Element Solutions Inc.

Good morning, ladies and gentlemen, and welcome to the Elements of the Third Quarter 2025 Financial Response Conference Call. I will now turn the call over to Erwin Gawker, Vice President of Strategy and Integration. Please go ahead.

Good morning, and thank you for participating in our Third Quarter 2025 Financial Response Conference Call. Joining me today are our CEO, Ben Glitch, and CFO, Kerry Dornan. In accordance with the regulation of GFD, we are web-tabbed to have comments and comments called. A replay will be made available on the Investor Section Company's website. During today's call, we will make certain follow-up 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 the earnings release, supplemental slides, and most recent CPC filings on our website for a discussion of material risk factors that could cause actual results to differ from our expectations and predictions. 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, Varun. Good morning, everybody. Thank you for joining. This is an exciting morning for us. When we launched ESI, we talked about a value creation model marrying operational excellence and prudent capital allocation. Today is a solid proof point showcasing our ability to do both. In addition to reporting record results yesterday, we're also announcing the acquisition of Micromax, a highly accretive strategic transaction and a value-enhancing addition to our electronics portfolio. Before we get into that, though, I want to give proper due to our operating results. This was an outstanding quarter. We set multiple records. Despite selling our graphics business, this was our highest quarterly adjusted EBITDA since the inception of Element Solutions. Our electronics segment posted its sixth consecutive quarter of high single-digit organic growth and achieved a record level of revenue. Excluding the impact of graphics, adjusted EBITDA growth would have been 10%. despite some of our legacy end markets remaining below prior peak volume levels, a weaker EV outlook, and a soft macroeconomic backdrop in Western industrial markets. Our teams are executing well on their strategies. In our industrial segment, portfolio optimization, productivity initiatives, and high margin wins in both verticals drove strong profit growth, despite a flat top line. The segments on meaningful margin improvement and excluding the impact of our graphics divestiture adjusted EBITDA growth would have been almost 30%. On the electronic side, we've built a unified platform of technologies to solve emerging customer pain points, just as burgeoning investment in data centers and their associated infrastructure accelerates demand for innovative material solutions. Our portfolio is uniquely positioned to provide those solutions, from metallization chemistries for high layer count printed circuit boards to specialized thermal management materials used in assembly to advance packaging chip scale chemistries. Micromax will add to those solutions. Its portfolio in electronics inks and pastes with a specialization in the highest performance, most technically challenging applications such as aerospace, defense, and healthcare is a great fit for Element Solutions. The acquisition broadens our offerings to our supply chains and enhances our value propositions to OEMs and specifiers. In 2019, our electronics business was just over a billion dollars, and with this transaction, it will exceed two. Like our business, Micromax is a leader in niche electronics markets reliant on innovation that is co-developed with customers and requires high levels of applications expertise. Its products are known for durability and performance in harsh environments and provide mission-critical solutions in highly specialized end markets. Micromax sits at the intersection of our assembly and circuitry businesses. Its metals-based manufacturing resembles assembly solutions, but its products are used more in circuit pathway applications, like our circuitry solutions business. These products also fit our core competencies in formulation and our high-touch, low-capital intensity operating model. The business is a proven team of experienced, highly technical leaders who add depth and expertise to our electronics business, McDermott Alpha Electronics Solutions. The transaction meets our robust acquisition criteria and is consistent with our strategy of disciplined investment in markets we understand and in growth businesses that we believe are better under our ownership. We expect the Micromax transaction to be more than 5% accretive to adjusted earnings per share, and based on its projected 2025 results, contribute approximately $40 million of adjusted EBITDA on a full year basis at accretive metals adjusted EBITDA margins. Subject to regulatory approvals and customary closing conditions, we expect to close in the first quarter of 2026. And we're looking forward to welcoming the Micromax team into the Element Solutions family and to capitalizing on the unique value opportunities associated with this combination. Shortly, you'll hear more from Carrie on our results. But to me, the most exciting thing about the quarter is what it means for our future. We've been able to generate great organic outcomes while ramping up investment in future internal and inorganic opportunities. While growing nicely in 2025, we're simultaneously building levers to accelerate that growth going forward. Those include several new product introductions and high-value categories in 2026, the accretive, highly strategic acquisition of Micromax underway, and substantial remaining balance sheet capacity to put to work should the right opportunities present themselves. The outlook is quite positive. Okay.