10/22/2026

speaker
Operator
Conference Operator

For your question, press star 1 again. I will now turn the call over to Varun Gokarn, Vice President of Strategy and Integration. Please go ahead.

speaker
Varun Gokarn
Vice President of Strategy and Integration

Good morning, and thank you for participating in our third quarter 2026 earnings conference call. Joining me today are our CEO, Ben Gliklich, and CFO, Carey 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 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 US 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 Gliklich.

speaker
Ben Gliklich
Chief Executive Officer

Thank you, Varun, and good morning, everyone. Thanks for joining. Element Solutions delivered yet another record quarter as we continue to benefit from favorable positions in our end markets, strong execution against our commercial and operational initiatives, and the results of thoughtful, disciplined capital allocation. Before discussing the quarter's performance, let me recap our decision to mutually terminate the proposed transaction with Solstice at the end of August. Our North Star at Element Solutions has always been serving our customers and shareholder value creation. And following the announcement of this proposed transaction, we had constructive discussions with our investors and gained valuable insights into how they'd like us to pursue that North Star. Feedback is a gift, and we were fortunate to receive it. We work for our shareholders, and we value their input. While we stand behind the strategic and financial merits of the SILSIS transaction, it became clear that our shareholders valued the standalone trajectory that we articulated in our May Investor Day. They wanted our team to deliver on our plan. They discounted alternatives, which introduced complexity and execution risk. The feedback we received was a vote of confidence from our shareholders. Confidence in management, appreciation for the unique culture we've deliberately developed, and enthusiasm for the portfolio of businesses we've built. Attributes that together outweigh the benefits of enhanced scale or synergy capture. So going forward, we're doubling down on the culture of entrepreneurship, operational excellence, and prudent capital allocation that has brought us our historical success. were committed to continue investing behind our businesses, both organically and through bolt-on M&A. Our electronics segment this year is on pace to deliver the same amount of adjusted EBITDA that our entire company generated last year. We are increasingly a critical enabler in the electronics ecosystem and becoming even more so as we introduce and acquire new capabilities. To keep up with the rapid pace in our markets, we must evolve, and we're working to accelerate our development cycle time. Thank you for joining us today. Our results were again enhanced by strong contributions from recent acquisitions, which position us well in attractive new market adjacencies that are seeing robust growth. 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, which has driven our offering of 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. This dynamic has led to four straight quarters of double-digit organic sales growth and meaningful X-metal margin expansion in our electronics business. Our profitable growth has allowed us to increase investment in people, technology, and plants, which we expect will reinforce ESI's role in critical emerging applications. Our customers are investing heavily to build capacity ahead of surging demand. We, in turn, have built and continue to build additional manufacturing capacity for several high-growth product lines, including incremental production capability for engineered preform and critical thermal interface products, as well as local laboratory footprints for electronics in India and Southeast Asia. Where investment in Southeast Asia was intended to de-risk geopolitical concerns two years ago, it's now become much needed additional capacity for our customers. Meanwhile, our business in China remains very strong, growing 30% in the quarter. We've also made substantial investments and financial commitments to scale manufacturing of our Couprion active copper products, focused on solving several emerging customer pain points around thermal management, power delivery, and plating copper on challenging substrates. Our development partners are exceptionally enthusiastic about this offering, and they're progressing towards high volume manufacturing themselves, progress evidenced by the two customer qualification milestones we achieved in the third quarter. These qualifications from two leading technology providers to the data center ecosystem support our strong conviction in the market opportunity for active copper and our ability to establish incumbency with this exciting technology. Beyond these investments in organic growth, We continue to reap the fruits of our inorganic strategy. The integrations of Micromax and EFC are going well, and both businesses contributed meaningful adjusted EBITDA growth in the quarter. Our formula of operational excellence and prudent capital allocation drove a 22% increase in adjusted EPS this quarter. Beyond M&A, when we see compelling value in our own shares, we can act opportunistically given our substantial existing share repurchase authorization. We did so this quarter, reflecting our confidence in the business from here. Carey will now take you through our third quarter business results in more detail. Carey?

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