Element Solutions Posts 2024 Net Sales of $2.46 Billion, Up 5%

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Element Solutions Inc., a global and diversified specialty chemicals company, announced its financial results for the three and twelve months ended December 31, 2024.

Executive Commentary

President and Chief Executive Officer Benjamin Gliklich commented, “Element Solutions had an outstanding year in 2024. We produced record results, improved our portfolio and positioned the Company for longer-term outperformance. Against an inconsistent macro backdrop, we delivered 13% constant currency adjusted EBITDA growth, significantly outpacing our end-markets. We have been successful penetrating some of the fastest growing, highest value niches in the electronics consumables market, which should continue to deliver profit growth well in excess of the broader ecosystem in 2025. We have also driven margins back towards prior record levels for Element Solutions, while total volumes remained materially below their previous peaks. This supports our expectation that we can continue to deliver both solid growth from a cyclical recovery over time – in addition to the secular demand growth in electronics – and margin expansion. The anticipated closing of the Graphics business sale this quarter will improve the overall portfolio and its longer-term growth rate, while providing significant flexibility on the balance sheet for long-term, value accretive capital allocation. More than just a good year behind us, our results in 2024 provide conviction in future value creation.”

Mr. Gliklich continued, “Expectations for 2025 suggest a demand environment similar to 2024. The industrial markets are not seen to be recovering, and an acceleration in the overall electronics industry is uncertain. However, the growth niches within our markets and the execution that delivered our performance in 2024 should remain on track. Demand continues to grow in high-performance computing and data storage applications. We continue to extend our penetration of the EV market with our differentiated power electronics solutions, and we expect market growth and our share gains in high-value semiconductor markets to continue. The two major non-operational impacts we expect on year-over-year adjusted EBITDA in 2025 are a reduction of approximately $30 million from the sale of the Graphics business and an anticipated translational foreign exchange impact from a stronger US dollar of $15 million based on rates at the end of January. At the midpoint, our full year 2025 adjusted EBITDA guidance range would translate to 8% growth without those two impacts. This would be strong growth in light of expected market conditions. We also expect opportunities this year to deploy our balance sheet capacity and deliver growth in per share earnings beyond what is reflected in our full year outlook. We have momentum, opportunity and, most importantly, a high-performing team enthusiastic about delivering on our compelling multi-year growth potential. I am grateful for each of these, but our people chief among them.”

Fourth Quarter 2024 Highlights (compared with fourth quarter 2023):

- Net sales on a reported basis for the fourth quarter of 2024 were $624 million, an increase of 9% over the fourth quarter of 2023. Organic net sales increased 6%.

• Electronics: Net sales increased 14% to $401 million. Organic net sales increased 7%.
• Industrial & Specialty: Net sales increased 1% to $223 million. Organic net sales increased 3%.

- Fourth quarter of 2024 earnings per share (EPS) performance:

• GAAP diluted EPS was $0.23, as compared to $0.32 for the same period last year.
• Adjusted EPS was $0.35, as compared to $0.32 for the same period last year.

- Reported net income for the fourth quarter of 2024 was $55 million, as compared to $77 million for the fourth quarter of 2023, a decrease of 29%.

• Net income margin decreased by 470 basis points to 8.8%.

- Adjusted EBITDA for the fourth quarter of 2024 was $130 million, as compared to $120 million for the fourth quarter of 2023, an increase of 8%. On a constant currency basis, adjusted EBITDA increased 9%.

• Electronics: Adjusted EBITDA was $87 million, an increase of 11%. On a constant currency basis, adjusted EBITDA increased 11%.
• Industrial & Specialty: Adjusted EBITDA was $43 million, an increase of 4%. On a constant currency basis, adjusted EBITDA increased 7%.
• Adjusted EBITDA margin decreased by 10 basis points to 20.8%. On a constant currency basis, adjusted EBITDA margin decreased by 10 basis points.

Full Year 2024 Highlights (compared with full year 2023) :

- Net sales on a reported basis for the full year 2024 were $2.46 billion, an increase of 5% over the prior full year period. Organic net sales increased 4%.

• Electronics: Net sales increased 10% to $1.56 billion. Organic net sales increased 7%.
• Industrial & Specialty: Net sales decreased 3% to $896 million. Organic net sales decreased 1%.

- Full year 2024 EPS performance:

• GAAP diluted EPS was $1.00, as compared to $0.48 for 2023.
• Adjusted EPS was $1.44, as compared to $1.29 for 2023.

- Reported net income for the full year 2024 was $245 million, as compared to $118 million for 2023.

• Net income margin increased by 490 basis points to 10.0%.

- Adjusted EBITDA for the full year 2024 was $535 million, as compared to $482 million for 2023. On a constant currency basis, adjusted EBITDA increased 13%.

• Electronics: Adjusted EBITDA was $362 million, an increase of 14%. On a constant currency basis, adjusted EBITDA increased 16%.
• Industrial & Specialty: Adjusted EBITDA was $173 million, an increase of 5%. On a constant currency basis, adjusted EBITDA increased 8%.
• Adjusted EBITDA margin increased by 110 basis points to 21.8%. On a constant currency basis, adjusted EBITDA margin increased by 120 basis points.

2025 Guidance

For the full year 2025, the Company expects adjusted EBITDA to be in the range of $520 million to $540 million and free cash flow conversion to be comparable year over year. In addition, the Company expects first quarter 2025 adjusted EBITDA to be approximately $125 million.

Recent Developments

Portfolio Optimization - On September 1, 2024, the Company entered into an agreement to sell its flexographic printing plate business, MacDermid Graphics Solutions, for approximately $325 million. MacDermid Graphics Solutions constitutes substantially all of the Company's Graphics Solutions business. The transaction is expected to close in the first quarter of 2025, subject to customary closing conditions and adjustments.

Improved Balance Sheet through Debt and Interest Rate Reduction - In October 2024, the Company completed the syndication of $1.04 billion of new term loans B-3 which resulted in an interest rate reduction of 25 basis points to SOFR plus a spread of 1.75% per annum. In connection with this repricing, the Company fully paid down its $1.14 billion term loans B-2, therefore reducing its borrowing under its credit agreement by $100 million. The net proceeds of the new term loans and cash on hand were used to prepay in full the Company's term loans B-2.

Cash Dividends - On February 12, 2025, the Board of Directors of the Company declared a cash dividend of $0.08 per outstanding share of its common stock. The dividend is expected to be paid on March 17, 2025 to stockholders of record at the close of business on March 3, 2025. For the full year 2024, approximately $78.2 million was returned to the Company's stockholders in the form of cash dividends.