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Element Solutions Inc. — 2026 Third Quarter Financial Results Call (Q3 2026)
Element Solutions Inc. (ESI) · 14 slides · Filed Oct 21, 2026
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Slide 1 — Third Quarter 2026
Enabling Technology. Growing Sustainably. Third Quarter 2026 Earnings Presentation
Slide 2 — Legal Notices
2 Legal Notices SAFE HARBOR Please note that in this presentation, we may discuss events or results that have not yet occurred or been realized, commonly referred to as forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or on behalf of the Company. Such discussion and statements will often contain words such as “expect,” “anticipate,” “project,” “will,” “should,” “believe,” “intend,” “plan,” “assume,” “estimate,” “predict,” “seek,” “continue,” “outlook,” “may,” “might,” "aim," “can have,” “likely,” “potential,” “target,” “hope,” “goal,” "priority,” “guidance” or "confident" and variations of such words and similar expressions, and relate in this presentation, without limitation to the Company's investments; customer innovation; expected benefits of recent acquisitions; metals prices volatility; foreign exchange rate fluctuations; free cash flow generation; capital deployment; profitability; market trends, conditions and demand expectations; full year 2026 guidance for adjusted EBITDA; full year 2026 guidance for adjusted EPS growth; full year 2026 cash flow uses outlook, including cash interest, cash taxes and net capex; expected further reduction in leverage ratio by year end; and expected full year 2026 FX tailwinds. These projections and statements reflect management's estimates, assumptions and expectations with respect to future events and financial performance and are believed to be reasonable, though are inherently uncertain and difficult to predict. Such projections and statements are based on the assessment of information available as of the current date, and the Company does not undertake any obligations to provide any further updates. Actual results could differ materially from those expressed or implied in the forward-looking statements if one or more of the underlying estimates, assumptions or expectations prove to be inaccurate or are unrealized. Important factors that could cause actual results to differ materially from those suggested by the forward-looking statements include, but are not limited to, the war in Ukraine, the Iran conflict and other hostilities in the Middle-East as well as actions in response thereto and their impact on market conditions and the global economy; increases in tariffs and/or imposition of new tariffs and other changes in trade policy in the U.S. and other countries, and other economic factors that may affect cost structure and demand, including the cost and availability of raw materials and precious metals; capital requirements and need for and availability of financing; the impact of government regulations on our ability to conduct operations; the impact of hedging activities; the impact of tax planning strategies; the impact of changes to privacy, cybersecurity, environmental, global trade, tax and other governmental regulations; impairments, including those on goodwill and other intangible assets; price volatility and cost environment; inflation and fluctuations in foreign exchange rates; the Company's liquidity, cash flows and capital allocation; funding sources; capital expenditures; outstanding debt and debt leverage ratio; shares repurchases; debt and/or equity issuance, repayments or retirement; expected returns to stockholders; and the impact of acquisitions, divestitures, restructurings, refinancings, impairments and other unusual items, including the Company's ability to integrate and obtain the anticipated benefits, results and synergies from these items or other related strategic initiatives. Additional information concerning these and other factors that could cause actual results to vary is, or will be, included in the Company's periodic and other reports filed with the Securities and Exchange Commission. The Company undertakes no obligation to update any forward- looking statements, whether as a result of new information, future events or otherwise. This data is provided for informational purposes only and is not necessarily, and should not be assumed to be, an indication of the results that may be achieved in the future. NON-GAAP FINANCIAL MEASURES To supplement the financial measures prepared in accordance with generally accepted accounting principles in the United States (“GAAP”), the Company presents in this presentation the following non-GAAP financial measures: EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted EPS, adjusted common shares outstanding, free cash flow, net debt to adjusted EBITDA ratio, pro forma net debt to adjusted EBITDA ratio, and full year 2026 guidance for adjusted EBITDA, adjusted EPS growth and free cash flow uses. The Company also evaluates and presents its results of operations on a constant currency and organic basis. The definitions and reconciliations of these non-GAAP measures to the most directly comparable financial measures calculated and presented in accordance with GAAP can be found in the footnotes and appendix of this presentation and in the Company’s earnings release dated October 21, 2026 (the “Release”), a copy of which can be found on the Company’s website at www.elementsolutionsinc.com. This presentation should be read in conjunction with the Release. Management internally reviews these non-GAAP measures to evaluate performance and liquidity on a comparative period-to-period basis in terms of absolute performance, trends and expected future performance with respect to the Company’s business and believes that these non-GAAP measures provide investors with an additional perspective on trends and underlying operating results on a period-to-period comparable basis. The Company also believes that investors find this information helpful in understanding the ongoing performance of its operations as well as their ability to generate cash separate from items that may have a disproportionate positive or negative impact on its financial results in any particular period or that are considered to be associated with its capital structure. These non-GAAP financial measures, however, have limitations as analytical tools, and should not be considered in isolation from, a substitute for, or superior to, the related financial information that the Company reports in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company’s financial statements and may not be completely comparable to similarly titled measures of other companies due to potential differences in calculation methods. In addition, these measures are subject to inherent limitations as they reflect the exercise of judgment by management about which items are excluded or included in determining these non-GAAP financial measures. Investors are encouraged to review the definitions and reconciliations of these non-GAAP financial measures to their most comparable GAAP financial measures included herein and in the Release, and not to rely on any single financial measure to evaluate the Company’s businesses. The Company provides full year 2026 financial guidance with respect to adjusted EBITDA, adjusted EPS growth and free cash flow uses only on a non-GAAP basis. Reconciliations of such forward-looking non- GAAP measures to GAAP are excluded in reliance upon the exception provided by Item 10(e)(1)(i)(B) of Regulation S-K due to the inherent difficulty in forecasting and quantifying, without unreasonable efforts, certain amounts that are necessary for such reconciliations, including adjustments that could be made for restructurings, refinancings, impairments, divestitures, integration and acquisition related expenses, share- based compensation amounts, non-recurring, unusual or unanticipated charges, expenses or gains, adjustments to inventory and other charges reflected in its reconciliation of historic numbers, the amount of which, based on historical experience, could be significant.
Slide 3 — Third Quarter 2026 Financial Results
3 Third Quarter 2026 Financial Results Note: Totals may not sum due to rounding or due to varying sizes of the two reportable segments * These financial measures, on this slide and subsequent slides, are not prepared in accordance with GAAP. For definitions, discussions of adjustments and reconciliations, please refer to the footnotes and appendix of this presentation Constant Currency* Organic* ($ in millions) Q3 2026 Q3 2025 YoY YoY YoY Net Sales $995 $656 52% 52% 13% Electronics 780 465 68% 68% 18% Specialties 216 191 13% 14% 1% Diluted EPS $0.27 $0.16 Adjusted EBITDA* $191 $147 30% 29% Net Sales ex-Metals 677 531 % margin 28.2% 27.7% 50 bps Electronics 148 102 46% 45% % margin 32.2% 29.9% 230 bps Specialties 43 45 (6)% (6)% % margin 19.8% 23.7% (390) bps Adjusted EPS* $0.50 $0.41 22% • Record quarterly revenue, adjusted EBITDA* and adjusted EPS* • Organic net sales* increased 13% year-over-year led by Electronics organic growth* of 18% • Double-digit growth across all business lines led by Semiconductor organic growth* of 24% • Adjusted EBITDA margin* increased 50 bps to 28% on a like-for-like basis with positive product mix in Electronics • Electronics Adjusted EBITDA margin* over 32% • Specialties Adjusted EBITDA margin* driven by YoY energy vertical sales decline from downtime at a large customer and price/cost timing in Industrial • Adjusted EPS* increase of 22%
Slide 4 — Third Quarter 2026 Segment Details
4 Third Quarter 2026 Segment Details Electronics Specialties Note: Totals may not sum due to rounding * See non-GAAP definitions and reconciliations in the appendix Net Sales ($ in millions) Organic Growth* Key Drivers Assembly $369 16% Increased volume of high reliability paste across electronics manufacturing and engineered products for datacenter applications Circuitry $162 16% AI-related demand for high layer count server boards Micromax $138 — Price and product mix drove 23% YoY ex-metal revenue growth (excluded from organic calculation) Semiconductor $111 24% Strong power electronics growth, increased wafer plating chemistry sales to OSATs, and precious metals price inflation Total $780 18% Net Sales ($ in millions) Organic Growth* Key Drivers Industrial $170 3% Pricing actions, including raw material surcharges, offsetting generally soft automotive and construction end-markets Energy $23 (13)% Downtime at a large customer and project timing dynamics in EMEA EFC $23 — Strength in electrical infrastructure and new satellite wins drove 19% YoY revenue growth (excluded from organic calculation) Total $216 1%
Slide 5 — Balance Sheet and Cash Flow Considerations
5 Balance Sheet and Cash Flow Considerations Q3 2026 Capital Structure Instrument (in millions) Corporate Revolver $15 Term Loans 1,280 Total First Lien Debt 1,295 Senior Notes due 2028 800 Total Debt $2,095 Cash Balance 225 Net Debt $1,870 Adjusted Shares Outstanding1 246 Market Capitalization2 $8,929 Total Capitalization $10,798 $ millions YTD 2026 FY 2026 Cash Interest $76 ~$90 Cash Taxes $67 ~$100 Net Capex $83 ~$110 Note: Totals may not sum due to rounding * See non-GAAP definitions and reconciliations in the appendix 1. See p.8 for reconciliation to Adjusted Share Counts 2. Based on Element Solutions’ closing stock price of $36.28 at September 30, 2026 Key Cash Flow Items Balance Sheet and Capital Allocation Q3 2026 Cash Flow Uses and FY 2026 Outlook ▪ Q3 2026 free cash flow* of $135 million ◦ Inventory discipline despite volume growth and continued metals price volatility ▪ Q3 2026 net capex of $30 million ◦ Expect full year net capex to be roughly $110 million driven by continued investment in Kuprion sites and expansion in other growth products ▪ Pro forma net debt to adjusted EBITDA ratio* of 2.7x on a LTM basis (including Micromax and EFC earnings) as of September 30, 2026 • Expect further reduction into year end, assuming no further capital deployment ▪ Repurchased 1.1 million shares in Q3 at an average price of $34.05 ▪ Paid $20 million in cash dividends in Q3 2026
Slide 6 — Full Year 2026 Financial Guidance
6 Full Year 2026 Financial Guidance Updated as of October 2026 FY Adjusted EPS* >20% YoY Growth Additional Considerations ~$720 million1 FY Adjusted EBITDA* * See non-GAAP definitions and reconciliations in the appendix 1. Based on FX rates as of September 30, 2026 and inclusive of expected contributions from the Micromax and EFC acquisitions on a full year basis Record year underway with electronics momentum expected to continue into 2027 ▪ FY 2026 guidance assumes continued modestly positive FX tailwind1 ▪ FY 2026 Adj. EBITDA* guidance includes above target compensation accruals ▪ FY 2026 Adj. EPS* guidance assumes no incremental capital allocation
Slide 7 — Appendix
Enabling Technology. Growing Sustainably. Appendix
Slide 8 — Reconciliation to Adjusted Share Counts
8 Reconciliation to Adjusted Share Counts (amounts in millions) Q3 2026 Q3 2025 Basic common shares outstanding 243 242 Number of shares issuable upon vesting of granted Equity Awards1 4 2 Adjusted common shares outstanding 246 244 Note: Totals may not sum due to rounding 1. Equity awards with targets that are considered probable of achievement vested at target level.
Slide 9 — Net Income Reconciliation to Adjusted EBITDA
9 Net Income Reconciliation to Adjusted EBITDA ($ millions) Q3 2026 Q3 2025 Net income $66 $39 Add (subtract): Income tax expense 28 16 Interest expense, net 23 13 Depreciation expense 15 10 Amortization expense 30 29 EBITDA 161 107 Adjustments to reconcile to Adjusted EBITDA: Inventory step-up 0 — Restructuring expense 3 2 Acquisition, integration and transaction expenses 22 11 Foreign exchange (gains) losses on intercompany loans (6) 12 Loss on divestitures — 7 Unrealized losses on metals derivative contracts 12 6 Change in fair value of EFC contingent consideration (6) — Other, net 4 2 Adjusted EBITDA 191 147 Net income margin % 6.6% 6.0% Adjusted EBITDA margin % 28.2% 27.7% Note: Totals may not sum due to rounding
Slide 10 — Net Income Reconciliation to Adjusted EPS
10 ($ millions, except per share amounts) Q3 2026 Q3 2025 Net income $66 $39 Reversal of amortization expense 30 29 Adjustment to reverse incremental depreciation expense from acquisitions and facility closures 1 0 Inventory step-up 0 — Restructuring expense 3 2 Acquisition, integration and transaction expense 22 11 Foreign exchange (gains) losses on intercompany loans (6) 12 Loss on divestitures — 7 Unrealized losses on metals derivative contracts 12 6 Change in fair value of EFC contingent consideration (6) — Other, net 4 2 Tax effect of pre-tax non-GAAP adjustments (12) (14) Adjustment to estimated effective tax rate 9 5 Adjusted net income $123 $99 Adjusted earnings per share $0.50 $0.41 Adjusted common shares outstanding1 246 244 Note: Totals may not sum due to rounding 1. See p.8 for a reconciliation to Adjusted Share Counts. Net Income Reconciliation to Adjusted EPS
Slide 11 — Net Debt to Adjusted EBITDA Ratio Reconciliation on a
11 Net Debt to Adjusted EBITDA Ratio Reconciliation on a Trailing Twelve Month Basis ($ millions) YTD 2026 Q4 2025 LTM Q3 2026 Net income $199 $6 $205 Add (subtract): Income tax expense 84 25 109 Interest expense, net 68 13 81 Depreciation expense 45 11 56 Amortization expense 88 26 114 EBITDA 484 81 565 Inventory step-up 6 — 6 Restructuring expense 7 1 8 Acquisition, integration and transaction expense 53 12 65 Foreign exchange (gains) losses on intercompany loans (13) — (13) Loss on divestitures — 1 1 Unrealized (gains) losses on metals derivative contracts (18) 3 (15) Change in fair value of contingent consideration 3 — 3 2025 executive share grants — 37 37 Other, net 15 1 16 Adjusted EBITDA $537 $136 $673 Net Debt $1,870 Net Debt to Net Income Ratio 9.1x Net Debt to Adjusted EBITDA Ratio 2.8x Adjusted EBITDA including Micromax & EFC $699 Pro Forma Net Debt to Adjusted EBITDA Ratio* 2.7x Note: Totals may not sum due to rounding
Slide 12 — Organic Net Sales Growth Reconciliation
12 Organic Net Sales Growth Reconciliation Three Months Ended September 30, 2026 Reported Net Sales Growth Impact of Currency Constant Currency Change in Pass- Through Metals Pricing Acquisitions Organic Net Sales Growth Electronics 68% 0% 68% (20)% (30)% 18% Specialties 13% 1% 14% —% (12)% 1% Total 52% 0% 52% (14)% (25)% 13% Note: Totals may not sum due to rounding or due to varying sizes of the two reportable segments
Slide 13 — Free Cash Flow Reconciliation
13 ($ millions) Q3 2026 Q3 2025 Cash flows from operating activities $159 $100 Capital expenditures (30) (17) Proceeds from disposal of property, plant and equipment — 0 Adjustments 6 0 Free cash flow $135 $84 Note: Totals may not sum due to rounding Free Cash Flow Reconciliation
Slide 14 — Non-GAAP Definitions
14 Non-GAAP Definitions Adjusted Earnings Per Share (EPS): Adjusted EPS is a key metric used by management to measure operating performance and trends as management believes the exclusion of certain expenses in calculating adjusted EPS facilitates operating performance comparisons on a period-to-period basis. Adjusted EPS is defined as net income adjusted to reflect adjustments consistent with the Company’s definition of adjusted EBITDA. Additionally, the Company eliminates amortization expense associated with intangible assets, incremental depreciation associated with the step-up of fixed assets and incremental cost of sales associated with the step-up of inventories, as applicable, recognized in purchase accounting for acquisitions. The resulting adjusted net income is then divided by the Company's adjusted common shares outstanding. Adjusted common shares outstanding represent the shares outstanding as of the balance sheet date for the quarter-to-date period and an average of each quarter for the year-to-date period, plus shares issuable upon exercise or vesting of all outstanding equity awards (assuming a performance achievement target level for equity awards with targets considered probable). The Company uses a non-GAAP effective tax rate of 20%, as described in the Release. This rate, which reflects the Company's estimated long-term expectations for taxes to be paid on its adjusted non-GAAP earnings, is consistent with how management evaluates the Company's financial performance. The Company also believes that providing a fixed rate facilitates comparisons of business performance from period to period. This non-GAAP effective tax rate is lower than the average of the statutory tax rates applicable to the Company's jurisdictional mix of earnings primarily because it reflects tax benefits derived from U.S. tax attribute carryforwards, which consist of operating losses and tax credits. Without taking into account these benefits and other similar adjustments, the Company projects its non-GAAP effective tax rate would be 26.0% based on its estimated results for the full year 2026. This rate would have resulted in a $0.10 reduction in Adjusted EPS for the nine months ended September 30, 2026. Constant Currency: The Company discloses net sales and adjusted EBITDA on a constant currency basis by adjusting results to exclude the impact of changes due to the translation of foreign currencies of its international locations into U.S. dollar. Management believes this non-GAAP financial information facilitates period-to-period comparison in the analysis of trends in business performance, thereby providing valuable supplemental information regarding its results of operations, consistent with how the Company internally evaluates its financial results. The impact of foreign currency translation is calculated by converting the Company's current-period local currency financial results into U.S. dollar using the prior period's exchange rates and comparing these adjusted amounts to its prior period reported results. The difference between actual growth rates and constant currency growth rates represents the estimated impact of foreign currency translation. EBITDA and Adjusted EBITDA: EBITDA represents earnings before interest, provision for income taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA, excluding the impact of additional items included in GAAP earnings which the Company believes are not representative or indicative of its ongoing business or are considered to be associated with its capital structure, as described in the Release. Adjusted EBITDA for each segment also includes an allocation of corporate costs, such as compensation expense and professional fees. Management believes adjusted EBITDA and adjusted EBITDA margin provide investors with a more complete understanding of the long-term profitability trends of the Company’s business and facilitate comparisons of its profitability to prior and future periods. However, these measures, which do not consider certain cash requirements, should not be construed as an alternative to net income or cash flows from operations as a measure of profitability or liquidity. Net Debt to Net Income and Net Debt to Adjusted EBITDA Ratios: Net debt is a non-GAAP measure and is comprised of total debt (current installments of long-term debt, revolving credit facilities and long-term debt), excluding unamortized discounts and debt issuance costs, which totaled $12.6 million at September 30, 2026, less cash. For the non-GAAP reconciliation of Net debt, please refer to the "Q3 2026 Capital Structure" table on page 5. Net debt to net income ratio and net debt to adjusted EBITDA ratio is net debt divided by net income and adjusted EBITDA, respectively. Free Cash Flow and Adjusted Free Cash Flow: Free cash flow is defined as net cash flows from operating activities less capital expenditures, plus (1) proceeds from the disposal of property, plant and equipment, (2) professional fees, non-recurring expenses and taxes paid in association with acquisitions and divestitures and (3) non-recurring payments associated with a multi-year tax settlement in the first quarter of 2025. Management believes that this non-GAAP metric, which measures the Company’s ability to generate cash from its business operations, is an important financial measure for evaluating the Company's liquidity. Free cash flow should be considered as an additional measure of liquidity to, rather than as a substitute for, net cash provided by operating activities. Organic Net Sales Growth: Organic net sales growth is defined as net sales excluding the impact of foreign currency translation, changes due to the pass-through pricing of certain metals and acquisitions and/ or divestitures, as applicable. Management believes this non-GAAP financial measure provides investors with a more complete understanding of the underlying net sales trends by providing comparable net sales over differing periods on a consistent basis. For the three months ended September 30, 2026, Electronics' consolidated results were positively impacted by $94.4 million of pass-through metals pricing and $138 million of acquisitions, which includes $93.1 million of net sales from pass-through metals, and Specialties consolidated results were positively impacted by $23.4 million of acquisitions.