Element Solutions Inc.

Good morning, ladies and gentlemen, and welcome to the Element Solutions Q2 2022 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question and answer session. You may register to ask a question at any time by pressing star 1 on your touchtone phone. You may withdraw yourself from the queue by pressing star 2. Please note that this call may be recorded, and I will be standing by should you need any assistance. I would now turn the call over to Varun Gokorn, Senior Director of Strategy and Finance. Please go ahead.

Good morning, and thank you for participating in our second quarter 2022 earnings conference call. Joining me are our CEO, Ben Glicklich, and CFO, Kerry Gorman. 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 our 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, everybody. Thank you for joining. Element Solutions had another quarter of solid earnings growth in a complicated macro environment. Supply chains remained challenged. The lockdowns in major commercial hubs in China persisted longer than expected. Auto markets have not yet recovered, and currencies moved significantly against us. Nonetheless, we delivered on our commitments in the quarter. Organic net sales grew in every vertical, and we met our adjusted EBITDA guidance. We believe this once again demonstrates the stability of our businesses and the ongoing execution of our strategy by our talented team. Demand across the electronics segment generally remained healthy, driven by continued EV and 5G penetration. We grew modestly across our industrial verticals, despite continued weak production in the automotive market and the overhang from geopolitical volatility in Europe. The ongoing integration of our recent acquisitions is going well. generating better-than-expected synergies, and we've started to capitalize on new long-term growth opportunities around sustainable chemistry. Overall, our sales growth was driven more by pricing actions and raw material surcharges than underlying unit growth. In certain of our markets, demand was resilient, while in others, such as China and automotive, it was weaker. We grew constant currency adjusted EBITDA by 13% over a difficult Q2 2021 comparable, which was before supply chain disruptions and inflation took hold. The biggest headwind to our financial results in the second quarter was the strengthening U.S. dollar, which weighed on sales by 7% in the quarter and presents additional headwinds into the second half of the year based on current FX rates. While macroeconomic sentiment has worsened, many of our end markets remain resilient. We expect the electronics business to grow sequentially and year-over-year in the second half from new smartphone platform launches and ongoing demand from mobile infrastructure and EV markets. Softness in other consumer electronic sectors, such as white goods and personal computers, has less of an impact on our portfolio and has been in line with our expectations coming into the year. We also expect a modest recovery in the automotive market, where underlying structural demand still remains higher than the industry's production levels. As we've demonstrated multiple times over the last several years, We can and will continue to keep a long-term strategic focus while also actively managing the business to navigate near-term volatility and deliver on our targets. On slide three, you can see a summary of our second quarter financial results. We grew the top line 6% organically, similar to our first quarter performance. This first half growth comes against a difficult comparison as the first half of 2021 benefited from a strong COVID recovery. On a constant currency basis, adjusted EBITDA grew 13% year on year. Adjusted EBITDA margin declined 170 basis points, with higher metal prices driving 100 basis points of margin headwind on a year-over-year basis, though the dollar value of pass-through metals in our assembly business declined sequentially as metal prices fell. Excluding the impact of $123 million of pass-through metal sales in our assembly solutions business, our adjusted EBITDA margin would have been 25% in the quarter. Our adjusted EPS in the quarter grew a healthy 9% on a reported basis, despite a negative 7% impact from FX translation from the stronger U.S. dollar. Carrie will now take you through our second quarter business results in more detail. Carrie?