展品99.1
element solutions inc
宣布2024年第三季度財務業績
•凈銷售額為64500萬美元，較2023年第三季度增長8% 根據報告基礎或有機基礎，與2023年第三季度相比增長了6%
•報告凈利潤為4000萬美元，與去年同期3200萬美元的凈虧損相比
•调整后的EBITDA为14300万美元，相比去年同期的13400万美元增长了6%，按照报告基础增长了8% 根据不变的货币基础
•2024年第三季度營運活動現金流為9900萬美元，自由現金流為8600萬美元
2024年10月28日，位於佛羅里達邁阿密-- 全球專業化學品公司element solutions inc（NYSE:ESI）（以下簡稱“Element Solutions”或“本公司”）宣布截至2024年9月30日的三個和九個月的財務業績。
執行層評論
執行長總裁Benjamin Gliklich評論說：“element solutions本季再次交出強勁的業績。在財務、運營和戰略方面，我們都表現出色。電子業務部門繼續利用先進封裝和高性能計算等發展中的科技趨勢，這代表著市場中價值最高且增長最快的部分。多年來，我們有計劃地投資，以建立面向這些新興機遇的能力，我們的成果反映出在幾個傳統核心市場，包括西方智能手機和汽車，持續疲軟的情況下取得的進展。盡管本季工業宏觀背景普遍疲弱，特別是在歐洲，但我們的工業與特殊業務部門收益依然增長。綜合而言，我們繼續履行承諾，在各業務領域中超越市場表現。我們縮小的2024年全年調整後EBITDA指引區間暗示創紀錄的收益，儘管整體終端市場依然遠低於先前高峰水準。”
格利克先生表示：「本季我們的行動重新定位了我們的投資組合，並改善了我們整體業務的質量和資產負債表。 之前宣佈的銷售MacDermid圖形解決方案將進一步將我們的公司專注於核心市場，應提高我們的基礎增長率、利潤率和投資回報率。 預計該交易將在2025年年底至第二季度末之間完成，須待交易條件和監管機構批准。 預期從該交易中獲得的收益，將使我們在2024年年底的淨槓桿比率約為2.5倍，這將使我們在多年來擁有更多戰略性資本配置的潛力。 Element Solutions在2025年為再創紀錄的一年做好了準備。」
2024年第三季度亮點（與2023年第三季度比較）
•2024年第三季度按報告基礎計算的凈銷售額為6,4500萬美元，較2023年第三季度增加8%。有機凈銷售增加了6%。
◦電子產品部門：淨銷售增加了14%至41900萬美元。有機淨銷售增加了9%。
◦工業與特殊產品部門：凈銷售額下降了3%至22600萬美元。有機凈銷售保持相對穩定。
•2024年第三季每股收益（EPS）表現：
◦根據GAAP溢利調整後每股收益為0.17美元，相比去年同期每股虧損0.13美元。
◦調整後的每股收益為0.39美元，相比去年同期的0.36美元。
•2024年第三季度報告的凈利潤為4000萬美元，而2023年第三季度則為凈虧損3200萬美元。
◦凈利潤率增加至6.3%。
•2024年第三季度调整后的息税折旧及摊销前利润（EBITDA）为14300萬美元，相比2023年第三季度的13400萬美元增加6%。按恒定货币计算，调整后的EBITDA增长了8%。
◦電子產品部門：調整後的EBITDA為9900萬美元，增加了9%。按照固定貨幣基礎計算，調整後的EBITDA增加了10%。
◦工業與特殊產品部門：調整後的EBITDA為4400萬美元，增加了1%。按照固定匯率計算，調整後的EBITDA增加了4%。
◦调整后的EBITDA利润率下降了30个基点至22.1%。根据恆定货币计算，调整后的EBITDA利润率下降了20个基点。
更新的2024年指引
公司預計2024年全年調整後的EBITDA區間為53500萬至54000萬美元。此外，公司預計2024年全年的自由現金流區間為28000萬至30000萬美元。
近期發展
麥克德密德圖形解決方案交易 — 2024年9月1日，公司達成協議，將彈性印刷版業務麥克德密很的圖形解決方案業務以約3.25億美元出售。麥克德密德圖形解決方案佔公司圖形解決方案業務的絕大部分。交易預計將在2024年第四季或2025年上半年完成，視常規的結束條件、調整和監管審批而定。
貸款合并了10.4億美元的貸款並減少債務 ——2024年10月15日，公司完成了10.4億美元新的b-3期貸款的聯合籌集，導致利率下降25個基點至SOFR加1.75%的利差。與此重新定價相關，公司完全償還了其11.4億美元的b-2期貸款，從而將其在信貸協議下的借款減少了1億美元。公司還終止了1億美元名義的利率掉期和跨貨幣掉期，這些掉期將於2025年1月到期。新的期貸的淨收益和手頭現金被用來全額預付公司的b-2期貸款。
看漲會議通話
element solutions將於2024年10月29日星期二上午8:30（美東時間）舉行網絡研討會/致電會議，討論其2024年第三季度的財務業績。 通話的參與者將包括總裁暨執行長本傑明·格利克利希和臨時代碼Carey J. Dorman。.
要透過電話收看看漲，請撥打888-510-2346（國內）或646-960-0111（國際），並提供會議ID：3799230。該看漲將同步在網址上播出 www.elementsolutionsinc.com。看漲結束後將提供該看漲的重播，請到 www.elementsolutionsinc.com.
關於element solutions
element solutions inc 是領先的全球特種化學品公司，其業務提供多種解決方案，可增強人們每天使用的產品的性能。 這些創新解決方案是通過多步技術過程開發的，使客戶的製造流程得以在幾個關鍵行業中進行，包括消費電子、動力電子、半導體製程、通信和數據存儲基礎設施、汽車系統、工業表面處理、消費者包裝和海上能源。
有關本公司的更多資訊，請瀏覽www.elementsolutionsinc.com.
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前瞻性陳述
此發布旨在符合1995年《私人證券訴訟改革法》所確立的安全港規定，因為其中包含《前瞻性聲明》，屬於聯邦證券法中「forward-looking statements」的意義。 這些聲明通常會包含「期望」、「預期」、「計劃」、「將會」、「應該」、「相信」、「打算」、「計畫」、「假定」、「估計」、「預測」、「尋求」、「持續」、「展望」、「有可能」、「可能」、「目標」、「期望享有」、「可能性」、「潛力」、「目標」、「希望」、「目標」、「優先事項」、「指引」或「有信心」等詞語和類似表達方式。 《前瞻性聲明》的範例包括但不限於對開發技術趨勢和新興機遇的資本化的聲明、市場趨勢和增長、超越最終市場的承諾、MacDermid Graphics Solutions交易的預期收益、此交易的完成功時機、雙方完成此交易的能力，包括獲得監管機構批准和滿足其他結束條件的能力；到2024年年底的淨債務槓桿率，包括此交易的預期收益；資本配置；非GAAP有效稅率；2024年全年財務指引中的調整後息稅前利潤、不變貨幣調整後息稅前利潤增長和自由現金流；以及2025年預期創紀錄年。 這些預測和聲明是基於管理層對於未來事件和財務表現的估計、假設或期望，被認為是合理的，但本身具有不確定性且難以預測。 此類預測和聲明基於截至當前日期提供的信息評估，並且公司不承擔進一步提供任何更新的義務。 如果其中一項或多項基礎估計、假設或期望被證實不準確或無法實現，則實際結果可能與《前瞻性聲明》中所表達或暗示的結果有顯著差異。 可能導致實際結果與《前瞻性聲明》所暗示的結果不一致的重要因素包括但不限於俄羅斯與烏克蘭之間的戰爭、以色列與哈瑪斯的衝突以及其他中東地區的敵對行動以及對此做出的回應及其對市場狀況和全球經濟的影響；冠狀病毒（COVID-19）及其變種對全球經濟和供應鏈的持續經濟影響；價格波動和成本環境；通膨和外匯匯率波動；未清償債務和債務槓桿率；股份回購；債務和／或股本發行或退休；對股東的預期回報；以及併購、出售、重組、再融資、減損和其他飛凡項目的影響，包括公司整合和獲取預期利益、成果和這些項目或其他相關戰略舉措的協同效應。 有關可能導致實際結果有所變動的其他進一步信息，將在公司向證券交易委員會提交的定期報告和其他報告中包括或已包括。 公司不承擔更新任何前瞻性聲明的任何義務，無論是基於新信息、未來事件還是其他原因。
3
ELEMENT SOLUTIONS INC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (dollars in millions, except per share amounts) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Net sales | $ | 645.0 | $ | 599.3 | $ | 1,832.7 | $ | 1,759.8 | |||||||||||||||
| Cost of sales | 377.5 | 357.4 | 1,053.0 | 1,061.6 | |||||||||||||||||||
| Gross profit | 267.5 | 241.9 | 779.7 | 698.2 | |||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Selling, technical, general and administrative | 157.6 | 149.9 | 462.1 | 445.8 | |||||||||||||||||||
| Research and development | 14.9 | 12.9 | 48.6 | 54.3 | |||||||||||||||||||
| Goodwill impairment | — | 80.0 | — | 80.0 | |||||||||||||||||||
| Total operating expenses | 172.5 | 242.8 | 510.7 | 580.1 | |||||||||||||||||||
| Operating profit (loss) | 95.0 | (0.9) | 269.0 | 118.1 | |||||||||||||||||||
| Other (expense) income: | |||||||||||||||||||||||
| Interest expense, net | (14.2) | (13.3) | (42.4) | (37.0) | |||||||||||||||||||
| Foreign exchange gains (losses) | 11.1 | (5.3) | 24.0 | 8.6 | |||||||||||||||||||
| Other (expense) income, net | (14.7) | 3.1 | (29.7) | 1.8 | |||||||||||||||||||
| Total other expense | (17.8) | (15.5) | (48.1) | (26.6) | |||||||||||||||||||
| Income (loss) before income taxes and non-controlling interests | 77.2 | (16.4) | 220.9 | 91.5 | |||||||||||||||||||
| Income tax expense | (36.8) | (15.3) | (32.8) | (53.4) | |||||||||||||||||||
| Net income (loss) from continuing operations | 40.4 | (31.7) | 188.1 | 38.1 | |||||||||||||||||||
| Income from discontinued operations, net of tax | — | — | 1.6 | 2.9 | |||||||||||||||||||
| Net income (loss) | 40.4 | (31.7) | 189.7 | 41.0 | |||||||||||||||||||
| Net income attributable to non-controlling interests | (0.1) | (0.1) | (0.2) | — | |||||||||||||||||||
| Net income (loss) attributable to common stockholders | $ | 40.3 | $ | (31.8) | $ | 189.5 | $ | 41.0 | |||||||||||||||
| Earnings (loss) per share | |||||||||||||||||||||||
| Basic from continuing operations | $ | 0.17 | $ | (0.13) | $ | 0.77 | $ | 0.16 | |||||||||||||||
| Basic from discontinued operations | — | — | 0.01 | 0.01 | |||||||||||||||||||
| Basic attributable to common stockholders | $ | 0.17 | $ | (0.13) | $ | 0.78 | $ | 0.17 | |||||||||||||||
| Diluted from continuing operations | $ | 0.17 | $ | (0.13) | $ | 0.77 | $ | 0.16 | |||||||||||||||
| Diluted from discontinued operations | — | — | 0.01 | 0.01 | |||||||||||||||||||
| Diluted attributable to common stockholders | $ | 0.17 | $ | (0.13) | $ | 0.78 | $ | 0.17 | |||||||||||||||
| Weighted average common shares outstanding | |||||||||||||||||||||||
| Basic | 242.1 | 241.5 | 242.0 | 241.4 | |||||||||||||||||||
| Diluted | 242.6 | 241.5 | 242.5 | 241.8 | |||||||||||||||||||
4
ELEMENT SOLUTIONS INC
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| September 30, | December 31, | ||||||||||
| (dollars in millions) | 2024 | 2023 | |||||||||
| Assets | |||||||||||
| Cash and cash equivalents | $ | 376.0 | $ | 289.3 | |||||||
| Accounts receivable, net of allowance for doubtful accounts of $10.6 and $12.6 at September 30, 2024 and December 31, 2023, respectively | 474.9 | 461.8 | |||||||||
| Inventories | 285.7 | 298.9 | |||||||||
| Prepaid expenses | 28.2 | 32.5 | |||||||||
| Other current assets | 116.4 | 115.0 | |||||||||
| Current assets held for sale | 70.0 | — | |||||||||
| Total current assets | 1,351.2 | 1,197.5 | |||||||||
| Property, plant and equipment, net | 273.9 | 296.9 | |||||||||
| Goodwill | 2,220.2 | 2,336.7 | |||||||||
| Intangible assets, net | 782.2 | 879.3 | |||||||||
| Deferred income tax assets | 159.3 | 120.5 | |||||||||
| Other assets | 120.0 | 143.2 | |||||||||
| Non-current assets held for sale | 191.4 | — | |||||||||
| Total assets | $ | 5,098.2 | $ | 4,974.1 | |||||||
| Liabilities and stockholders' equity | |||||||||||
| Accounts payable | $ | 127.1 | $ | 140.6 | |||||||
| Current installments of long-term debt | 11.5 | 11.5 | |||||||||
| Accrued expenses and other current liabilities | 228.8 | 217.3 | |||||||||
| Current liabilities held for sale | 16.6 | — | |||||||||
| Total current liabilities | 384.0 | 369.4 | |||||||||
| Debt | 1,914.7 | 1,921.0 | |||||||||
| Pension and post-retirement benefits | 24.4 | 28.1 | |||||||||
| Deferred income tax liabilities | 105.6 | 108.9 | |||||||||
| Other liabilities | 198.5 | 202.4 | |||||||||
| Non-current liabilities held for sale | 16.3 | — | |||||||||
| Total liabilities | 2,643.5 | 2,629.8 | |||||||||
| Stockholders' equity | |||||||||||
| Common stock: 400.0 shares authorized (2024: 267.1 shares issued; 2023: 266.2 shares issued) | 2.7 | 2.7 | |||||||||
| Additional paid-in capital | 4,210.4 | 4,196.9 | |||||||||
| Treasury stock (2024: 25.0 shares; 2023: 24.6 shares) | (349.5) | (341.9) | |||||||||
| Accumulated deficit | (1,052.4) | (1,183.3) | |||||||||
| Accumulated other comprehensive loss | (371.9) | (345.9) | |||||||||
| Total stockholders' equity | 2,439.3 | 2,328.5 | |||||||||
| Non-controlling interests | 15.4 | 15.8 | |||||||||
| Total equity | 2,454.7 | 2,344.3 | |||||||||
| Total liabilities and stockholders' equity | $ | 5,098.2 | $ | 4,974.1 | |||||||
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ELEMENT SOLUTIONS INC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||
September 30, | June 30, | March 31, | September 30, | |||||||||||||||||||||||||||||
| (dollars in millions) | 2024 | 2024 | 2024 | 2024 | 2023 | |||||||||||||||||||||||||||
| Cash flows from operating activities: | ||||||||||||||||||||||||||||||||
Net income | $ | 40.4 | $ | 93.3 | $ | 56.0 | $ | 189.7 | $ | 41.0 | ||||||||||||||||||||||
| Net income from discontinued operations, net of tax | — | 1.6 | — | 1.6 | 2.9 | |||||||||||||||||||||||||||
| Net income from continuing operations | 40.4 | 91.7 | 56.0 | 188.1 | 38.1 | |||||||||||||||||||||||||||
Reconciliation of net income to net cash flows provided by operating activities: | ||||||||||||||||||||||||||||||||
| Depreciation and amortization | 39.4 | 40.1 | 40.3 | 119.8 | 124.7 | |||||||||||||||||||||||||||
| Deferred income taxes | 9.2 | (37.4) | (5.4) | (33.6) | (8.1) | |||||||||||||||||||||||||||
Foreign exchange gains | (12.4) | (4.7) | (7.8) | (24.9) | (10.5) | |||||||||||||||||||||||||||
| Incentive stock compensation | 3.8 | 3.6 | 4.1 | 11.5 | 10.6 | |||||||||||||||||||||||||||
Goodwill impairment | — | — | — | — | 80.0 | |||||||||||||||||||||||||||
| Other, net | 13.6 | 1.3 | 3.7 | 18.6 | 25.8 | |||||||||||||||||||||||||||
| Changes in assets and liabilities, net of acquisitions: | ||||||||||||||||||||||||||||||||
| Accounts receivable | (12.2) | (27.4) | (4.8) | (44.4) | (6.6) | |||||||||||||||||||||||||||
| Inventories | 22.6 | (20.1) | (23.9) | (21.4) | (37.2) | |||||||||||||||||||||||||||
| Accounts payable | (15.1) | 14.3 | 0.7 | (0.1) | 13.3 | |||||||||||||||||||||||||||
| Accrued expenses | 18.9 | 13.5 | (14.5) | 17.9 | (8.0) | |||||||||||||||||||||||||||
| Prepaid expenses and other current assets | (0.9) | (9.3) | 6.7 | (3.5) | 3.4 | |||||||||||||||||||||||||||
| Other assets and liabilities | (8.8) | 1.0 | 3.1 | (4.7) | (3.7) | |||||||||||||||||||||||||||
| Net cash flows provided by operating activities | 98.5 | 66.6 | 58.2 | 223.3 | 221.8 | |||||||||||||||||||||||||||
| Cash flows from investing activities: | ||||||||||||||||||||||||||||||||
| Capital expenditures | (12.6) | (14.5) | (19.0) | (46.1) | (36.3) | |||||||||||||||||||||||||||
| Proceeds from disposal of property, plant and equipment | — | — | — | — | 1.4 | |||||||||||||||||||||||||||
| Acquisitions, net of cash acquired | — | — | (3.9) | (3.9) | (188.6) | |||||||||||||||||||||||||||
| Other, net | — | (6.4) | — | (6.4) | (2.7) | |||||||||||||||||||||||||||
| Net cash flows used in investing activities | (12.6) | (20.9) | (22.9) | (56.4) | (226.2) | |||||||||||||||||||||||||||
| Cash flows from financing activities: | ||||||||||||||||||||||||||||||||
| Debt proceeds | — | — | — | — | 150.0 | |||||||||||||||||||||||||||
| Repayments of borrowings | (2.8) | (2.9) | (2.9) | (8.6) | (8.6) | |||||||||||||||||||||||||||
| Dividends | (19.4) | (19.4) | (20.0) | (58.8) | (58.1) | |||||||||||||||||||||||||||
| Payment of financing fees | — | — | (2.1) | (2.1) | (1.0) | |||||||||||||||||||||||||||
| Other, net | (6.0) | 0.9 | (7.7) | (12.8) | (7.7) | |||||||||||||||||||||||||||
Net cash flows (used in) provided by financing activities | (28.2) | (21.4) | (32.7) | (82.3) | 74.6 | |||||||||||||||||||||||||||
| Net cash flows provided by operating activities of discontinued operations | — | 1.6 | — | 1.6 | 2.9 | |||||||||||||||||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | 9.0 | (2.9) | (5.6) | 0.5 | (9.1) | |||||||||||||||||||||||||||
Net increase (decrease) in cash and cash equivalents | 66.7 | 23.0 | (3.0) | 86.7 | 64.0 | |||||||||||||||||||||||||||
| Cash and cash equivalents at beginning of period | 309.3 | 286.3 | 289.3 | 289.3 | 265.6 | |||||||||||||||||||||||||||
| Cash and cash equivalents at end of period | $ | 376.0 | $ | 309.3 | $ | 286.3 | $ | 376.0 | $ | 329.6 | ||||||||||||||||||||||
6
ELEMENT SOLUTIONS INC
ADDITIONAL FINANCIAL INFORMATION
(Unaudited)
I. SEGMENT RESULTS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (dollars in millions) | 2024 | 2023 | Reported | Constant Currency | Organic | 2024 | 2023 | Reported | Constant Currency | Organic | |||||||||||||||||||||||||||||||||||||||||||||||||
Net Sales | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Electronics | $ | 419.1 | $ | 367.0 | 14% | 15% | 9% | $ | 1,160.0 | $ | 1,062.4 | 9% | 11% | 7% | |||||||||||||||||||||||||||||||||||||||||||||
| Industrial & Specialty | 225.9 | 232.3 | (3)% | 0% | 0% | 672.7 | 697.4 | (4)% | (2)% | (2)% | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 645.0 | $ | 599.3 | 8% | 9% | 6% | $ | 1,832.7 | $ | 1,759.8 | 4% | 6% | 3% | |||||||||||||||||||||||||||||||||||||||||||||
Net Income (Loss) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 40.4 | $ | (31.7) | (nm) | $ | 189.7 | $ | 41.0 | 362% | |||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Electronics | $ | 98.6 | $ | 90.4 | 9% | 10% | $ | 274.7 | $ | 239.4 | 15% | 18% | |||||||||||||||||||||||||||||||||||||||||||||||
| Industrial & Specialty | 44.1 | 43.7 | 1% | 4% | 130.1 | 123.1 | 6% | 9% | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 142.7 | $ | 134.1 | 6% | 8% | $ | 404.8 | $ | 362.5 | 12% | 15% | |||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended September 30, | Constant Currency | Nine Months Ended September 30, | Constant Currency | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2024 | 2023 | Change | 2024 | Change | 2024 | 2023 | Change | 2024 | Change | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income Margin | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | 6.3% | (5.3)% | (nm) | 10.3% | 2.3% | 800bps | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted EBITDA Margin | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Electronics | 23.5% | 24.6% | (110)bps | 23.6% | (100)bps | 23.7% | 22.5% | 120bps | 23.9% | 140bps | |||||||||||||||||||||||||||||||||||||||||||||||||
| Industrial & Specialty | 19.5% | 18.9% | 60bps | 19.7% | 90bps | 19.3% | 17.7% | 160bps | 19.6% | 190bps | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total | 22.1% | 22.4% | (30)bps | 22.2% | (20)bps | 22.1% | 20.6% | 150bps | 22.3% | 170bps | |||||||||||||||||||||||||||||||||||||||||||||||||
(nm) Calculation not meaningful.
| II. CAPITAL STRUCTURE | |||||||||||||||||||||||
| (dollars in millions) | Maturity | Interest Rate | September 30, | ||||||||||||||||||||
| 2024 | |||||||||||||||||||||||
| Instrument | |||||||||||||||||||||||
Term Loans | (1) | 12/18/2030 | SOFR plus 2.00% | $ | 1,141.4 | ||||||||||||||||||
| Total First Lien Debt | 1,141.4 | ||||||||||||||||||||||
| Senior Notes due 2028 | 9/1/2028 | 3.875% | 800.0 | ||||||||||||||||||||
| Total Debt | 1,941.4 | ||||||||||||||||||||||
| Cash Balance | 376.0 | ||||||||||||||||||||||
| Net Debt | $ | 1,565.4 | |||||||||||||||||||||
| Adjusted Shares Outstanding | (2) | 244.6 | |||||||||||||||||||||
Market Capitalization | (3) | $ | 6,643.3 | ||||||||||||||||||||
| Total Capitalization | $ | 8,208.7 | |||||||||||||||||||||
(1) Element Solutions swapped its floating term loan rate to a fixed rate for all of its outstanding term loans through the use of interest rate swaps and cross-currency swaps which mature in January 2025 or December 2028, as applicable. At September 30, 2024, 100% of the Company's debt was fixed.
(2) See "Adjusted Common Shares Outstanding at September 30, 2024 and 2023" following the footnotes under the "Adjusted Earnings Per Share (EPS)" reconciliation table below.
(3) Based on the closing price of the shares of Element Solutions of $27.16 at September 30, 2024.
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| III. SELECTED FINANCIAL DATA | |||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (dollars in millions) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Interest expense | $ | 17.4 | $ | 15.7 | $ | 50.9 | $ | 43.5 | |||||||||||||||
| Interest paid | 24.3 | 22.9 | 56.9 | 48.7 | |||||||||||||||||||
| Income tax expense | 36.8 | 15.3 | 32.8 | 53.4 | |||||||||||||||||||
| Income taxes paid | 21.3 | 17.5 | 60.8 | 49.0 | |||||||||||||||||||
| Capital expenditures | 12.6 | 13.4 | 46.1 | 36.3 | |||||||||||||||||||
| Proceeds from disposal of property, plant and equipment | — | 0.9 | — | 1.4 | |||||||||||||||||||
Non-GAAP Measures
To supplement its financial measures prepared in accordance with GAAP, Element Solutions presents in this release the following non-GAAP financial measures: EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted EPS, adjusted common shares outstanding, free cash flow, organic net sales growth, full year 2024 guidance for adjusted EBITDA, constant currency adjusted EBITDA growth and free cash flow. The Company also evaluates and presents its results of operations on a constant currency basis.
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 Element Solutions 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 in this press release, and not to rely on any single financial measure to evaluate the Company's businesses.
The Company provides full year 2024 guidance for adjusted EBITDA and constant currency adjusted EBITDA growth 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 reconciliations of historic numbers, the amount of which, based on historical experience, could be significant.
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.
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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.
The following table reconciles GAAP net sales growth to organic net sales growth for the three and nine months ended September 30, 2024:
| Three Months Ended September 30, 2024 | ||||||||||||||||||||||||||||||||||||||
| Reported Net Sales Growth | Impact of Currency | Constant Currency | Change in Pass-Through Metals Pricing | Acquisitions | Organic Net Sales Growth | |||||||||||||||||||||||||||||||||
| Electronics | 14% | 0% | 15% | (5)% | —% | 9% | ||||||||||||||||||||||||||||||||
| Industrial & Specialty | (3)% | 2% | 0% | —% | —% | 0% | ||||||||||||||||||||||||||||||||
| Total | 8% | 1% | 9% | (3)% | —% | 6% | ||||||||||||||||||||||||||||||||
| Nine Months Ended September 30, 2024 | ||||||||||||||||||||||||||||||||||||||
| Reported Net Sales Growth | Impact of Currency | Constant Currency | Change in Pass-Through Metals Pricing | Acquisitions | Organic Net Sales Growth | |||||||||||||||||||||||||||||||||
| Electronics | 9% | 2% | 11% | (3)% | (1)% | 7% | ||||||||||||||||||||||||||||||||
| Industrial & Specialty | (4)% | 2% | (2)% | —% | 0% | (2)% | ||||||||||||||||||||||||||||||||
| Total | 4% | 2% | 6% | (2)% | 0% | 3% | ||||||||||||||||||||||||||||||||
NOTE: Totals may not sum due to rounding.
For the three months ended September 30, 2024, Electronics' consolidated results were positively impacted by $19.2 million of pass-through metals pricing. For the nine months ended September 30, 2024, Electronics' consolidated results were positively impacted by $36.1 million of pass-through metals pricing and $8.1 million of acquisitions and Industrial & Specialty's consolidated results were positively impacted by $0.5 million of acquisitions.
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.
Further, the Company adjusts its effective tax rate to 20%, as described in footnote (9) under the reconciliation table below. This effective tax 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.
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).
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The following table reconciles GAAP "Net income (loss)" to "Adjusted net income" and presents the number of adjusted common shares outstanding used in calculating adjusted EPS for each period presented below:
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||||||
| (dollars in millions, except per share amounts) | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||
| Net income (loss) | $ | 40.4 | $ | (31.7) | $ | 189.7 | $ | 41.0 | ||||||||||||||||||
Income from discontinued operations, net of tax | — | — | (1.6) | (2.9) | ||||||||||||||||||||||
| Net income attributable to non-controlling interests | (0.1) | (0.1) | (0.2) | — | ||||||||||||||||||||||
| Reversal of amortization expense | (1) | 29.4 | 32.7 | 89.4 | 93.3 | |||||||||||||||||||||
| Adjustment to reverse incremental depreciation expense from acquisitions | (1) | 0.3 | 0.4 | 1.0 | 1.2 | |||||||||||||||||||||
| Restructuring (income) expense | (2) | (0.1) | 2.1 | 5.7 | 6.3 | |||||||||||||||||||||
| Acquisition, divestiture and integration expense | (3) | 6.3 | 5.0 | 11.3 | 13.3 | |||||||||||||||||||||
| Foreign exchange (gains) losses on intercompany loans | (4) | (13.5) | 6.5 | (24.2) | (7.6) | |||||||||||||||||||||
| Debt refinancing costs | (5) | 0.4 | — | 0.4 | — | |||||||||||||||||||||
| Goodwill impairment | (6) | — | 80.0 | — | 80.0 | |||||||||||||||||||||
| Kuprion Acquisition research and development charge | (7) | — | — | 3.9 | 15.7 | |||||||||||||||||||||
| Other, net | (8) | 18.8 | (0.9) | 24.6 | 1.6 | |||||||||||||||||||||
| Tax effect of pre-tax non-GAAP adjustments | (9) | (8.3) | (25.2) | (22.4) | (40.8) | |||||||||||||||||||||
| Adjustment to estimated effective tax rate | (9) | 21.3 | 18.6 | (11.4) | 35.1 | |||||||||||||||||||||
Adjusted net income | $ | 94.9 | $ | 87.4 | $ | 266.2 | $ | 236.2 | ||||||||||||||||||
| Adjusted earnings per share | (10) | $ | 0.39 | $ | 0.36 | $ | 1.09 | $ | 0.97 | |||||||||||||||||
| Adjusted common shares outstanding | (10) | 244.6 | 243.9 | 244.5 | 243.9 | |||||||||||||||||||||
(1) The Company eliminates the amortization expense associated with intangible assets and incremental depreciation associated with the step-up of fixed assets recognized in purchase accounting for acquisitions. The Company believes these adjustments provide insight with respect to the cash flows necessary to maintain and enhance its product portfolio.
(2) The Company adjusts for costs of restructuring its operations, including those related to its acquired businesses. The Company adjusts these costs because it believes they are not reflective of ongoing operations.
(3) The Company adjusts for costs associated with acquisition, divestiture and integration activity, including costs of obtaining related financing, legal and accounting fees and transfer taxes. The Company adjusts these costs because it believes they are not reflective of ongoing operations.
(4) The Company adjusts for foreign exchange gains and losses on intercompany loans because it expects the period-to-period movement of the applicable currencies to offset on a long-term basis and because these gains and losses are not fully realized due to their long-term nature. The Company does not exclude foreign exchange gains and losses on short-term intercompany and third-party payables and receivables.
(5) The Company adjusts for costs related to debt refinancing because it believes these costs are not reflective of ongoing operations.
(6) The Company recorded a non-cash goodwill impairment charge of $80.0 million related to its Graphics Solutions reporting unit in its Industrial & Specialty segment in the third quarter of 2023. The Company adjusts this cost because it believes it is not reflective of ongoing operations.
(7) The Company adjusts for research and development costs associated with contingent consideration and the purchase accounting related to the acquisition of Kuprion, Inc. The Company adjusts these costs because it believes they are not reflective of ongoing operations.
(8) The Company's adjustments include a non-cash available-for-sale debt security impairment charge of $11.4 million in the third quarter of 2024 and highly inflationary accounting losses for its operations in Turkey of $1.0 million and $2.0 million for the three months ended September 30, 2024 and 2023, respectively and $3.1 million and $8.4 million for the nine months ended September 30, 2024 and 2023, respectively. In addition, the Company adjusts for certain professional consulting fees and unrealized gains/losses on metals derivative contracts. The Company adjusts for the available-for-sale debt security impairment and certain professional consulting fees because it believes they are not reflective of ongoing operations. The Company adjusts for highly inflationary accounting impacts for its operations in Turkey and unrealized gains/losses on metals derivative contracts as it believes it provides a more meaningful comparison of its performance between periods.
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(9) The Company uses a non-GAAP effective tax rate of 20%. 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. These economic benefits are expected to recur through 2028. Without taking into account these benefits derived from its U.S. tax attribute carryforwards and other similar adjustments, the Company projects its non-GAAP effective tax rate would be 24.3% based on its estimated results for the full year 2024. This rate would have resulted in a $0.06 reduction in Adjusted EPS for the nine months ended September 30, 2024.
(10) The Company defines "Adjusted common shares outstanding" as the number of shares of its common stock 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 the 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 adjusts the number of its outstanding common shares for this calculation as it believes it provides a better understanding of its results of operations on a per share basis. See the table below for further information.
Adjusted Common Shares Outstanding at September 30, 2024 and 2023
The following table shows the Company's adjusted common shares outstanding at each period presented:
| September 30, | Year-to-Date Average | ||||||||||||||||||||||
| September 30, | |||||||||||||||||||||||
| (amounts in millions) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Basic common shares outstanding | 242.2 | 241.5 | 242.1 | 241.5 | |||||||||||||||||||
| Number of shares issuable upon vesting of granted Equity Awards | 2.4 | 2.4 | 2.4 | 2.4 | |||||||||||||||||||
| Adjusted common shares outstanding | 244.6 | 243.9 | 244.5 | 243.9 | |||||||||||||||||||
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 footnotes located under the "Adjusted Earnings Per Share (EPS)" reconciliation table above. 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.
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The following table reconciles GAAP "Net income (loss)" to "Adjusted EBITDA" for each of the periods presented:
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||||||
| (dollars in millions) | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||
| Net income (loss) | $ | 40.4 | $ | (31.7) | $ | 189.7 | $ | 41.0 | ||||||||||||||||||
| Add (subtract): | ||||||||||||||||||||||||||
| Income from discontinued operations, net of tax | — | — | (1.6) | (2.9) | ||||||||||||||||||||||
| Income tax expense | 36.8 | 15.3 | 32.8 | 53.4 | ||||||||||||||||||||||
| Interest expense, net | 14.2 | 13.3 | 42.4 | 37.0 | ||||||||||||||||||||||
| Depreciation expense | 10.0 | 11.8 | 30.4 | 31.4 | ||||||||||||||||||||||
| Amortization expense | 29.4 | 32.7 | 89.4 | 93.3 | ||||||||||||||||||||||
| EBITDA | 130.8 | 41.4 | 383.1 | 253.2 | ||||||||||||||||||||||
| Adjustments to reconcile to Adjusted EBITDA: | ||||||||||||||||||||||||||
| Restructuring (income) expense | (2) | (0.1) | 2.1 | 5.7 | 6.3 | |||||||||||||||||||||
| Acquisition, divestiture and integration expense | (3) | 6.3 | 5.0 | 11.3 | 13.3 | |||||||||||||||||||||
| Foreign exchange (gains) losses on intercompany loans | (4) | (13.5) | 6.5 | (24.2) | (7.6) | |||||||||||||||||||||
| Debt refinancing costs | (5) | 0.4 | — | 0.4 | — | |||||||||||||||||||||
| Goodwill impairment | (6) | — | 80.0 | — | 80.0 | |||||||||||||||||||||
| Kuprion Acquisition research and development charge | (7) | — | — | 3.9 | 15.7 | |||||||||||||||||||||
| Other, net | (8) | 18.8 | (0.9) | 24.6 | 1.6 | |||||||||||||||||||||
| Adjusted EBITDA | $ | 142.7 | $ | 134.1 | $ | 404.8 | $ | 362.5 | ||||||||||||||||||
NOTE: For the footnote descriptions, please refer to the footnotes located under the "Adjusted Earnings Per Share (EPS)" reconciliation table above.
Free Cash Flow:
Free cash flow is defined as net cash flows from operating activities less net capital expenditures. Net capital expenditures include capital expenditures less proceeds from the disposal of property, plant and equipment. Management believes that free cash flow, 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.
The following table reconciles "Cash flows from operating activities" to "Free cash flow" for the periods presented and the Company's free cash flow outlook for the full year 2024:
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||
| September 30, | September 30, | Outlook | ||||||||||||||||||||||||||||||
| (dollars in millions) | 2024 | 2023 | 2024 | 2023 | 2024 | |||||||||||||||||||||||||||
| Cash flows from operating activities | $ | 98.5 | $ | 87.4 | $ | 223.3 | $ | 221.8 | ~$340-$360 | |||||||||||||||||||||||
| Capital expenditures | (12.6) | (13.4) | (46.1) | (36.3) | ~(60) | |||||||||||||||||||||||||||
| Proceeds from disposal of property, plant and equipment | — | 0.9 | — | 1.4 | ~0 | |||||||||||||||||||||||||||
Free cash flow | $ | 85.9 | $ | 74.9 | $ | 177.2 | $ | 186.9 | ~$280-$300 | |||||||||||||||||||||||
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| Investor Relations Contact: | Media Contact: | ||||
Varun Gokarn Vice President, Strategy and Integration Element Solutions Inc 1-203-952-0369 IR@elementsolutionsinc.com | Scott Bisang / Ed Hammond / Tali Epstein Collected Strategies 1-212-379-2072 esi@collectedstrategies.com | ||||
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