Element Solutions Inc.

Good morning, ladies and gentlemen, and welcome to Element Solutions Q3 2024 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I will now turn the call over to Byron Gokarn, Vice President, Strategy and Integration. Please go ahead.

Good morning, and thank you for participating in our third quarter 2024 earnings conference call. Joining me today are our president and CEO, Ben Glicklich, and CFO, Kerry Dorman. In accordance with Regulation FD, we are webcasting this conference call. A replay will be made available in the investor section of the company's website. 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, which 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 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 our CEO, Ben Glicklich.

Thank you, Veruna. Good morning, everyone. Thank you for joining. Element Solutions delivered strong results once again this quarter. Financially, operationally, and strategically, we executed well. Our multi-year effort to target the highest value and fastest growing segments of the electronic supply chain and position ourselves as key enablers of developing technologies is working. As the market has developed for our offerings, supporting high-performance computing, data centers, advanced packaging used in cutting-edge chip designs, and power electronics for electric vehicles, our revenue has grown along with it. And because of these emerging growth vectors, our electronics segment has outperformed sluggishness in more traditional electronics and industrial end markets this year. In the quarter, standout volume growth in wafer-level packaging and semiconductor assembly drove an acceleration in sales for the electronics segment, which grew 9% organically. Our advanced packaging applications and power electronics businesses accelerated sequentially as expected. Circuitry solutions also grew over 9% organically, driven by demand for data storage, certain EV applications, and circuit boards for high-performance computing. The electronics market overall, however, was not uniformly stronger in the third quarter. Smartphone sales growth did not accelerate as quickly as expected, and electronics for more industrial applications remained soft. in line with those markets. Our results are a testament to the business shifting away from some of its legacy drivers and towards emerging growth sectors. The combination of softening demand in Europe and lower revenue from metal price surcharges in the core industrial portfolio were headwinds for our industrial and specialty segment. Profitability, however, improved, and so did adjusted EBITDA from raw material cost actions and ongoing strength in our energy business, which grew sales by double digits at high incrementals. The businesses in this segment benefited from work we've done to improve them, whether through procurement, facility rationalization, or pricing actions. The impact of these actions translated into earnings growth in a soft market and should be even more evident when end markets inevitably rebound. Staying with our industrial and specialty segment, this quarter we announced the divestiture of our graphics solutions business. McDermott Graphics Solutions is a high-quality business with great attributes, that does not align with ESI's core businesses and operating model. This transaction is long-term growth, margin, and return on capital accretive. For example, the midpoint of our 2024 adjusted EBITDA guidance implies an average constant currency growth rate of 7% since 2019. X graphics, that rate increases to 8%. Transactions should be 230 basis points accretive to CRI. This transaction values the business at an attractive double-digit multiple, and given our legacy tax attributes, we should pay minimal taxes on the $325 million of gross proceeds. Pro forma for the transaction, our net leverage ratio would have been two and a half times this quarter. Transaction is expected to close in late 2024 or the first half of 2025, pending closing conditions and regulatory approvals. Taken together, we've repositioned the company through innovation acquisitions and divestitures for faster profit growth. With the support of electronics market, our confidence in the long-term algorithm for ESI is increasing. We're uniquely positioned with decades of technical expertise across the breadth of the electronics manufacturing supply chain to support OEMs and fabricators as they increasingly rely on unique material sets spanning the circuit board, the chip, and the variety of attachment technologies which connect them to deliver computing performance improvements. Our investments in new technologies from advanced packaging and die-attach offerings to nanocopper, as well as new applications in research centers in Southeast and subcontinental Asia, support our enhanced profile and mindshare with specifiers, qualifiers, and customers in our supply chain. With this invigorated and focused organization and dry powder to capitalize on strategic opportunities, Element Solutions is well-positioned for 2025. Carrie will now take you through our third quarter results in more detail.