Element Solutions Inc, a leading global specialty chemicals company, has announced its financial results for the three and nine months ending September 30, 2024.
Executive Commentary
Benjamin Gliklich, President and Chief Executive Officer, stated, “Element Solutions delivered robust results once again this quarter. We executed well on financial, operational, and strategic fronts. The Electronics segment capitalized on emerging technology trends such as advanced packaging and high-performance computing, which represent the highest value and fastest-growing areas of our markets. Our deliberate investments over the past several years have enhanced our capabilities in these sectors, yielding positive results even amid ongoing softness in several historical core markets, including Western smartphones and automotive. The Industrial & Specialty business also saw earnings growth despite a challenging industrial macro environment, particularly in Europe. Overall, we continue to meet our commitments and outperform in each of our segments. Our updated full-year 2024 adjusted EBITDA guidance range suggests record earnings, even with end-markets remaining significantly below previous peak levels.”
He added, “This quarter, we took steps to reposition our portfolio, improving the quality of our business and our balance sheet. The sale of MacDermid Graphics Solutions, previously announced, will sharpen our focus on core markets and is expected to enhance our growth rate, margins, and cash return on investment. The transaction is anticipated to close between year-end and the end of Q2 2025, pending regulatory approvals. With the expected proceeds, we estimate our net leverage ratio will be around 2.5x at the end of 2024, providing more capacity for strategic capital deployment than we’ve had in recent years. Element Solutions is well-positioned for another record year in 2025.”
Third Quarter 2024 Highlights (Compared to Q3 2023)
- Reported net sales for Q3 2024 were $645 million, an 8% increase from Q3 2023. Organic net sales grew by 6%.
- Electronics segment: Net sales increased by 14% to $419 million, with organic net sales up by 9%.
- Industrial & Specialty segment: Net sales decreased by 3% to $226 million, with organic net sales remaining relatively flat.
- Q3 2024 earnings per share (EPS): GAAP diluted EPS was $0.17, compared to a loss of $0.13 in the same period last year. Adjusted EPS was $0.39, up from $0.36 in the previous year.
- Reported net income for Q3 2024 was $40 million, a recovery from a net loss of $32 million in Q3 2023. Net income margin increased to 6.3%.
- Adjusted EBITDA for Q3 2024 was $143 million, a 6% increase from $134 million in Q3 2023. On a constant currency basis, adjusted EBITDA increased by 8%.
- Electronics adjusted EBITDA was $99 million, up 9%, with a 10% increase on a constant currency basis.
- Industrial & Specialty adjusted EBITDA was $44 million, a 1% increase, rising 4% on a constant currency basis.
- Adjusted EBITDA margin decreased by 30 basis points to 22.1%. On a constant currency basis, the margin decreased by 20 basis points.
Updated 2024 Guidance
The Company projects its full-year 2024 adjusted EBITDA to be in the range of $535 million to $540 million. Additionally, free cash flow is expected to range from $280 million to $300 million.
Recent Developments
- MacDermid Graphics Solutions Sale: On September 1, 2024, Element Solutions entered an agreement to sell its flexographic printing plate business for approximately $325 million. The transaction is expected to close in late 2024 or early 2025, subject to standard closing conditions and regulatory approvals.
- Debt Reduction and Term Loan Syndication: On October 15, 2024, the Company completed syndication of $1.04 billion in new term loans B-3, resulting in a 25 basis point interest rate reduction to SOFR plus a spread of 1.75% per annum. The proceeds were used to pay down $1.14 billion in existing term loans B-2, effectively reducing its borrowing by $100 million.
Conference Call
Element Solutions will host a conference call to discuss its Q3 2024 financial results on Tuesday, October 29, 2024, at 8:30 a.m. ET. Participants will include CEO Benjamin Gliklich and CFO Carey J. Dorman. To listen to the call, dial 888-510-2346 (domestic) or 646-960-0111 (international), providing Conference ID: 3799230. The call will also be available via webcast at Element Solutions.
About Element Solutions
Element Solutions Inc is a leading global specialty chemicals company providing a broad range of solutions that enhance the performance of everyday products. The company’s innovative solutions support manufacturing processes in several key industries, including consumer electronics, power electronics, semiconductor fabrication, communications, automotive systems, and industrial surface finishing.
Forward-Looking Statements
This release includes “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995, which may involve risks and uncertainties. Actual results may differ materially due to various factors, including economic conditions, market volatility, and strategic decisions. Further information regarding these risks and uncertainties can be found in the Company’s periodic reports filed with the Securities and Exchange Commission. The Company undertakes no obligation to update any forward-looking statements.
