Element Solutions (ESI) Bank of America 2025 Global Agriculture and Materials Conference summary

Recent performance and market outperformance

• Electronics business grew high single digits in 2024, outpacing end market drivers like PCB and smartphone units, which grew mid-single digits.

• Growth driven by penetration into fast-growing niches such as AI, high-performance compute, and electric vehicles through innovation and technical service.

• Semiconductor business achieved a 14% five-year CAGR, increasing its revenue share from 9% in 2019 to nearly 15% in 2024.

• Advanced packaging and power electronics, especially in EVs, are key growth drivers, with continued double-digit growth expected.

• Outperformance is expected to persist across all targeted niches over the medium term.

Strategic portfolio management and divestitures

• Divested the graphics business, which was slower growing and lower margin, to focus on higher-growth, higher-margin electronics.

• The sale enhances balance sheet capacity and positions the company for faster growth and better returns entering 2025.

• No immediate plans for further divestitures; focus remains on operational excellence and value creation.

Capital allocation and M&A strategy

• Capital allocation prioritizes reinvestment in core businesses, bolt-on M&A, and share buybacks, benchmarked against free cash flow yield.

• Post-divestiture, leverage will be under 2.5x, providing nearly $1 billion in capacity for M&A, buybacks, or debt reduction.

• M&A targets are complementary technologies or businesses that enhance customer value and fit existing capabilities.