EX-99 2 aearningsreleaseex99120253.htm EX-99.1 Q1 2025 EARNINGS RELEASE
EXHIBIT 99.1
Element Solutions Inc
Announces 2025 First Quarter Financial Results
•Net sales of $594 million, an increase of 3% on a reported basis or 5% on an organic basis from the first quarter of 2024
•Reported net income of $98 million, compared to $56 million in the same period last year, an increase of 75% on a reported basis
•Adjusted EBITDA of $128 million, compared to $127 million in the same period last year, an increase of 1% on a reported basis and 5% on a constant currency basis
•First quarter 2025 cash flows from operating activities of $26 million and adjusted free cash flow of $30 million
Miami, Fla., April 23, 2025 -- Element Solutions Inc (NYSE:ESI) (“Element Solutions” or the “Company”), a global and diversified specialty chemicals company, today announced its financial results for the three months ended March 31, 2025.
Executive Commentary
President and Chief Executive Officer Benjamin Gliklich commented, “Element Solutions started 2025 strong. We grew profits, meaningfully reduced leverage, and continued to execute on breakthrough growth strategies. Our markets were similar to last year's – soft industrial demand with pockets of strength in high-value electronics niches, most particularly data centers and AI applications. Considering that backdrop, our results are encouraging. Net sales grew 10% organically in electronics, and ex-metal adjusted EBITDA margins improved year-on-year. We have seen no slowdown in our leading semiconductor customers, benefited from diversification in our power electronics customer base, and continued to gain traction with new product introductions. The team is executing well.”
Mr. Gliklich continued, “Given our global footprint, recent trade actions have added complexity to our business ecosystem. We are fortunate to operate locally in most of our markets with sourcing, manufacturing and technical resources close to our customers. Thanks to that dynamic and our nimble supply chain, we believe we can mitigate most of the impact of increased tariffs and potential new tariffs on our cost structure. It is harder to assess their impact on end-market demand. Our business fared well through the first quarter despite the specter of trade actions impacting sentiment. We are also benefiting from a transition in our business towards B2B electronics sales in data centers. Indications suggest that hyper-scalers will continue to invest, further supporting our growth in high-end electronics. Without more clarity or additional data points, while considering the easing FX headwinds from a weakening US dollar, our initial full year 2025 adjusted EBITDA guidance of $520 million to $540 million remains our best estimate of earnings potential for this year, albeit with more uncertainty given the risk of further tariffs escalation or implementation. We are prepared to quickly react to shifts in demand to address cost and preserve profit. We believe we are also well positioned to deploy capital in scale against attractive opportunities that may be created by the current volatility in the markets.”
First Quarter 2025 Highlights (compared with first quarter 2024)
•Net sales on a reported basis for the first quarter of 2025 were $594 million, an increase of 3% over the first quarter of 2024. Organic net sales increased 5%.
◦Electronics: Net sales increased 13% to $394 million. Organic net sales increased 10%.
◦Industrial & Specialty: Net sales decreased 12% to $199 million, of which 6% resulted from the sale of MacDermid Graphics Solutions in February 2025. Organic net sales decreased 2%.
•First quarter of 2025 earnings per share (EPS) performance:
◦GAAP diluted EPS was $0.40, as compared to $0.23 for the same period last year.
◦Adjusted EPS was $0.34, as compared to $0.34 for the same period last year.
•Reported net income for the first quarter of 2025 was $98 million, as compared to $56 million for the first quarter of 2024, an increase of 75%.

◦Net income margin increased by 680 basis points to 16.5%.
•Adjusted EBITDA for the first quarter of 2025 was $128 million, as compared to $127 million for the first quarter of 2024. On a constant currency basis, adjusted EBITDA increased 5%.
◦Electronics: Adjusted EBITDA was $89 million, an increase of 6%. On a constant currency basis, adjusted EBITDA increased 9%.
◦Industrial & Specialty: Adjusted EBITDA was $40 million, a decrease of 8%. On a constant currency basis, adjusted EBITDA decreased 2%.
◦Adjusted EBITDA margin decreased by 50 basis points to 21.6%. On a constant currency basis, adjusted EBITDA margin decreased by 30 basis points.
2025 Guidance
The Company expects full year 2025 adjusted EBITDA to be in the range of $520 million to $540 million and free cash flow conversion to be comparable to the previous year. In addition, the Company expects second quarter 2025 adjusted EBITDA to be in the range of $120 million to $125 million, or roughly flat sequentially considering the sale of the MacDermid Graphics Solutions business in the first quarter, and assuming limited impact from announced or potential new or increased tariffs on demand.
Recent Developments
Portfolio Optimization - On February 28, 2025, the Company completed the sale of its flexographic printing plate business, MacDermid Graphics Solutions, for $323 million, net of cash, subject to customary adjustments. MacDermid Graphics Solutions represented substantially all of the Company's Graphics Solutions business. The sale resulted in a gain of $72.1 million during the first quarter of 2025.
Debt Reduction - On March 31, 2025, the Company prepaid $200 million of its term loans B-3 with part of the proceeds of the MacDermid Graphics Solutions transaction, reducing the principal outstanding under its credit agreement from $1.04 billion to $836 million.
Conference Call
Element Solutions will host a webcast/dial-in conference call to discuss its 2025 first quarter financial results at 8:30 a.m. (Eastern Time) on Thursday, April 24, 2025. Participants on the call will include President and Chief Executive Officer Benjamin H. Gliklich and Chief Financial Officer Carey J. Dorman.
To listen to the call by telephone, please dial 888-510-2346 (domestic) or 646-960-0111 (international) and provide the Conference ID: 3799230. The call will be simultaneously webcast at www.elementsolutionsinc.com. A replay of the call will be available after completion of the live call at www.elementsolutionsinc.com.
About Element Solutions
Element Solutions Inc is a leading global specialty chemicals technology company whose businesses supply a broad range of solutions that enhance the performance of products people use every day. Developed in multi-step technological processes, these innovative solutions enable customers' manufacturing processes in several key industries, including consumer electronics, power electronics, semiconductor fabrication, communications and data storage infrastructure, automotive systems, industrial surface finishing and offshore energy.
More information about the Company is available at www.elementsolutionsinc.com.
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Forward-Looking Statements
This release is intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995 as it contains "forward-looking statements" within the meaning of the federal securities laws. These 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. Examples of forward-looking statements include, but are not limited to, statements, beliefs, projections and expectations regarding the Company's ability to mitigate the impact of announced, increased and potential new tariffs on its cost structure; the impact of such tariffs on end-market demand; transition towards B2B electronics sales; growth in the Company's high-end electronics business; easing FX headwinds; second quarter 2025 guidance for adjusted EBITDA; full year 2025 guidance for adjusted EBITDA and free cash flow conversion; further tariffs escalation and implementation; the Company's ability to react to shifts in demand to address cost and preserve profits; and capital deployment opportunities created by the current market volatility. These projections and statements are based on management's estimates, assumptions or 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 and the Israel-Hamas 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; capital requirements and need for and availability of financing; the impact of government regulations on our ability to conduct operations; the impact of tax planning strategies, assessments and settlements; the impact of changes to privacy, cybersecurity, environmental, global trade, tax and other governmental regulations; impairments, including those on goodwill and other intangible assets; market volatility, including as a result of tariff uncertainty; price and cost environment; inflation and fluctuations in foreign exchange rates; the Company's liquidity, cash flows and capital allocation; funding sources and capital expenditures; outstanding debt and debt leverage ratio; shares repurchases; debt and/or equity issuance 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.
3

ELEMENT SOLUTIONS INC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

|  |  | Three Months Ended March 31,
(dollars in millions, except per share amounts) |  |  |  |  | 2025 |  | 2024
Net sales |  |  |  |  | $ | 593.7 |  |  | $ | 575.0 |
Cost of sales |  |  |  |  | 343.2 |  |  | 330.0 |
Gross profit |  |  |  |  | 250.5 |  |  | 245.0 |
Operating expenses: |  |  |  |  |  |  |
Selling, technical, general and administrative |  |  |  |  | 157.2 |  |  | 149.1 |
Research and development |  |  |  |  | 15.9 |  |  | 18.1 |
Total operating expenses |  |  |  |  | 173.1 |  |  | 167.2 |
Operating profit |  |  |  |  | 77.4 |  |  | 77.8 |
Other (expense) income: |  |  |  |  |  |  |
Interest expense, net |  |  |  |  | (14.3) |  |  | (13.9) |
Foreign exchange (losses) gains |  |  |  |  | (6.3) |  |  | 7.9 |
Other expense, net |  |  |  |  | (13.1) |  |  | (2.3) |
MGS Transaction gain |  |  |  |  | 72.1 |  |  | — |
Total other income (expense) |  |  |  |  | 38.4 |  |  | (8.3) |
Income before income taxes and non-controlling interests |  |  |  |  | 115.8 |  |  | 69.5 |
Income tax expense |  |  |  |  | (17.8) |  |  | (13.5) |
Net income |  |  |  |  | $ | 98.0 |  |  | $ | 56.0 |
Earnings per share |  |  |  |  |  |  |
Basic |  |  |  |  | $ | 0.40 |  |  | $ | 0.23 |
Diluted |  |  |  |  | $ | 0.40 |  |  | $ | 0.23 |
Weighted average common shares outstanding |  |  |  |  |  |  |
Basic |  |  |  |  | 242.4 |  |  | 241.8 |
Diluted |  |  |  |  | 243.0 |  |  | 242.5 |

4

ELEMENT SOLUTIONS INC
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

| March 31, |  | December 31,
(dollars in millions) | 2025 |  | 2024
Assets |  |  |
Cash and cash equivalents | $ | 499.2 |  |  | $ | 359.4 |
Accounts receivable, net of allowance for doubtful accounts of $11.0 and $10.3 at March 31, 2025 and December 31, 2024, respectively | 454.7 |  |  | 439.6 |
Inventories | 269.9 |  |  | 246.2 |
Prepaid expenses | 28.1 |  |  | 22.7 |
Other current assets | 108.6 |  |  | 136.9 |
Current assets held for sale | — |  |  | 65.2 |
Total current assets | 1,360.5 |  |  | 1,270.0 |
Property, plant and equipment, net | 283.8 |  |  | 276.8 |
Goodwill | 2,162.0 |  |  | 2,132.0 |
Intangible assets, net | 713.7 |  |  | 732.0 |
Deferred income tax assets | 153.1 |  |  | 133.3 |
Other assets | 121.5 |  |  | 140.9 |
Non-current assets held for sale | — |  |  | 188.9 |
Total assets | $ | 4,794.6 |  |  | $ | 4,873.9 |
Liabilities and stockholders' equity |  |  |
Accounts payable | $ | 145.2 |  |  | $ | 121.3 |
Current installments of long-term debt | — |  |  | 10.4 |
Accrued expenses and other current liabilities | 199.4 |  |  | 229.3 |
Current liabilities held for sale | — |  |  | 18.7 |
Total current liabilities | 344.6 |  |  | 379.7 |
Debt | 1,623.8 |  |  | 1,813.6 |
Pension and post-retirement benefits | 21.8 |  |  | 22.2 |
Deferred income tax liabilities | 96.9 |  |  | 93.9 |
Other liabilities | 172.5 |  |  | 152.6 |
Non-current liabilities held for sale | — |  |  | 13.5 |
Total liabilities | 2,259.6 |  |  | 2,475.5 |
Stockholders' equity |  |  |
Common stock: 400.0 shares authorized (2025: 267.7 shares issued; 2024: 267.2 shares issued) | 2.7 |  |  | 2.7 |
Additional paid-in capital | 4,219.6 |  |  | 4,214.1 |
Treasury stock (2025: 25.2 shares; 2024: 25.0 shares) | (354.3) |  |  | (349.5) |
Accumulated deficit | (938.6) |  |  | (1,017.1) |
Accumulated other comprehensive loss | (409.6) |  |  | (467.2) |
Total stockholders' equity | 2,519.8 |  |  | 2,383.0 |
Non-controlling interests | 15.2 |  |  | 15.4 |
Total equity | 2,535.0 |  |  | 2,398.4 |
Total liabilities and stockholders' equity | $ | 4,794.6 |  |  | $ | 4,873.9 |

5

ELEMENT SOLUTIONS INC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

|  |  |  | Three Months Ended
|  |  | March 31,
(dollars in millions) |  |  |  |  |  |  |  | 2025 |  | 2024
Cash flows from operating activities: |  |  |  |  |  |  |  |  |  |
Net income |  |  |  |  |  |  |  | $ | 98.0 |  |  | $ | 56.0 |
Reconciliation of net income to net cash flows provided by operating activities: |  |  |  |  |  |  |  |  |  |
Depreciation and amortization |  |  |  |  |  |  |  | 37.2 |  |  | 40.3 |
Deferred income taxes |  |  |  |  |  |  |  | (4.8) |  |  | (5.4) |
Foreign exchange losses (gains) |  |  |  |  |  |  |  | 5.7 |  |  | (7.8) |
Incentive stock compensation |  |  |  |  |  |  |  | 5.0 |  |  | 4.1 |
MGS Transaction gain |  |  |  |  |  |  |  | (72.1) |  |  | — |
Other, net |  |  |  |  |  |  |  | 4.5 |  |  | 3.7 |
Changes in assets and liabilities, net of acquisitions and divestitures: |  |  |  |  |  |  |  |  |  |
Accounts receivable |  |  |  |  |  |  |  | (12.8) |  |  | (4.8) |
Inventories |  |  |  |  |  |  |  | (18.3) |  |  | (23.9) |
Accounts payable |  |  |  |  |  |  |  | 19.3 |  |  | 0.7 |
Accrued expenses |  |  |  |  |  |  |  | (44.5) |  |  | (14.5) |
Prepaid expenses and other current assets |  |  |  |  |  |  |  | (4.8) |  |  | 6.7 |
Other assets and liabilities |  |  |  |  |  |  |  | 13.6 |  |  | 3.1 |
Net cash flows provided by operating activities |  |  |  |  |  |  |  | 26.0 |  |  | 58.2 |
Cash flows from investing activities: |  |  |  |  |  |  |  |  |  |
Capital expenditures |  |  |  |  |  |  |  | (11.0) |  |  | (19.0) |
Proceeds from disposal of property, plant and equipment |  |  |  |  |  |  |  | 0.1 |  |  | — |
Proceeds from the MGS Transaction (net of cash of $2.5 million) |  |  |  |  |  |  |  | 322.9 |  |  | — |
Acquisitions, net of cash acquired |  |  |  |  |  |  |  | — |  |  | (3.9) |
Other, net |  |  |  |  |  |  |  | 25.6 |  |  | — |
Net cash flows provided by (used in) investing activities |  |  |  |  |  |  |  | 337.6 |  |  | (22.9) |
Cash flows from financing activities: |  |  |  |  |  |  |  |  |  |
Repayments of borrowings |  |  |  |  |  |  |  | (202.6) |  |  | (2.9) |
Dividends |  |  |  |  |  |  |  | (19.8) |  |  | (20.0) |
Payment of financing fees |  |  |  |  |  |  |  | — |  |  | (2.1) |
Other, net |  |  |  |  |  |  |  | (4.9) |  |  | (7.7) |
Net cash flows used in financing activities |  |  |  |  |  |  |  | (227.3) |  |  | (32.7) |
Effect of exchange rate changes on cash and cash equivalents |  |  |  |  |  |  |  | 3.5 |  |  | (5.6) |
Net increase (decrease) in cash and cash equivalents |  |  |  |  |  |  |  | 139.8 |  |  | (3.0) |
Cash and cash equivalents at beginning of period |  |  |  |  |  |  |  | 359.4 |  |  | 289.3 |
Cash and cash equivalents at end of period |  |  |  |  |  |  |  | $ | 499.2 |  |  | $ | 286.3 |

6

ELEMENT SOLUTIONS INC
ADDITIONAL FINANCIAL INFORMATION
(Unaudited)

I. SUMMARY RESULTS |  |  |  |  |  |  |  |  |  |
|  |  | Three Months Ended March 31,
(dollars in millions) |  |  |  |  |  |  |  |  |  |  | 2025 |  | 2024 |  | Reported |  | Constant Currency |  | Organic
Net Sales
Electronics |  |  |  |  |  |  |  |  |  |  | $ | 394.3 |  |  | $ | 349.2 |  |  | 13% |  | 15% |  | 10%
Industrial & Specialty |  |  |  |  |  |  |  |  |  |  | 199.4 |  |  | 225.8 |  |  | (12)% |  | (7)% |  | (2)%
Total |  |  |  |  |  |  |  |  |  |  | $ | 593.7 |  |  | $ | 575.0 |  |  | 3% |  | 6% |  | 5%
Net Income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total |  |  |  |  |  |  |  |  |  |  | $ | 98.0 |  |  | $ | 56.0 |  |  | 75% |  |  |  |
Adjusted EBITDA
Electronics |  |  |  |  |  |  |  |  |  |  | $ | 88.9 |  |  | $ | 83.9 |  |  | 6% |  | 9% |  |
Industrial & Specialty |  |  |  |  |  |  |  |  |  |  | 39.5 |  |  | 43.1 |  |  | (8)% |  | (2)% |  |
Total |  |  |  |  |  |  |  |  |  |  | $ | 128.4 |  |  | $ | 127.0 |  |  | 1% |  | 5% |  |

|  |  |  |  | Three Months Ended March 31, |  | Constant Currency
|  |  |  |  |  |  |  |  |  |  | 2025 |  | 2024 |  | Change |  | 2025 |  | Change
Net Income Margin |  |  |  |  |  |  |  |  |  |
Total |  |  |  |  |  |  |  |  |  |  | 16.5% |  | 9.7% |  | 680bps |  |  |  |
Adjusted EBITDA Margin |  |  |  |  |  |  |  |  |  |
Electronics |  |  |  |  |  |  |  |  |  |  | 22.5% |  | 24.0% |  | (150)bps |  | 22.7% |  | (130)bps
Industrial & Specialty |  |  |  |  |  |  |  |  |  |  | 19.8% |  | 19.1% |  | 70bps |  | 20.2% |  | 110bps
Total |  |  |  |  |  |  |  |  |  |  | 21.6% |  | 22.1% |  | (50)bps |  | 21.8% |  | (30)bps

II. CAPITAL STRUCTURE
(dollars in millions) |  |  | Maturity |  | Interest Rate |  | March 31,
|  |  |  |  | 2025
Instrument |  |  |  |  |  |  |
Term Loans | (1) |  | 12/18/2030 |  | SOFR plus 1.75% |  | $ | 836.2 |
Total First Lien Debt |  |  |  |  |  |  | 836.2 |
Senior Notes due 2028 |  |  | 9/1/2028 |  | 3.875% |  | 800.0 |
Total Debt |  |  |  |  |  |  | 1,636.2 |
Cash Balance |  |  |  |  |  |  | 499.2 |
Net Debt |  |  |  |  |  |  | $ | 1,137.0 |
Adjusted Shares Outstanding | (2) |  |  |  |  |  | 244.9 |
Market Capitalization | (3) |  |  |  |  |  | $ | 5,537.2 |
Total Capitalization |  |  |  |  |  |  | $ | 6,674.2 |

(1) Element Solutions swapped its floating term loan rate to a fixed rate for a portion of its outstanding term loans through the use of interest rate swaps and cross-currency swaps which mature in December 2028 or December 2029, as applicable. At March 31, 2025, 100% of the Company's debt was fixed.
(2) See "Adjusted Common Shares Outstanding at March 31, 2025 and 2024" 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 $22.61 at March 31, 2025.
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III. SELECTED FINANCIAL DATA |  |  |  |
|  |  | Three Months Ended March 31,
(dollars in millions) |  |  |  |  | 2025 |  | 2024
Interest expense |  |  |  |  | $ | 18.6 |  |  | $ | 16.4 |
Interest paid |  |  |  |  | 7.2 |  |  | 24.2 |
Income tax expense |  |  |  |  | 17.8 |  |  | 13.5 |
Income taxes paid |  |  |  |  | 28.3 |  |  | 14.2 |
Capital expenditures |  |  |  |  | 11.0 |  |  | 19.0 |
Proceeds from disposal of property, plant and equipment |  |  |  |  | 0.1 |  |  | — |

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 growth, adjusted EBITDA margin, adjusted EPS, adjusted common shares outstanding, free cash flow, adjusted free cash flow, free cash flow conversion, organic net sales growth, second quarter 2025 guidance for adjusted EBITDA, and full year 2025 guidance for adjusted EBITDA and free cash flow conversion. 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 second quarter 2025 guidance for adjusted EBITDA and full year 2025 guidance for adjusted EBITDA and free cash flow conversion on a non-GAAP basis only. 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.
8

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 months ended March 31, 2025:

|  | Three Months Ended March 31, 2025
|  | Reported Net Sales Growth |  | Impact of Currency |  | Constant Currency |  | Change in Pass-Through Metals Pricing |  | Divestiture |  | Organic Net Sales Growth
Electronics |  | 13% |  | 2% |  | 15% |  | (5)% |  | —% |  | 10%
Industrial & Specialty |  | (12)% |  | 4% |  | (7)% |  | —% |  | 6% |  | (2)%
Total |  | 3% |  | 3% |  | 6% |  | (3)% |  | 2% |  | 5%

NOTE: Totals may not sum due to rounding.
For the three months ended March 31, 2025, Electronics' consolidated results were positively impacted by $18.5 million of pass-through metals pricing and Industrial & Specialty's consolidated results were negatively impacted by a divestiture of $13.3 million.
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 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" 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
|  |  |  | March 31,
(dollars in millions, except per share amounts) |  |  |  |  |  | 2025 |  | 2024
Net income |  |  |  |  |  | $ | 98.0 |  |  | $ | 56.0 |
Reversal of amortization expense | (1) |  |  |  |  | 27.2 |  |  | 30.2 |
Adjustment to reverse incremental depreciation expense from acquisitions | (1) |  |  |  |  | 0.3 |  |  | 0.3 |
Restructuring expense | (2) |  |  |  |  | 1.1 |  |  | 2.3 |
Acquisition, divestiture and integration expense | (3) |  |  |  |  | 8.3 |  |  | 1.7 |
Foreign exchange losses (gains) on intercompany loans | (4) |  |  |  |  | 6.0 |  |  | (6.8) |
MGS Transaction gain | (5) |  |  |  |  | (72.1) |  |  | — |
Debt financing costs | (6) |  |  |  |  | 1.8 |  |  | — |
Kuprion Acquisition research and development charge | (7) |  |  |  |  | — |  |  | 3.9 |
Other, net | (8) |  |  |  |  | 16.0 |  |  | 2.2 |
Tax effect of pre-tax non-GAAP adjustments | (9) |  |  |  |  | 2.3 |  |  | (6.8) |
Adjustment to estimated effective tax rate | (9) |  |  |  |  | (5.4) |  |  | (0.4) |
Adjusted net income |  |  |  |  |  | $ | 83.5 |  |  | $ | 82.6 |
Adjusted earnings per share | (10) |  |  |  |  | $ | 0.34 |  |  | $ | 0.34 |
Adjusted common shares outstanding | (10) |  |  |  |  | 244.9 |  |  | 244.5 |

(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 the gain on the sale of its MacDermid Graphics Solutions business because it believes it is not reflective of ongoing operations.
(6) The Company adjusts for costs related to the partial prepayment of its term loans B-3 because it believes these costs are not reflective of ongoing operations.
(7) The Company adjusts for research and development costs associated with contingent consideration 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 consist primarily of highly inflationary accounting losses for its operations in Turkey of $1.6 million and $1.8 million, certain professional consulting fees and unrealized gains/losses on metals derivative contracts for the three months ended March 31, 2025 and 2024, respectively. 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. The Company adjusts for certain professional consulting fees because it believes they are not reflective of ongoing operations.
(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
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attribute carryforwards and other similar adjustments, the Company's non-GAAP effective tax rate would have been 24.7% which would have resulted in a $0.02 reduction in Adjusted EPS for the three months ended March 31, 2025.
(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 March 31, 2025 and 2024
The following table shows the Company's adjusted common shares outstanding at each period presented:

| March 31, |  |
(amounts in millions) | 2025 |  | 2024 |  |  |  |
Basic common shares outstanding | 242.5 |  |  | 242.1 |  |  |  |  |
Number of shares issuable upon vesting of granted Equity Awards | 2.4 |  |  | 2.4 |  |  |  |  |
Adjusted common shares outstanding | 244.9 |  |  | 244.5 |  |  |  |  |

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.
The following table reconciles GAAP "Net income" to "Adjusted EBITDA" for each of the periods presented:

|  |  |  | Three Months Ended
|  |  |  | March 31,
(dollars in millions) |  |  |  |  |  | 2025 |  | 2024
Net income |  |  |  |  |  | $ | 98.0 |  |  | $ | 56.0 |
Add (subtract): |  |  |  |  |  |  |  |
Income tax expense |  |  |  |  |  | 17.8 |  |  | 13.5 |
Interest expense, net |  |  |  |  |  | 14.3 |  |  | 13.9 |
Depreciation expense |  |  |  |  |  | 10.0 |  |  | 10.1 |
Amortization expense |  |  |  |  |  | 27.2 |  |  | 30.2 |
EBITDA |  |  |  |  |  | 167.3 |  |  | 123.7 |
Adjustments to reconcile to Adjusted EBITDA: |  |  |  |  |  |  |  |
Restructuring expense | (2) |  |  |  |  | 1.1 |  |  | 2.3 |
Acquisition, divestiture and integration expense | (3) |  |  |  |  | 8.3 |  |  | 1.7 |
Foreign exchange losses (gains) on intercompany loans | (4) |  |  |  |  | 6.0 |  |  | (6.8) |
MGS Transaction gain | (5) |  |  |  |  | (72.1) |  |  | — |
Debt financing costs | (6) |  |  |  |  | 1.8 |  |  | — |
Kuprion Acquisition research and development charge | (7) |  |  |  |  | — |  |  | 3.9 |
Other, net | (8) |  |  |  |  | 16.0 |  |  | 2.2 |
Adjusted EBITDA |  |  |  |  |  | $ | 128.4 |  |  | $ | 127.0 |

NOTE: For the footnote descriptions, please refer to the footnotes located under the "Adjusted Earnings Per Share (EPS)" reconciliation table above.
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Free Cash Flow and Adjusted Free Cash Flow:
Free cash flow is defined as net cash flows from operating activities less net capital expenditures. Adjusted free cash flow for 2025 is defined as net cash flows from operating activities less (1) net capital expenditures, (2) non-recurring payments associated with a multi-year tax settlement and (3) professional fees, non-recurring expenses and taxes paid in association with the sale of MacDermid Graphics Solutions. Net capital expenditures include capital expenditures less proceeds from the disposal of property, plant and equipment. Management believes that these non-GAAP metrics, which measure the Company’s ability to generate cash from its business operations, are important financial measures for evaluating the Company's liquidity. Free cash flow and adjusted free cash flow should be considered as additional measures of liquidity to, rather than as substitutes for, net cash provided by operating activities.
The following table reconciles "Cash flows from operating activities" to "Adjusted free cash flow" for 2025 and "Free cash flow" for 2024:

|  | Three Months Ended |  |  |  |  |
|  | March 31, |  |  |  |  |
(dollars in millions) |  | 2025 |  | 2024 |  |  |  |  |  |  |
Cash flows from operating activities |  | $ | 26.0 |  |  | $ | 58.2 |  |  |  |  |  |  |  |
Capital expenditures |  | (11.0) |  |  | (19.0) |  |  |  |  |  |  |  |
Proceeds from disposal of property, plant and equipment |  | 0.1 |  |  | — |  |  |  |  |  |  |  |
Adjustments |  | 15.0 |  |  |  |  |  |  |  |  |  |
Free cash flow |  | $ | 30.1 |  |  | $ | 39.2 |  |  |  |  |  |  |  |

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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