Element Solutions Inc Announces 2025 First Quarter Financial Results

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Element Solutions Inc., a global and diversified specialty chemicals company, 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.