Element Solutions Inc Announces Record Fourth Quarter and Full Year Financial Results Since its Launch in 2019

• 2020 net sales of $1.85 billion, an increase of 1% on a reported basis or a decline of 3% on an organic basis from 2019
• 2020 GAAP diluted EPS of $0.31, compared to $0.30 in 2019
• 2020 adjusted EPS of $0.96, compared to $0.88 in 2019, an increase of 9%
• 2020 reported net income of $77 million, compared to $80 million in 2019
• 2020 adjusted EBITDA of $423 million, an increase of 2% from last year on a constant currency basis
• 2020 cash flows from operating activities of $276 million; 2020 free cash flows of $249 million
• Introduced 2021 full year financial guidance:
  • Adjusted EBITDA growth of approximately 7% year-on-year
  • Adjusted EPS of $1.10 to $1.15, an increase of 15% to 20%
  • 2021 expected free cash flow of approximately $275 million

MIAMI–(BUSINESS WIRE)–Element Solutions Inc (NYSE:ESI) (“Element Solutions” or the “Company”), a global and diversified specialty chemicals company, today announced its financial results from continuing operations for the three and twelve months ended December 31, 2020.

Executive Commentary

Chief Executive Officer Benjamin Gliklich commented, “In the face of dramatic economic dislocation, Element Solutions grew net sales, adjusted EBITDA, adjusted EPS and free cash flow in 2020. Through the dedication, resolve and responsiveness of our global team, we continued to deliver high quality service and attention to our customers despite the impediments created by the COVID pandemic. We are grateful to our outstanding organization, which rose to meet these challenges and rapidly adapted to ensure that our operations remained reliable and, most importantly, safe for our employees. Combining the resilience and flexibility of our supply chain with robust variable cost management during COVID-related shutdowns, we generated organic profit and cash flow growth. This did not come at the expense of investing for the future through R&D and bolt-on acquisitions and in our people by preserving our employee base despite the crisis. We demonstrated the power of our cash generative model this year repurchasing 5.7 million shares, funding an acquisition from cash flow and initiating a dividend in Q4, while also reducing our net debt ratio to less than 3.0x adjusted EBITDA.”

Mr. Gliklich continued, “In 2020, we saw an acceleration of the compelling secular trends we expect to propel our business in the future. Investment in 5G infrastructure and new mobile technologies and the development of electric vehicles all gained ground. In the fourth quarter, our industrially oriented businesses recovered from the impact of COVID-related shutdowns, while our high-end electronics business experienced strong demand driven by these trends. The fourth quarter was a record for net sales and adjusted EBITDA since we launched Element Solutions in February 2019. This strength has carried over into 2021. We expect this year once again to be a record year for our businesses. For the full year 2021, we expect adjusted EBITDA to increase by approximately 7% and adjusted EPS to grow by more than 15%. Growth in the first half should be greater than the second half as we lap the negative impact of COVID, which was greatest in the second quarter of 2020. Full year free cash flow generation should be a record this year as well, providing flexibility for additional capital deployment toward some combination of prudent tuck-in acquisitions, share buybacks, and potentially increased dividends.”

Mr. Gliklich concluded, “We are proud to have published our inaugural ESG report today. The intersection between sustainability and profitability is well established in our business. This report highlights how our efforts to improve outcomes for customers in many cases support sustainability objectives in our broader supply chains. Our business is only as healthy as the ecosystems in which we operate. In late 2020, we also proudly established the ESI Foundation to further our commitment to the environmental and social causes that matter to our employees and stakeholders.”

Fourth Quarter 2020 Highlights (compared with fourth quarter 2019):

• Net sales on a reported basis for the fourth quarter of 2020 were $537 million, an increase of 18% over the fourth quarter of 2019. Organic net sales, which exclude the impact of currency changes, certain pass-through metal prices and acquisitions, increased 10%.
  • Electronics: Net sales increased 26% to $343 million. Organic net sales increased 16%.
  • Industrial & Specialty: Net sales increased 6% to $193 million. Organic net sales increased 1%.

• Fourth Quarter of 2020 earnings per share (EPS) performance:
  • GAAP diluted EPS was $0.12, as compared to $0.29 in the same period last year.
  • Adjusted EPS was $0.31, as compared to $0.22 per share in the prior year.
• Reported net income for the fourth quarter of 2020 was $30 million, as compared to $74 million for the fourth quarter of 2019.
• Adjusted EBITDA for the fourth quarter of 2020 was $126 million, an increase of 23%. On a constant currency basis, adjusted EBITDA increased 20%.
  • Electronics: Adjusted EBITDA was $81 million, an increase of 30%. On a constant currency basis, adjusted EBITDA increased 25%.
  • Industrial & Specialty: Adjusted EBITDA was $45 million, an increase of 13%. On a constant currency basis, adjusted EBITDA increased 11%.
  • Adjusted EBITDA margin increased by 100 basis points to 23.5% on a reported basis and 23.3% on a constant currency basis.

Full Year 2020 Highlights (compared with full year 2019):

• Net sales on a reported basis for the full year 2020 were $1.85 billion, an increase of 1% over the prior full year period. Organic net sales decreased 3%.
  • Electronics: Net sales increased 8% to $1.17 billion. Organic net sales increased 2%.
  • Industrial & Specialty: Net sales decreased 9% to $682 million. Organic net sales decreased 10%.

• Full year 2020 EPS performance:
  • GAAP diluted EPS was $0.31, as opposed to $0.30 for the same period last year.
  • Adjusted EPS was $0.96, as compared to $0.88 in 2019.
• Reported net income for the full year 2020 was $77 million, as compared to $80 million for 2019.
• Adjusted EBITDA for the full year 2020 was $423 million, an increase of 1% as compared to 2019. On a constant currency basis, adjusted EBITDA increased 2%.
  • Electronics: Adjusted EBITDA was $277 million, an increase of 10% on both a reported and constant currency basis.
  • Industrial & Specialty: Adjusted EBITDA was $145 million, a decrease of 11%. On a constant currency basis, adjusted EBITDA decreased 10%.
  • Adjusted EBITDA margin improved by 10 basis points to 22.8%. On a constant currency basis, adjusted EBITDA margin increased by 10 basis points.

2021 Guidance

For the full year 2021, the Company expects adjusted EBITDA growth of approximately 7% and adjusted EPS to be in the range of $1.10 to $1.15. These results, if achieved, would be new annual records since the launch of Element Solutions in 2019.

Recent Developments

On February 24, 2021, the Company released its inaugural ESG Report, which highlights management’s approach to, and progress against, key environmental, social and governance topics that are significant to its business. This report is another step forward in the Company’s efforts to create sustainable solutions and integrate environmental initiatives throughout its operations and those of its customers. The report can be viewed on the sustainability page of the Company’s corporate website: www.elementsolutionsinc.com/sustainability. The information on, or linked to, the Company’s website is neither a part of nor incorporated by reference into this release.

During the fourth quarter of 2020, the Company established the ESI Foundation to serve as its primary charitable giving entity. The foundation intends to provide grants to qualified charitable organizations in the communities where the Company’s employees live and work and to focus on causes important to the environmental and social well-being of these communities.

On February 17, 2021, the Board of Directors of the Company declared a cash dividend of $0.05 per outstanding share of its common stock. The dividend is expected to be paid on March 15, 2021 to all stockholders of record at the close of business on March 1, 2021. On December 15, 2020, the Company paid a cash dividend of $0.05 per share outstanding at the record date, which dividend totaled $12.4 million.

As part of its previously-announced $750 million share repurchase program, during the fourth quarter of 2020, the Company repurchased 1.7 million shares of its common stock at an average price of $11.54 per share, for a total of approximately $20.0 million. These repurchases were in addition to 4.0 million shares repurchased previously during 2020, resulting in total share repurchases of 5.7 million for the year at an average price of $9.74 per share. The remaining authorization under the share repurchase program was approximately $187 million at December 31, 2020.

Conference Call

Element Solutions will host a webcast/dial-in conference call to discuss its 2020 fourth quarter and full year financial results at 8:30 a.m. (Eastern Time) on Thursday, February 25, 2021. Participants on the call will include Executive Chairman Sir Martin E. Franklin, President and Chief Executive Officer Benjamin Gliklich and EVP, Chief Financial Officer Carey J. Dorman.

To listen to the call by telephone, please dial 877-876-9174 (domestic) or 785-424-1669 (international) and provide the Conference ID: ESIQ420. The call will be simultaneously webcast at www.elementsolutionsinc.com. A replay of the call will be available after completion of the live call at www.elementsolutionsinc.com.

About Element Solutions

Element Solutions Inc is a leading 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, consumer packaging and offshore energy.

Forward-Looking Statements

This release is intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995 as it contains “forward-looking statements” within the meaning of the federal securities laws. These statements will often contain 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,” “guidance” or “confident” and variations of such words and similar expressions. Examples of forward-looking statements include, but are not limited to, statements, beliefs, projections and expectations regarding the Company’s investing for the future; cash generative model; the acceleration of trends expected to propel the Company’s business in the future, including 5G infrastructure, new mobile technologies and the development of electric vehicles; market strength carried over into 2021; 2021 as a record year for the Company; 2021 full year guidance related to adjusted EBITDA and adjusted EPS, with growth in the first half of 2020 being greater than the second half; record free cash flow generation for the full year of 2021, providing flexibility for additional capital deployment toward some combination of acquisitions, share buybacks and potentially increased dividends; earnings growth allowing continued deleveraging in 2021; sustainability objectives; commitment to environmental and social causes, through the ESI Foundation or otherwise; and efforts to create sustainable solutions and integrate environmental initiatives throughout the Company’s operations and those of its customers. These projections and statements are based on management’s estimates, assumptions or expectations with respect to future events and financial performance, and are believed to be reasonable, though are inherently uncertain and difficult to predict. Such projections and statements are based on the assessment of information available as of the current date, and the Company does not undertake any obligations to provide any further updates. Actual results could differ materially from those expressed or implied in the forward-looking statements if one or more of the underlying estimates, assumptions or expectations prove to be inaccurate or are unrealized. Important factors that could cause actual results to differ materially from those suggested by the forward-looking statements include, but are not limited to, the duration of the pandemic; the efficacy, availability and/or public acceptance of vaccines targeting COVID-19; the impact of variants of COVID-19 that may affect its spread or virulence or the effectiveness of vaccines on the virus; the impact of actions taken or that might be taken by governments, businesses or individuals to contain or reduce its repercussions and mitigate its economic implications; evolving macroeconomic factors, including general economic uncertainty, unemployment rates, and recessionary pressures; decreased consumer spending levels; reduction or changes in customer demand for the Company’s products and services; the Company’s ability to manufacture, sell and provide its products and services, including as a result of travel restrictions, closed borders, operating restrictions imposed on its facilities or reduced ability of its employees to continue to work efficiently; increased operating costs (whether as a results of changes to the Company’s supply chain or increases in employee costs or otherwise); collectability of customer accounts; additional and prolonged devaluation of other countries’ currencies relative to the U.S. dollar; the general impact of the pandemic on the Company’s customers, employees, suppliers, vendors and other stakeholders; the Company’s ability to realize the expected benefits of its cost containment and cost savings measures; business and management strategies; outstanding debt and debt leverage ratio; shares repurchases; expected returns to stockholders; and the impact of acquisitions, divestitures, restructurings, refinancings, impairments and other unusual items, including the Company’s ability to raise and/or retire new debt and/or equity and to integrate and obtain the anticipated benefits, results and synergies from these items or other related strategic initiatives. Additional information concerning these and other factors that could cause actual results to vary is, or will be, included in the periodic and other reports of Element Solutions filed with the Securities and Exchange Commission. Element Solutions undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Contacts

Investor Relations Contact:
Varun Gokarn

Senior Director, Strategy and Finance

Element Solutions Inc

1-561-406-8465

Media Contact:
Liz Cohen

Managing Director

Kekst CNC

1-212-521-4845

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