esi-20250331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________

FORM 10-Q

_______________

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-36272

Element Solutions Inc

(Exact name of Registrant as specified in its charter)

Delaware

37-1744899

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

500 East Broward Boulevard, Suite 1860

33394

Fort Lauderdale,

Florida

(Zip Code)

(Address of principal executive offices)

Registrant’s telephone number, including area code: (561) 207-9600

_______________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	ESI	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares of common stock outstanding at April 17, 2025: 242,504,073

TABLE OF CONTENTS


		Page

	Glossary of Defined Terms	i
	Forward-Looking Statements	ii
	Non-GAAP Financial Measures	ii

Part I.	Financial Information

Item 1.	Condensed Consolidated Financial Statements (Unaudited)
	Condensed Consolidated Statements of Operations
	Three Months Ended March 31, 2025 and 2024	1
	Condensed Consolidated Statements of Comprehensive Income
	Three Months Ended March 31, 2025 and 2024	2
	Condensed Consolidated Balance Sheets
	March 31, 2025 and December 31, 2024	3
	Condensed Consolidated Statements of Cash Flows
	Three Months Ended March 31, 2025 and 2024	4
	Condensed Consolidated Statements of Changes in Stockholders' Equity
	Three Months Ended March 31, 2025 and 2024	5
	Notes to the Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	28

Part II.	Other Information

Item 1.	Legal Proceedings	29
Item 1A.	Risk Factors	29
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 3.	Defaults Upon Senior Securities	29
Item 4.	Mine Safety Disclosures	29
Item 5.	Other Information	29
Item 6.	Exhibits	30

Signatures		31

GLOSSARY OF DEFINED TERMS


Terms						Definitions
Element Solutions; We; Us; Our; the Company						Element Solutions Inc, a Delaware corporation, and where the context requires, its subsidiaries or operating businesses.
Credit Agreement						Credit Agreement, dated as of January 31, 2019, as amended from time to time, among, inter alia, Element Solutions and MacDermid, Incorporated, as borrowers, certain subsidiaries of Element Solutions and the lenders from time to time parties thereto.
EBITDA						Earnings before interest, taxes, depreciation and amortization.
Exchange Act						Securities Exchange Act of 1934, as amended.
FDII						Foreign-derived intangible income.
GAAP						U.S. Generally Accepted Accounting Principles.
GILTI						Global intangible low-taxed income.
Kuprion Acquisition						Acquisition of Kuprion, Inc. on May 19, 2023.
MGS Transaction						ESI's sale of its flexographic printing plate business, MacDermid Graphics Solutions, completed on February 28, 2025.
Quarterly Report						This quarterly report on Form 10-Q for the three months ended March 31, 2025.
RSUs						Restricted stock units issued by Element Solutions from time to time under its Amended and Restated 2013 Incentive Compensation Plan.
SEC						Securities and Exchange Commission.

2024 Annual Report						Element Solutions' annual report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on February 19, 2025.
3.875% USD Notes due 2028						Element Solutions' $800 million aggregate principal amount of 3.875% senior notes due 2028, denominated in U.S. dollars, issued on August 18, 2020.

Forward-Looking Statements

This Quarterly Report contains forward-looking statements that can be identified by 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" or "confident" and variations of such words and similar expressions. Many of the forward-looking statements include, but are not limited to, statements, beliefs, projections and expectations regarding the expected benefits of the reacquired ViaForm Distribution Rights, the Kuprion Acquisition and the MGS Transaction; the tax treatment and tax implications of the MGS Transaction; deferred payments related to the Kuprion Acquisition; 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; capital requirements and need for and availability of financing; probability of achievement of the performance target related to certain performance-based RSUs; the impact of government regulations on our ability to conduct operations; the impact of new accounting standards and accounting changes; potential share repurchases; our dividend policy and dividend declarations; our hedging activities; timing and outcome of environmental and legal matters; 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; price volatility and cost environment; inflation and fluctuations in foreign exchange rates; our liquidity, cash flows and capital allocation; funding sources; expected capital expenditures; debt and debt leverage ratio; pension plan contributions; contractual obligations; general views about future operating results; sustainability goals; expected returns to stockholders; risk management programs; future prospects; and other events or developments that we expect or anticipate will occur in the future.

Although we believe these forward-looking statements are based upon reasonable assumptions regarding our business and expectations about future events, financial performance and trends, there can be no assurance that our actual results will not differ materially from any results expressed or implied in these forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed in Part I, Item 1A, Risk Factors, of our 2024 Annual Report. In addition, as we operate in a very competitive and rapidly changing environment, new risks may emerge from time to time. Any forward-looking statement included in this Quarterly Report is based solely on information currently available and speaks only as of the date on which it is made. We undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. Please consult any further disclosures on related subjects in our SEC filings.

Non-GAAP Financial Measures

This Quarterly Report contains non-GAAP financial measures, such as Adjusted EBITDA and operating results on a constant currency and organic basis. Non-GAAP financial measures should not be considered in isolation from, a substitute for, or superior to, performance measures calculated in accordance with GAAP. For additional information on these non-GAAP financial measures, including definitions, limitations and reconciliations to their most comparable applicable GAAP measures, see "Non-GAAP Financial Measures" in Part I, Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations, and Note 12, Segment Information, to the unaudited Condensed Consolidated Financial Statements, both included in this Quarterly Report.

PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

ELEMENT SOLUTIONS INC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(dollars in millions, except per share amounts)


	Three Months Ended March 31,
		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

See accompanying notes to the Condensed Consolidated Financial Statements

ELEMENT SOLUTIONS INC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(dollars in millions)


	Three Months Ended March 31,
		2025		2024
Net income		$	98.0	$	56.0

Other comprehensive income (loss)
Foreign currency translation:
Other comprehensive income (loss) before reclassifications, net of tax (benefit) expense of $(6.9) and $5.4 for the three months ended March 31, 2025 and 2024, respectively		38.3		(46.3)
Reclassifications, net of tax benefit of $0.8 and $0.0 for the three months ended March 31, 2025 and 2024, respectively		29.8		—
Total foreign currency translation adjustments		68.1		(46.3)








Derivative financial instruments:
Other comprehensive (loss) income before reclassifications, net of tax (benefit) expense of $(2.9) and $4.7 for the three months ended March 31, 2025 and 2024, respectively		(9.3)		15.2
Reclassifications, net of tax benefit of $0.3 and $1.9 for the three months ended March 31, 2025 and 2024, respectively		(1.3)		(7.2)
Total unrealized (loss) income on qualified hedging derivatives		(10.6)		8.0
Other comprehensive income (loss)		57.5		(38.3)
Comprehensive income		155.5		17.7
Comprehensive income attributable to non-controlling interests		0.1		—
Comprehensive income attributable to common stockholders		$	155.6	$	17.7

See accompanying notes to the Condensed Consolidated Financial Statements

ELEMENT SOLUTIONS INC AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(dollars in millions)


	March 31,		December 31,
	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
Commitments and contingencies (Note 9)
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

See accompanying notes to the Condensed Consolidated Financial Statements

ELEMENT SOLUTIONS INC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(dollars in millions)


	Three Months Ended March 31,
	2025		2024
Cash flows from operating activities:
Net income	$	98.0	$	56.0


Reconciliations 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

See accompanying notes to the Condensed Consolidated Financial Statements

ELEMENT SOLUTIONS INC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(Unaudited)

(dollars in millions, except share amounts)


Three Months Ended March 31, 2025	Common Stock			Additional Paid-in Capital		Treasury Stock			Accumulated Deficit		Accumulated Other Comprehensive (Loss) Income		Total Stockholders' Equity		Non- controlling Interests		Total Equity
	Shares	Amount				Shares	Amount
Balance at December 31, 2024	267,154,474	$	2.7	$	4,214.1	24,972,401	$	(349.5)	$	(1,017.1)	$	(467.2)	$	2,383.0	$	15.4	$	2,398.4
Net income	—	—		—		—	—		98.0		—		98.0		—		98.0
Other comprehensive income, net of taxes	—	—		—		—	—		—		57.6		57.6		(0.1)		57.5
Exercise/ vesting of stock-based compensation	490,560	—		—		185,189	(4.8)		—		—		(4.8)		—		(4.8)
Issuance of common stock under Employee Stock Purchase Plan	16,511	—		0.4		—	—		—		—		0.4		—		0.4

Dividends ($0.08 per share)	—	—		—		—	—		(19.5)		—		(19.5)		—		(19.5)
Equity compensation expense	—	—		5.1		—	—		—		—		5.1		—		5.1
Changes in non-controlling interests	—	—		—		—	—		—		—		—		(0.1)		(0.1)
Balance at March 31, 2025	267,661,545	$	2.7	$	4,219.6	25,157,590	$	(354.3)	$	(938.6)	$	(409.6)	$	2,519.8	$	15.2	$	2,535.0


Three Months Ended March 31, 2024	Common Stock			Additional Paid-in Capital		Treasury Stock			Accumulated Deficit		Accumulated Other Comprehensive (Loss) Income		Total Stockholders' Equity		Non- controlling Interests		Total Equity
	Shares	Amount				Shares	Amount
Balance at December 31, 2023	266,179,100	$	2.7	$	4,196.9	24,644,755	$	(341.9)	$	(1,183.3)	$	(345.9)	$	2,328.5	$	15.8	$	2,344.3
Net income	—	—		—		—	—		56.0		—		56.0		—		56.0
Other comprehensive loss, net of taxes	—	—		—		—	—		—		(38.3)		(38.3)		—		(38.3)
Exercise/ vesting of share based compensation	837,317	—		—		324,502	(7.5)		—		—		(7.5)		—		(7.5)
Issuance of common stock under Employee Stock Purchase Plan	16,661	—		0.3		—	—		—		—		0.3		—		0.3

Dividends ($0.08 per share)	—	—		—		—	—		(19.5)		—		(19.5)		—		(19.5)
Equity compensation expense	—	—		4.2		—	—		—		—		4.2		—		4.2
Changes in non-controlling interests	—	—		—		—	—		—		—		—		(0.2)		(0.2)
Balance at March 31, 2024	267,033,078	$	2.7	$	4,201.4	24,969,257	$	(349.4)	$	(1,146.8)	$	(384.2)	$	2,323.7	$	15.6	$	2,339.3

See accompanying notes to the Condensed Consolidated Financial Statements

ELEMENT SOLUTIONS INC AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

1. BACKGROUND AND BASIS OF PRESENTATION

Background

Element Solutions was incorporated in Delaware in January 2014 and its shares of common stock, par value $0.01 per share, trade on the New York Stock Exchange under the ticker symbol “ESI.”

Element Solutions is a leading global specialty chemicals 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. Element Solutions businesses provide products that, in substantially all cases, are consumed by customers as part of their production process, providing the Company with reliable and recurring revenue streams as the products are replenished in order to continue production. Element Solutions delivers its products to customers through its sales and service workforce, regional distributors and manufacturing representatives.

The Company's operations are organized in two reportable segments: Electronics and Industrial & Specialty. The reportable segments represent businesses for which separate financial information is utilized by the chief operating decision maker for the purpose of allocating resources and evaluating performance.

Electronics – The Electronics segment researches, formulates and sells specialty chemicals and material process technologies for all types of electronics hardware, from complex printed circuit board designs to advanced semiconductor packaging. In mobile communications, computers, automobiles and aerospace equipment, its products are an integral part of the electronics manufacturing process and the functionality of end-products. The segment's "wet chemistries" for metallization, surface treatments and solderable finishes form the physical circuitry pathways, and its "assembly materials," such as surface mount technologies (SMT), pastes, fluxes and adhesives, join those pathways together. The segment provides specialty chemical solutions through the following businesses: Assembly Solutions, Circuitry Solutions and Semiconductor Solutions.

Industrial & Specialty – The Industrial & Specialty segment researches, formulates and sells specialty chemicals and material process technologies that enhance surfaces or improve industrial processes in diverse industrial sectors from automotive trim to transcontinental infrastructure and high-design faucets. Its products include chemical systems that protect and decorate metal and plastic surfaces; and chemistries used in water-based hydraulic control fluids for offshore energy production. These fully consumable products are used in the aerospace, automotive, construction, consumer electronics, and oil and gas production end-markets. The segment provides specialty chemical solutions through the following businesses: Industrial Solutions and Energy Solutions. On February 28, 2025, the Company completed the sale of its previously reported flexographic printing plate business, MacDermid Graphics Solutions.

Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with GAAP and include the accounts of Element Solutions and all of its controlled subsidiaries. The Company consolidates the income, expenses, assets, liabilities and cash flows of its subsidiaries from the date it acquires control or becomes the primary beneficiary. All intercompany accounts and transactions have been eliminated upon consolidation.

In preparing the unaudited Condensed Consolidated Financial Statements in conformity with GAAP, management uses estimates and assumptions that may affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of net sales and expenses during the reporting period. Management applies judgment based on its understanding and analysis of the relevant circumstances, including historical experience and future expectations. These judgments, by their nature, are subject to an inherent degree of uncertainty and, accordingly, actual results could differ significantly from these estimates and assumptions.

These unaudited Condensed Consolidated Financial Statements reflect all adjustments that are normal, recurring and necessary for a fair statement of the Company's financial position, results of operations and cash flows for interim periods, but are not

SEC Form 10-Q filed by Element Solutions Inc.