Element Solutions Inc.

Good morning, ladies and gentlemen, and welcome to the Element Solutions Q4 and year-end 2020 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, you'll have the opportunity to ask questions during the question and answer session. You may register to ask a question by pressing the star and one keys on your touch-tone phone. You may withdraw yourself from the queue by pressing the pound key. Please note this call may be recorded. I'll be standing by should you need any assistance. I will now turn the call over to Varun Gokarn, Senior Director of Strategy and Finance. Please go ahead.

Good morning, and thank you for participating on our fourth quarter and full year 2020 earnings conference call. Joining me are Executive Chairman Sir Martin Franklin, CEO Ben Glicklich, and CFO Kerry Dorman. In accordance with Regulation FD or Fair Disclosure, we are webcasting this conference call. Any redistribution, retransmission or rebroadcast of this call in any form without the express written consent of Element Solutions is strictly prohibited. During today's call, we will make certain forward-looking statements that reflect our current views about the company's future performance and financial results. These statements are based on assumptions and expectations of future events that are subject to risks and uncertainties. Please refer to our earnings release, supplemental slides and most recent SEC filings for a discussion of material risk factors that could cause actual results to differ from our expectations and predictions. These materials can be found on the company's website at www.elementsolutionsinc.com in the investor section under news and events. Today's materials also include financial information that has not been prepared in accordance with U.S. GAAP. Please refer to the earnings release and supplemental slides for definitions and reconciliations of these non-GAAP measures to comparable GAAP financial measures. It is now my pleasure to introduce Ben Glicklich, CEO of Element Solutions.

Thank you, Varun, and good morning, everyone. Thank you for joining. We had an outstanding year in 2020, outstanding on an absolute basis, and particularly on a relative basis in light of the macroeconomic backdrop. We grew net sales, adjusted EBITDA, adjusted earnings per share, and free cash flow. The fourth quarter was the culmination and the capstone It was a record quarter for net sales and adjusted EBITDA since we launched Element Solutions in early 2019. We grew the top line 10% organically year over year and adjusted EBITDA by 20%. This was entirely a testament to our outstanding team who lived our culture every day and showed intense dedication to our company, our customers, and our colleagues. We're only as good as our people, and this year proved our people are outstanding. The stark contrast between our performance this year and the tragic ongoing health and socioeconomic crisis is not lost on us. We feel deeply for those who are sick, suffering, and mourning. The pandemic has touched all of us. And in that context, we are especially grateful for the resilience and persistence of our team who drove our success in 2020 while navigating the turbulence created by COVID and its ramifications. When we launched Element Solutions in February 2019, we espoused a strategy balancing operational excellence and prudent capital allocation, running our high-quality businesses better every year, and deploying the strong cash flows they generate in long-term, value-enhancing ways. On page three, we consider 2020 against those objectives. In the face of a dramatic economic dislocation, we grew adjusted EPS by 9%, and adjusted EBITDA by 2%. This 2020 earnings growth did not come at the expense of investing in our long-term growth trajectory or in our people. We continued investing throughout the year, maintaining our prior year spending levels in both RMD and CapEx, and notably delivering on our commitment to preserve our employee base despite the COVID-19 related shutdowns. We demonstrated the resilience of our variable cost operating model and stable cash flow profile preserving margins throughout the year, and generating robust cash flow every quarter. Free cash flow was approximately $250 million, up 5% like for like over 2019. And we deployed that cash flow prudently with a small bolt-on acquisition that we believe creates a great long-term growth opportunity for us, a high returning debt refinancing, and accretive share repurchases. We demonstrated a commitment to balanced capital allocation, with the initiation of a $0.05 per share cash dividend in the fourth quarter, as well as the repurchase of nearly $56 million in shares throughout the course of the year at an average price below $10 per share. Even as we invested in growth and retreat continued to improve, our net leverage ratio fell to 2.9, while 2020 is only. It's a year we exited stronger than we entered. Our fourth quarter results are summarized on slide four. They exceeded our mid-December expectations as business through what is typically a slow period at year end. November was even better. Net sellers in the quarter were also a record since launch. They represented driven by strength in high-end electronics and the continued recovery in industrially-oriented businesses. ...in constant currency to a quarterly record of $126 million. Adjusted EBITDA margin points year over year, as we saw both mixed benefits and continued operating efficiencies. Adjusted EPS in the quarter of 31 cents grew 41% versus the same period in 2020. Turning to our full year... year 2020 financial results on slide five. We delivered growth in net sales, adjusted EBITDA, and adjusted earnings per share in a year marked declines. Organic net sales declined 3% for 2019-driven production slowdowns, heavily impacted automotive and general industrial end markets in the second quarter before recovering in the second half of the year. Strong underlying demand for next-generation smartphones, 5G telecommunications markets supported our high-end electronics business throughout the year in most other manufacturing markets. Including currency movements of DMP and Kester, net sales were up 1%. We grew adjusted EBITDA 2% on a constant currency basis and expanded adjusted EBITDA margins modestly versus the prior year. Full-year adjusted earnings per share grew 9% as our work on the capital structure and share repurchases compounded our full-year earnings performance. Shine a light on the quality of our business and our team. Harry will now take you through our full year.