Element Solutions (ESI) investor relations material

Strategic evolution and portfolio transformation

• Shifted portfolio to over 70% electronics, with 75% of that serving B2B markets, focusing on high-growth sectors like data centers, HPC, and advanced packaging.

• Refined portfolio through acquisitions (Coventya, HSO, Kuprion, Micromax, EFC Gases) and divestitures, expanding into specialty gases and advanced electronics materials.

• Enhanced operational excellence and capital allocation, returning ~$500M to shareholders since 2022 and maintaining disciplined leverage.

• Electronics segment now nearly 80% enterprise-driven, with improved margins and resilience despite industry headwinds.

• Specialties segment diversified into high-specification, recurring revenue businesses, including automotive, energy, and industrial solutions.

Innovation, technology, and customer-centricity

• Built a robust pipeline of innovative technologies, including ActiveCopper (Kuprion), advanced packaging, and system-level solutions for electronics.

• Investments in R&D, technical service, and global manufacturing footprint (including labs and Asia expansions) to support customer intimacy and early engagement.

• Focused on solving critical customer challenges in AI, EV, data centers, and advanced communications through tailored materials and technical support.

• AI and process automation initiatives are expected to drive further efficiency and margin improvement, reducing G&A costs and enabling business growth.

• Focus on sustainability, regulatory compliance, and high-touch technical service differentiates offerings and drives customer loyalty.

Financial guidance and capital allocation

• Organic top-line growth expected at ~7% through the cycle, with high single-digit growth in Electronics and 5% in Specialties.

• Adjusted EBITDA projected to grow in the high single to low double digits, with incremental margins of 30–40%.

• Long-term adjusted EPS growth targeted at mid-teens %, assuming market unit growth and high single-digit to low double-digit EBITDA growth.

• Capital allocation remains disciplined and opportunistic, prioritizing internal growth, M&A, and shareholder returns while maintaining leverage below 3.5x.

• Free cash flow conversion expected around 50%, with temporary dips due to growth investments.