Element Solutions Inc.

Good morning, ladies and gentlemen, and welcome to the Element Solutions Q1 2026 Financial Results Conference Call. At this time, 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 by that time, please press star 1 on your telephone keypad. Thank you. I will now turn the call over to Varun Gokarn, Vice President of Strategy and Integration. Please go ahead.

Varun Gokarn Good morning, and thank you for participating in our first quarter 2026 Earnings Conference Call. Joining me today are our CEO, Ben Glicklich, and CFO, Keri Dunn. In accordance with Regulation FD, we are webcasting this conference call. A replay will be made available in the Investors 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 the earnings release supplemental slides and most recent SEC 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 Goodlitch.

Thank you, Varun, and good morning, everybody. Thank you for joining. Element Solutions started 2026 strong. We reported a record quarter yesterday that demonstrates ongoing success with our strategy of penetrating the highest value, fastest growing subsegments in our addressable markets. The quarter's results are a product of work we've been doing for years in our labs, at our sites, and alongside our customers. It was enhanced by our strategic acquisitions of EFC and Micromax, both of which closed in Q1, and are off to a solid start as part of the Element family. The trends that drove accelerating performance at the end of 2025 continued to propel us forward. We delivered double-digit organic sales growth for the second quarter in a row and strong margin expansion, excluding the impact of past year metals, all while increasing investment in people, technology, and plants to support customer growth. Sales in our electronics segment grew 15% organically as activity accelerated across our supply chain in support of the ongoing AI infrastructure build-out. Technical requirements in data center hardware and other high performance electronics continue to increase and our businesses provide critical enabling solutions across thermal management, power density, and advanced packaging applications to name a few. We're seeing volume growth in the highest value categories across our end markets, from leading-edge semi- and high-end circuit board fabs to device assemblers, and a strong pull for innovation to enable greater levels of device performance and manufacturing yield or throughput. This dynamic, combined with resilience in the higher-end mobile market, led to double-digit organic net sales growth in all of our electronics verticals. Forecast from customers are increasing, and innovation cycles are accelerating. This trend will continue, and we're increasing investments to better serve our customers, whether an inventory to support volume growth, additional manufacturing capacity for certain high-growth product lines, or innovation to remain on the leading edge. Our investment in OpEx and CapEx is customer-led and supports durable growth trends. As a predominantly asset-light formulation business with low maintenance capital requirements, we're uniquely positioned to selectively target efficient investment ahead of industry inflection points. Our ongoing activity with Kubrion is an example of such an investment, where we're in the midst of commercializing a differentiated new material to solve several emerging customer pain points. The pipeline for this capability continues to grow despite our limiting commercial activities to ensure the supply chain can keep up with demand. We've also expanded the areas of opportunity we serve through the acquisitions of Micromax and EFC. Their results in the quarter and forecasts for the year are tracking favorably to our expectations, with both growing revenue organically this quarter by double digits. More importantly, we welcomed two highly capable, deeply technical teams with the same customer-centric mentality that is the hallmark of ESI. Integration is on track, and the teams are settling well into our organization and energized by the opportunities that Element Solutions can provide them to better serve customers.