. S.A. [1]. - The extraordinary general meeting will also address the redemption of Bluestar's shares [1]. Group 2: Meeting Logistics - The extraordinary general meeting will take place digitally on the Lumi AGM-platform, including a live webcast and electronic voting for all attending shareholders [1]. - The meeting is set for March 9, 2026, at 09:00 CET [1]. Group 3: Company Overview - Elkem is a leading provider of advanced silicon-based materials, focusing on sustainable solutions and innovations in various sectors, including electric mobility and digital communications [1]. - In 2025, Elkem reported an operating income of NOK 31 billion [1]. - The company has received high scores for its environmental initiatives, including an A on Forests and Water Security and a B on Climate Change from CDP [1].

Financial Data and Key Metrics Changes - Adjusted earnings per share (EPS) for the first quarter was $1.53, which is 13% lower than the same quarter last year [19] - Operating cash flow was strong at $126 million, with discretionary free cash flow of $71 million [19] - The company ended the quarter with a cash balance of $230 million and a liquidity position of approximately $1.4 billion [20] - Capital expenditures for the first quarter were $69 million, with expectations for fiscal 2026 to be between $200 million and $230 million [20] - The debt balance was $1.1 billion, with a net debt to EBITDA ratio of 1.2 times [21] Business Segment Data and Key Metrics Changes - EBIT in the Reinforcement Materials segment declined by 22% compared to the first quarter of fiscal 2025, primarily due to lower volumes in the Americas and Asia Pacific [4][19] - EBIT in the Performance Chemicals segment increased by 7% compared to the first quarter of fiscal 2025, driven by a favorable product mix and momentum in battery materials [4][19] - In Reinforcement Materials, volumes decreased by 7% year-over-year, with a 15% decline in the Americas and a 7% decline in Asia Pacific, while Europe saw a 6% increase [21] Market Data and Key Metrics Changes - Tire imports from Asia have increased by approximately 4% year-over-year in the U.S., while Brazil experienced a 4% year-over-year decline in passenger car tire imports due to tariffs [7] - In Europe, tire imports remain elevated, with an 8% increase year-to-date as of November 2025 [8] - The company anticipates that domestic tire production in Western regions will return to growth in 2026 and 2027, influenced by trade measures and pent-up demand [26] Company Strategy and Development Direction - The company is focused on reinforcing its leadership in the market and maintaining strong margins and cash generation through cost-saving measures and strategic investments [10][29] - A multiyear agreement with PowerCo, a subsidiary of Volkswagen Group, is expected to enhance the company's position in the battery materials market [16] - The company plans to rationalize Carbon Black capacity in the Americas and Europe to align with current demand levels [12] Management's Comments on Operating Environment and Future Outlook - The management noted that the global demand environment, particularly in Reinforcement Materials, remains challenging due to depressed tire production levels and inflation affecting the replacement cycle [6][26] - The company expects improving EBIT in the second half of fiscal 2026, driven by new capacity in Indonesia and an acquisition in Mexico [22][25] - Management anticipates continued strong free cash flow generation and a robust balance sheet, allowing for flexibility in cash usage [25][29] Other Important Information - The company delivered $50 million in cost savings in fiscal year 2025 and expects to maintain these benefits in fiscal 2026, with an additional $30 million in cost reduction programs planned [10][11] - The Battery Materials product line saw a revenue growth of 39% compared to the first quarter of fiscal 2025, with EBITDA margins at 22% [14] Q&A Session Summary Question: What are you seeing on tire exports leaving the ports in Asia? - Management indicated that tire imports in the Americas have been decreasing sequentially, with a modest year-over-year decline in South America due to tariffs [32][33] Question: Is the volume weakness in Europe silicas due to the construction silicones market or Dow's silanes closure? - Management clarified that the demand weakness is more related to general market conditions rather than Dow's closure [35] Question: Have you quantified the expected earnings contribution from the PowerCo agreement? - Management did not disclose specific earnings contributions due to confidentiality but emphasized the strategic importance of the agreement [38] Question: How does the new Mexico plant fit into America's manufacturing footprint? - The new plant is seen as strategically important, providing operational synergies and supporting long-term partnerships with customers [45][46] Question: How were volumes realized by region in the annual contracts? - Management noted that overall volumes are expected to be relatively flat globally, with some volume loss in Europe due to contract negotiations [48]

Financial Data and Key Metrics Changes - In Q3, the company reported net sales of $10 billion, with EBITDA at $868 million, reflecting a sequential improvement despite being lower than the same period last year [5][6][7] - Cash provided by operating activities increased by $1.6 billion sequentially, driven by working capital improvements and advanced payments for low-carbon solutions [7][16] Business Line Data and Key Metrics Changes - The packaging and specialty plastics segment saw net sales decline year-over-year and sequentially, with operating EBIT at $199 million, primarily due to lower integrated margins [11][12] - The industrial intermediates and infrastructure segment experienced a 4% year-over-year decline in net sales but saw a sequential increase due to volume gains and lower planned maintenance activity [12][13] - Performance materials and coatings segment net sales were $2.1 billion, down 6% year-over-year and 2% sequentially, with operating EBIT decreasing due to upstream margin compression [14] Market Data and Key Metrics Changes - Global demand in the packaging market remains steady, with North America experiencing record domestic and export volumes, while Europe contracted [18][19] - The infrastructure sector faces soft market conditions across the U.S., Europe, and China, with mortgage rates in the U.S. remaining above 6% [18][19] Company Strategy and Development Direction - The company is focused on restoring core earnings and positioning for profitable growth, with over $6.5 billion in strategic actions and cash support planned [32][33] - The company is committed to being a low-cost producer, with over 75% of its global cracking capacity in a top-quartile cost position, expected to increase to approximately 80% [29][30] Management's Comments on Operating Environment and Future Outlook - Management noted a cautious operating environment with subdued business investment and consumer spending due to economic uncertainty, but anticipates potential positive influences from recent monetary policy shifts [18][21] - For Q4, the company expects EBITDA to be approximately $725 million, with anticipated headwinds from higher feedstock costs and normal seasonality impacting performance [21][22] Other Important Information - The company has completed significant strategic actions, including a $3 billion partnership for U.S. Gulf Coast infrastructure assets and a $1.4 billion bond issuance for financial flexibility [8][16] - The company is on track to deliver approximately $400 million in targeted cost savings this year, contributing to improved performance [9][10] Q&A Session Summary Question: Reconciliation of Q3 results - Management highlighted higher integrated margins and better-than-expected volume as key factors for exceeding expectations in Q3 [37][39] Question: Rationalization and project cancellations - Management provided insights on global capacity rationalization, particularly in ethylene supply, and noted potential delays in announced capacity in China due to market conditions [44][46] Question: Polyethylene demand - Polyethylene demand has remained stable, with strong performance in packaging and personal care segments, and expectations for continued stability [62][63] Question: Demand function and order books - October order books appear positive, with management maintaining a balanced outlook for Q4 sales and EBITDA guidance [73][75]

Core Insights - Elkem ASA has initiated a strategic review of its Silicones division to streamline operations and enhance capital allocation for growth in its Silicon Products and Carbon Solutions divisions [1] Company Strategy - The strategic review aims to enable Elkem to focus on accelerating growth in its Silicon Products and Carbon Solutions divisions [1]

Financial Data and Key Metrics Changes - In Q2 2025, net sales were $10.1 billion, down 7% year-over-year and down 3% sequentially, reflecting declines across all operating segments [7][20] - EBITDA for the quarter was $700 million, lower than the same period last year [7] - A 50% dividend reduction was announced, effective in Q3 2025, to maintain financial flexibility amid a prolonged downturn [8][40] Business Line Data and Key Metrics Changes - **Packaging and Specialty Plastics**: Net sales decreased year-over-year due to lower downstream polymer pricing, despite higher volumes in polyethylene [13][18] - **Industrial Intermediates and Infrastructure**: Net sales declined both year-over-year and sequentially, with a 2% volume decrease attributed to challenging market conditions [15][16] - **Performance Materials and Coatings**: Net sales decreased year-over-year but increased 3% sequentially, driven by higher demand for downstream silicones [18][19] Market Data and Key Metrics Changes - Domestic demand in North America for packaging remains stable, but export markets are experiencing slower growth due to tariff policies [21] - Manufacturing activity in China is flat, and consumer spending in the U.S. and Europe remains steady, although confidence is below historical norms [22][23] - Building permits in the U.S. are near five-year lows, indicating weak infrastructure market conditions [21] Company Strategy and Development Direction - The company is focused on operational discipline and financial flexibility to navigate the current downturn and position itself for future growth [6][9] - Strategic actions include cash support initiatives, divestitures of non-core product lines, and shutting down three upstream assets in Europe to address structural challenges [9][31] - The completion of new growth projects, such as the PolySeven polyethylene train, is expected to enhance production capacity and efficiency [35][36] Management's Comments on Operating Environment and Future Outlook - Management noted that the global macroeconomic backdrop remains challenging, with ongoing tariff and geopolitical uncertainties impacting demand [20] - Expectations for Q3 EBITDA are approximately $800 million, reflecting anticipated improvements in integrated margins and higher volumes from growth investments [25][26] - The company remains committed to maintaining a competitive dividend while focusing on restoring earnings growth and managing costs [40][41] Other Important Information - The company expects to receive approximately $1.2 billion in cash proceeds from a legal judgment related to a jointly owned ethylene asset [34] - A strategic partnership with Macquarie Asset Management has provided $2.4 billion in cash for infrastructure assets, with potential for further cash inflow [33][34] Q&A Session Summary Question: Contextualizing the dividend in relation to operating net income - Management indicated that the dividend reduction was based on extensive analysis of economic recovery, with a focus on restoring earnings growth alongside maintaining a competitive dividend [48] Question: Philosophy behind maintaining a fixed dividend - The fixed dividend is significant for institutional and retail investors, and reducing it provides more capital flexibility during the downturn [52][53] Question: Industry operating rates and polyethylene supply-demand fundamentals - Management acknowledged that while some capacity closures have occurred, polyethylene demand continues to grow above GDP rates, necessitating new capacity [55] Question: Anticompetitive behavior and its impact - Polyurethanes have seen significant anticompetitive activity, and the company is actively engaged in trade negotiations to mitigate these impacts [95][96] Question: Plans for cash saved from the dividend - The cash saved from the dividend reduction is intended to maintain flexibility and support balance sheet strength, rather than immediate reinvestment [80][81]

Financial Data and Key Metrics Changes - Net sales were $10.4 billion, down 3% year-over-year, reflecting declines in all operating segments due to margin pressures [8][10] - EBITDA was $944 million, down compared to the same period last year, as volume gains were offset by margin compression [10] - Cash flow from continuing operations was $104 million, with returns to shareholders totaling $494 million in dividends for the quarter [10][12] Business Line Data and Key Metrics Changes - **Packaging and Specialty Plastics**: Net sales decreased year-over-year due to pricing pressures, although volume improved by 4% [25][26] - **Industrial Intermediate and Infrastructure**: Net sales declined both year-over-year and sequentially, with a 1% volume gain driven by improved supply availability [27][30] - **Performance Materials and Coatings**: Net sales decreased 4% year-over-year, but operating EBIT increased due to lower fixed costs [31][33] Market Data and Key Metrics Changes - Global demand remains below historical average GDP levels, with significant impacts from tariffs affecting expectations for growth [42][43] - North American domestic demand continues to grow, but there are concerns about inventory levels and inflation [44][46] - European markets are experiencing softness, particularly in housing demand, with a decline in building permits [46][48] Company Strategy and Development Direction - The company is focused on operational discipline, cost reductions, and aligning capacity to slower GDP conditions [8][14] - A strategic review of select European assets has been expanded, particularly in polyurethanes, to enhance near-term cash flow [12][20] - The company aims to deliver at least $1 billion in targeted cost savings by 2026, with a focus on improving margins and long-term competitiveness [60][62] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the prolonged downturn in the industry, with a third consecutive year of below 3% GDP growth [14][68] - The company remains agile, taking decisive actions to reduce costs and protect margins amid geopolitical and macroeconomic concerns [14][68] - Future visibility is contingent on tariff negotiations and overall demand recovery, with a commitment to transparency in updates [49][124] Other Important Information - The company expects to receive approximately $2.4 billion from a strategic transaction with Macquarie Asset Management, with potential additional proceeds later in the year [13][58] - A final ruling on pending litigation is expected to yield over $1 billion in cash proceeds [13][60] - The company is delaying construction on a major project to align with market conditions, reducing total CapEx for 2025 by approximately $1 billion [11][18] Q&A Session Summary Question: Context on Alberta project delay and market conditions - Management indicated that the decision to delay was based on current market uncertainties and will be revisited regularly [73][78] Question: Outlook for EBITDA improvement in the second half - Management highlighted upcoming projects that will contribute positively, alongside expected cost reductions and normalization of input costs [81][84] Question: Impact of Chinese tariffs on polyethylene prices - Management discussed the active engagement in tariff discussions and the potential for reconfiguring supply chains to mitigate impacts [88][90] Question: Security of the dividend in the current environment - Management emphasized the importance of maintaining dividend yield and the need to monitor macro conditions closely [120][123] Question: Strategic review of European assets - Management explained the expansion of the review scope due to better ownership opportunities and the need to rationalize capacity in response to market conditions [134][135]

Financial Performance & Strategic Actions - Net sales reached $10.4 billion, marking the 6th consecutive quarter of YoY volume growth[6] - Operating EBITDA was $944 million, a decrease YoY[6] - The company is implementing at least $1 billion in annualized cost reductions across 2025 & 2026[6] - Expect ~$4 billion in unique-to-Dow cash levers in 2025, including up to ~$3 billion from infrastructure asset sales and >$1 billion NOVA judgment[6] Capital Expenditure & Asset Review - Total CapEx for the quarter was $685 million, below D&A levels, and will remain below for FY25[6] - 2025 CapEx is now expected to be $2.5 billion, a reduction of ~$1 billion compared to the original plan of $3.5 billion[9,45] - The company is expanding the scope of its European asset review to include 3 additional upstream assets for further action, potentially leading to idling or shutting down facilities[6,9] Segment Performance Highlights - Packaging & Specialty Plastics: Revenue of $5.31 billion in 1Q25[11] - Industrial Intermediates & Infrastructure: Revenue of $2.855 billion in 1Q25[16] - Performance Materials & Coatings: Revenue of $2.071 billion in 1Q25[23] Outlook & Cash Support - Expect to receive initial cash proceeds of ~$2.4 billion for a 40% equity stake in select USGC infrastructure assets, with a potential additional ~$600 million if an option is exercised[45]