- Net sales of $575 million, approximately flat on a reported
basis or a 1% increase on an organic basis from the first quarter
of 2023
- Reported net income of $56 million, compared to $43 million in
the same period last year
- Adjusted EBITDA of $127 million, an increase of 13% from the
first quarter of last year on a reported basis and 17% on a
constant currency basis
- First quarter 2024 cash flows from operating activities of $58
million and free cash flow of $39 million
Element Solutions Inc (NYSE:ESI) (“Element Solutions” or the
“Company”), a global and diversified specialty chemicals company,
today announced its financial results for the three months ended
March 31, 2024.
Executive Commentary
President and Chief Executive Officer Benjamin Gliklich
commented, “Element Solutions executed well this quarter in
recovering electronics markets. Our ongoing investment in
high-value technologies, particularly in advanced packaging and
semiconductor markets, has driven favorable mix, while the
carryover of our pricing actions against deflating raw materials
prices led margins higher in our industrial business. The overall
impact was substantial margin expansion and 17% constant-currency
adjusted EBITDA growth. Contribution from ongoing investment in
innovation for leading edge electronics applications should
continue to drive our value proposition and profitability higher
from here over time.”
Mr. Gliklich continued, “We are optimistic for a continued
recovery in electronics end markets despite a slower economic
backdrop in the Americas and Europe. It remains early to make a
call on the magnitude of demand acceleration in the second half of
2024; however, pockets of strength in electronics and our margin
progress give us confidence to increase our full year 2024 adjusted
EBITDA guidance range to $515 million to $530 million, despite an
incremental FX headwind of more than $5 million. This translates to
full year constant currency adjusted EBITDA growth of 10% to 14%.
While the near-term growth outlook is strong, we are even more
compelled by the longer-term opportunities we are pursuing. Our
traction with advanced electronics innovators and pipeline of
solutions to solve emerging customer pain-points have been
improving consistently. This is a product of our strategy execution
and our exceptional people who have once again delivered this
quarter for our customers and shareholders."
First Quarter 2024 Highlights (compared
with first quarter 2023)
- Net sales on a reported basis for the first quarter of 2024
were $575 million, relatively flat over the first quarter of 2023.
Organic net sales increased 1%.
- Electronics: Net sales increased 3% to $349 million. Organic
net sales increased 4%.
- Industrial & Specialty: Net sales decreased 4% to $226
million. Organic net sales decreased 3%.
- First quarter of 2024 earnings per share (EPS) performance:
- GAAP diluted EPS was $0.23, as compared to $0.18 for the same
period last year.
- Adjusted EPS was $0.34, as compared to $0.30 for the same
period last year.
- Reported net income for the first quarter of 2024 was $56
million, as compared to $43 million for the first quarter of 2023,
an increase of 30%.
- Net income margin increased by 220 basis points to 9.7%.
- Adjusted EBITDA for the first quarter of 2024 was $127 million,
as compared to $112 million for the first quarter of 2023. On a
constant currency basis, adjusted EBITDA increased 17%.
- Electronics: Adjusted EBITDA was $84 million, an increase of
15%. On a constant currency basis, adjusted EBITDA increased
20%.
- Industrial & Specialty: Adjusted EBITDA was $43 million, an
increase of 9%. On a constant currency basis, adjusted EBITDA
increased 11%.
- Adjusted EBITDA margin increased by 260 basis points to 22.1%.
On a constant currency basis, adjusted EBITDA margin increased by
290 basis points.
Updated 2024 Guidance
The Company now expects full year 2024 adjusted EBITDA to be in
the range of $515 million to $530 million and free cash flow to be
in the range of $280 million to $300 million. The Company expects
second quarter 2024 adjusted EBITDA to be approximately $125
million, or roughly flat to the first quarter on a constant
currency basis.
Conference Call
Element Solutions will host a webcast/dial-in conference call to
discuss its 2024 first quarter financial results at 8:30 a.m.
(Eastern Time) on Tuesday, April 30, 2024. Participants on the call
will include President and Chief Executive Officer Benjamin
Gliklich and Chief Financial Officer Carey J. Dorman.
To listen to the call by telephone, please dial 888-510-2346
(domestic) or 646-960-0111 (international) and provide the
Conference ID: 3799230. The call will be simultaneously webcast at
www.elementsolutionsinc.com. A replay of the call will be available
after completion of the live call at
www.elementsolutionsinc.com.
About Element Solutions
Element Solutions Inc is a leading global specialty chemicals
company whose businesses supply a broad range of solutions that
enhance the performance of products people use every day. Developed
in multi-step technological processes, these innovative solutions
enable customers' manufacturing processes in several key
industries, including consumer electronics, power electronics,
semiconductor fabrication, communications and data storage
infrastructure, automotive systems, industrial surface finishing,
consumer packaging and offshore energy.
More information about the Company is available at
www.elementsolutionsinc.com.
Forward-Looking
Statements
This release is intended to qualify for the safe harbor from
liability established by the Private Securities Litigation Reform
Act of 1995 as it contains "forward-looking statements" within the
meaning of the federal securities laws. These statements will often
contain words such as "expect," "anticipate," "project," "will,"
"should," "believe," "intend," "plan," "assume," "estimate,"
"predict," "seek," "continue," "outlook," "may," "might," "aim,"
"can have," "likely," "potential," "target," "hope," "goal,"
"priority," "guidance" or "confident" and variations of such words
and similar expressions. Examples of forward-looking statements
include, but are not limited to, statements, beliefs, projections
or expectations regarding ongoing investment in high-value
technologies and innovation for electronics applications driving
value proposition and profitability; continued recovery in the
electronics end markets; demand acceleration in the second half of
2024, including strong demand in electronics and margin progress;
non-GAAP effective tax rate; full year 2024 guidance for adjusted
EBITDA, constant currency adjusted EBITDA growth and free cash
flow; second quarter 2024 guidance for adjusted EBITDA; incremental
FX headwind; near term growth outlook; longer-term opportunities;
and improving traction with advanced electronics innovators and
pipeline of solutions to solve emerging customer pain-points. These
projections and statements are based on management's estimates,
assumptions or expectations with respect to future events and
financial performance, and are believed to be reasonable, though
are inherently uncertain and difficult to predict. Such projections
and statements are based on the assessment of information available
as of the current date, and the Company does not undertake any
obligations to provide any further updates. Actual results could
differ materially from those expressed or implied in the
forward-looking statements if one or more of the underlying
estimates, assumptions or expectations prove to be inaccurate or
are unrealized. Important factors that could cause actual results
to differ materially from those suggested by the forward-looking
statements include, but are not limited to, the war between Russia
and Ukraine and the Israel-Hamas conflict and other hostilities in
the Middle-East as well as actions in response thereto and their
impact on market conditions and the global economy; the continuing
economic impact of the coronavirus (COVID-19) and its variants on
the global economy and supply chains; price volatility and cost
environment; inflation and fluctuations in foreign exchange rates;
outstanding debt and debt leverage ratio; shares repurchases; debt
and/or equity issuance or retirement; expected returns to
stockholders; and the impact of acquisitions, divestitures,
restructurings, refinancings, impairments and other unusual items,
including the Company's ability to integrate and obtain the
anticipated benefits, results and synergies from these items or
other related strategic initiatives. Additional information
concerning these and other factors that could cause actual results
to vary is, or will be, included in the Company's periodic and
other reports filed with the Securities and Exchange Commission.
The Company undertakes no obligation to update any forward-looking
statements, whether as a result of new information, future events
or otherwise.
ELEMENT SOLUTIONS INC
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended March
31,
(dollars in millions, except per share
amounts)
2024
2023
Net sales
$
575.0
$
574.4
Cost of sales
330.0
346.6
Gross profit
245.0
227.8
Operating expenses:
Selling, technical, general and
administrative
149.1
148.9
Research and development
18.1
12.5
Total operating expenses
167.2
161.4
Operating profit
77.8
66.4
Other (expense) income:
Interest expense, net
(13.9
)
(11.7
)
Foreign exchange gains
7.9
4.9
Other (expense) income, net
(2.3
)
0.3
Total other expense
(8.3
)
(6.5
)
Income before income taxes and
non-controlling interests
69.5
59.9
Income tax expense
(13.5
)
(16.9
)
Net income
56.0
43.0
Net income attributable to non-controlling
interests
—
(0.1
)
Net income attributable to common
stockholders
$
56.0
$
42.9
Earnings per
share
Basic
$
0.23
$
0.18
Diluted
$
0.23
$
0.18
Weighted average
common shares outstanding
Basic
241.8
241.1
Diluted
242.5
241.8
ELEMENT SOLUTIONS INC
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
March 31,
December 31,
(dollars in millions)
2024
2023
Assets
Cash & cash equivalents
$
286.3
$
289.3
Accounts receivable, net of allowance for
doubtful accounts of $11.8 and $12.6 at March 31, 2024 and December
31, 2023, respectively
459.0
461.8
Inventories
319.1
298.9
Prepaid expenses
25.1
32.5
Other current assets
146.3
115.0
Total current assets
1,235.8
1,197.5
Property, plant and equipment, net
295.5
296.9
Goodwill
2,302.3
2,336.7
Intangible assets, net
840.0
879.3
Deferred income tax assets
112.9
120.5
Other assets
125.7
143.2
Total assets
$
4,912.2
$
4,974.1
Liabilities and stockholders'
equity
Accounts payable
$
132.9
$
140.6
Current installments of long-term debt
11.5
11.5
Accrued expenses and other current
liabilities
196.5
217.3
Total current liabilities
340.9
369.4
Debt
1,918.9
1,921.0
Pension and post-retirement benefits
26.5
28.1
Deferred income tax liabilities
102.9
108.9
Other liabilities
183.7
202.4
Total liabilities
2,572.9
2,629.8
Stockholders' equity
Common stock: 400.0 shares authorized
(2024: 267.0 shares issued; 2023: 266.2 shares issued)
2.7
2.7
Additional paid-in capital
4,201.4
4,196.9
Treasury stock (2024: 25.0 shares; 2023:
24.6 shares)
(349.4
)
(341.9
)
Accumulated deficit
(1,146.8
)
(1,183.3
)
Accumulated other comprehensive loss
(384.2
)
(345.9
)
Total stockholders' equity
2,323.7
2,328.5
Non-controlling interests
15.6
15.8
Total equity
2,339.3
2,344.3
Total liabilities and stockholders'
equity
$
4,912.2
$
4,974.1
ELEMENT SOLUTIONS INC
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31,
(dollars in millions)
2024
2023
Cash flows from operating
activities:
Net income
$
56.0
$
43.0
Reconciliation of net income to net cash
flows provided by operating activities:
Depreciation and amortization
40.3
39.1
Deferred income taxes
(5.4
)
(0.4
)
Foreign exchange gains
(7.8
)
(7.3
)
Incentive stock compensation
4.1
4.4
Other, net
3.7
2.2
Changes in assets and liabilities, net of
acquisitions:
Accounts receivable
(4.8
)
(2.6
)
Inventories
(23.9
)
(29.1
)
Accounts payable
0.7
18.6
Accrued expenses
(14.5
)
(22.3
)
Prepaid expenses and other current
assets
6.7
2.7
Other assets and liabilities
3.1
5.2
Net cash flows provided by operating
activities
58.2
53.5
Cash flows from investing
activities:
Capital expenditures
(19.0
)
(9.1
)
Proceeds from disposal of property, plant
and equipment
—
0.5
Acquisitions, net of cash acquired
(3.9
)
—
Other, net
—
(3.0
)
Net cash flows used in investing
activities
(22.9
)
(11.6
)
Cash flows from financing
activities:
Repayments of borrowings
(2.9
)
(2.9
)
Dividends
(20.0
)
(19.4
)
Payment of financing fees
(2.1
)
—
Other, net
(7.7
)
(7.2
)
Net cash flows used in financing
activities
(32.7
)
(29.5
)
Effect of exchange rate changes on cash
and cash equivalents
(5.6
)
1.0
Net (decrease) increase in cash and
cash equivalents
(3.0
)
13.4
Cash and cash equivalents at beginning of
period
289.3
265.6
Cash and cash equivalents at end of
period
$
286.3
$
279.0
ELEMENT SOLUTIONS INC
ADDITIONAL FINANCIAL
INFORMATION
(Unaudited)
I. SEGMENT RESULTS
Three Months Ended March
31,
(dollars in millions)
2024
2023
Reported
Constant Currency
Organic
Net Sales
Electronics
$
349.2
$
339.6
3%
5%
4%
Industrial & Specialty
225.8
234.8
(4)%
(3)%
(3)%
Total
$
575.0
$
574.4
0%
2%
1%
Net Income
Total
$
56.0
$
43.0
30%
Adjusted EBITDA
Electronics
$
83.9
$
72.7
15%
20%
Industrial & Specialty
43.1
39.6
9%
11%
Total
$
127.0
$
112.3
13%
17%
Three Months Ended March
31,
Constant Currency
2024
2023
Change
2024
Change
Net Income Margin
Total
9.7%
7.5%
220bps
Adjusted EBITDA Margin
Electronics
24.0%
21.4%
260bps
24.4%
300bps
Industrial & Specialty
19.1%
16.9%
220bps
19.3%
240bps
Total
22.1%
19.5%
260bps
22.4%
290bps
II. CAPITAL STRUCTURE
(dollars in millions)
Maturity
Interest Rate
March 31,
2024
Instrument
Term Loans
(1)
12/18/2030
SOFR plus 2.00%
$
1,147.1
Total First Lien Debt
1,147.1
Senior Notes due 2028
9/1/2028
3.875%
800.0
Total Debt
1,947.1
Cash Balance
286.3
Net Debt
$
1,660.8
Adjusted Shares Outstanding
(2)
244.5
Market Capitalization
(3)
$
6,107.6
Total Capitalization
$
7,768.4
(1)
Element Solutions swapped its floating
term loan rate to a fixed rate for all of its outstanding term
loans through the use of interest rate swaps and cross-currency
swaps which mature in January 2025 or December 2028, as applicable.
At March 31, 2024, 100% of the Company's debt was fixed.
(2)
See "Adjusted Common Shares Outstanding at
March 31, 2024 and 2023" following the footnotes under the
"Adjusted Earnings Per Share (EPS)" reconciliation table below.
(3)
Based on the closing price of the shares
of Element Solutions of $24.98 at March 28, 2024, which was the
last business day of the quarter.
III. SELECTED FINANCIAL DATA
Three Months Ended March
31,
(dollars in millions)
2024
2023
Interest expense
$
16.4
$
13.3
Interest paid
24.2
21.3
Income tax expense
13.5
16.9
Income taxes paid
14.2
12.7
Capital expenditures
19.0
9.1
Proceeds from disposal of property, plant
and equipment
—
0.5
Non-GAAP Measures
To supplement its financial measures prepared in accordance with
GAAP, Element Solutions presents in this release the following
non-GAAP financial measures: EBITDA, adjusted EBITDA, adjusted
EBITDA margin, adjusted EPS, adjusted common shares outstanding,
free cash flow, organic net sales growth, full year 2024 guidance
for adjusted EBITDA, constant currency adjusted EBITDA growth and
free cash flow, and second quarter 2024 guidance for adjusted
EBITDA. The Company also evaluates and presents its results of
operations on a constant currency basis.
Management internally reviews these non-GAAP measures to
evaluate performance and liquidity on a comparative
period-to-period basis in terms of absolute performance, trends and
expected future performance with respect to the Company’s business
and believes that these non-GAAP measures provide investors with an
additional perspective on trends and underlying operating results
on a period-to-period comparable basis. The Company also believes
that investors find this information helpful in understanding the
ongoing performance of its operations as well as their ability to
generate cash separate from items that may have a disproportionate
positive or negative impact on its financial results in any
particular period or that are considered to be associated with its
capital structure. These non-GAAP financial measures, however, have
limitations as analytical tools, and should not be considered in
isolation from, a substitute for, or superior to, the related
financial information that Element Solutions reports in accordance
with GAAP. The principal limitation of these non-GAAP financial
measures is that they exclude significant expenses and income that
are required by GAAP to be recorded in the Company’s financial
statements and may not be completely comparable to similarly titled
measures of other companies due to potential differences in
calculation methods. In addition, these measures are subject to
inherent limitations as they reflect the exercise of judgment by
management about which items are excluded or included in
determining these non-GAAP financial measures. Investors are
encouraged to review the definitions and reconciliations of these
non-GAAP financial measures to their most comparable GAAP financial
measures included in this press release, and not to rely on any
single financial measure to evaluate the Company's businesses.
The Company provides full year 2024 guidance for adjusted EBITDA
and constant currency adjusted EBITDA growth and second quarter
2024 guidance for adjusted EBITDA only on a non-GAAP basis.
Reconciliations of such forward-looking non-GAAP measures to GAAP
are excluded in reliance upon the exception provided by Item
10(e)(1)(i)(B) of Regulation S-K due to the inherent difficulty in
forecasting and quantifying, without unreasonable efforts, certain
amounts that are necessary for such reconciliations, including
adjustments that could be made for restructurings, refinancings,
impairments, divestitures, integration and acquisition-related
expenses, share-based compensation amounts, non-recurring, unusual
or unanticipated charges, expenses or gains, adjustments to
inventory and other charges reflected in reconciliations of
historic numbers, the amount of which, based on historical
experience, could be significant.
Constant Currency:
The Company discloses net sales and adjusted EBITDA on a
constant currency basis by adjusting results to exclude the impact
of changes due to the translation of foreign currencies of its
international locations into U.S. dollar. Management believes this
non-GAAP financial information facilitates period-to-period
comparison in the analysis of trends in business performance,
thereby providing valuable supplemental information regarding its
results of operations, consistent with how the Company internally
evaluates its financial results.
The impact of foreign currency translation is calculated by
converting the Company's current-period local currency financial
results into U.S. dollar using the prior period's exchange rates
and comparing these adjusted amounts to its prior period reported
results. The difference between actual growth rates and constant
currency growth rates represents the estimated impact of foreign
currency translation.
Organic Net Sales Growth:
Organic net sales growth is defined as net sales excluding the
impact of foreign currency translation, changes due to the
pass-through pricing of certain metals and acquisitions and/or
divestitures, as applicable. Management believes this non-GAAP
financial measure provides investors with a more complete
understanding of the underlying net sales trends by providing
comparable net sales over differing periods on a consistent
basis.
The following table reconciles GAAP net sales growth to organic
net sales growth for the three months ended March 31, 2024:
Three Months Ended March 31,
2024
Reported Net Sales
Growth
Impact of Currency
Constant Currency
Change in Pass-Through Metals
Pricing
Acquisitions
Organic Net Sales
Growth
Electronics
3%
2%
5%
0%
(1)%
4%
Industrial & Specialty
(4)%
1%
(3)%
—%
0%
(3)%
Total
0%
2%
2%
0%
(1)%
1%
NOTE: Totals may not sum due to
rounding.
For the three months ended March 31, 2024, Electronics'
consolidated results were positively impacted by $0.5 million of
pass-through metals pricing and $4.8 million of acquisitions and
Industrial & Specialty's consolidated results were positively
impacted by $0.5 million of acquisitions.
Adjusted Earnings Per Share (EPS):
Adjusted EPS is a key metric used by management to measure
operating performance and trends as management believes the
exclusion of certain expenses in calculating adjusted EPS
facilitates operating performance comparisons on a period-to-period
basis. Adjusted EPS is defined as net income adjusted to reflect
adjustments consistent with the Company's definition of adjusted
EBITDA. Additionally, the Company eliminates amortization expense
associated with intangible assets, incremental depreciation
associated with the step-up of fixed assets and incremental cost of
sales associated with the step-up of inventories, as applicable,
recognized in purchase accounting for acquisitions.
Further, the Company adjusts its effective tax rate to 20%, as
described in footnote (7) under the reconciliation table below.
This effective tax rate, which reflects the Company’s estimated
long-term expectations for taxes to be paid on its adjusted
non-GAAP earnings, is consistent with how management evaluates the
Company’s financial performance. The Company also believes that
providing a fixed rate facilitates comparisons of business
performance from period to period. This non-GAAP effective tax rate
is lower than the average of the statutory tax rates applicable to
the Company’s jurisdictional mix of earnings, primarily because it
reflects tax benefits derived from U.S. tax attribute
carryforwards, which consist of operating losses and tax
credits.
The resulting adjusted net income is then divided by the
Company's adjusted common shares outstanding. Adjusted common
shares outstanding represent the shares outstanding as of the
balance sheet date for the quarter-to-date period and an average of
each quarter for the year-to-date period plus shares issuable upon
exercise or vesting of all outstanding equity awards (assuming a
performance achievement target level for equity awards with targets
considered probable).
The following table reconciles GAAP "Net income" to "Adjusted
net income" and presents the number of adjusted common shares
outstanding used in calculating adjusted EPS for each period
presented below:
Three Months Ended
March 31,
(dollars in millions, except per share
amounts)
2024
2023
Net income
$
56.0
$
43.0
Net income attributable to non-controlling
interests
—
(0.1
)
Reversal of amortization expense
(1)
30.2
29.6
Adjustment to reverse incremental
depreciation expense from acquisitions
(1)
0.3
0.4
Restructuring expense
(2)
2.3
2.3
Acquisition and integration expense
(3)
1.7
3.9
Foreign exchange gains on intercompany
loans
(4)
(6.8
)
(5.6
)
Kuprion Acquisition research and
development charge
(5)
3.9
—
Other, net
(6)
2.2
1.0
Tax effect of pre-tax non-GAAP
adjustments
(7)
(6.8
)
(6.3
)
Adjustment to estimated effective tax
rate
(7)
(0.4
)
4.9
Adjusted net income
$
82.6
$
73.1
Adjusted earnings per share
(8)
$
0.34
$
0.30
Adjusted common shares
outstanding
(8)
244.5
243.9
(1)
The Company eliminates the amortization
expense associated with intangible assets and incremental
depreciation associated with the step-up of fixed assets recognized
in purchase accounting for acquisitions. The Company believes these
adjustments provide insight with respect to the cash flows
necessary to maintain and enhance its product portfolio.
(2)
The Company adjusts for costs of
restructuring its operations, including those related to its
acquired businesses. The Company adjusts these costs because it
believes they are not reflective of ongoing operations.
(3)
The Company adjusts for costs associated
with acquisition and integration activity, including costs of
obtaining related financing, legal and accounting fees and transfer
taxes. The Company adjusts these costs because it believes they are
not reflective of ongoing operations.
(4)
The Company adjusts for foreign exchange
gains and losses on intercompany loans because it expects the
period-to-period movement of the applicable currencies to offset on
a long-term basis and because these gains and losses are not fully
realized due to their long-term nature. The Company does not
exclude foreign exchange gains and losses on short-term
intercompany and third-party payables and receivables.
(5)
The Company adjusts for research and
development costs associated with contingent consideration related
to the acquisition of Kuprion, Inc. The Company adjusts these costs
because it believes they are not reflective of ongoing
operations.
(6)
The Company's adjustments consist
primarily of highly inflationary accounting losses for its
operations in Turkey of $1.8 million and $0.5 million, certain
professional consulting fees and unrealized gains/losses on metals
derivative contracts for the three months ended March 31, 2024 and
2023, respectively. The Company adjusts for highly inflationary
accounting impacts for its operations in Turkey and unrealized
gains/losses on metals derivative contracts as it believes it
provides a more meaningful comparison of its performance between
periods. The Company adjusts for certain professional consulting
fees because it believes they are not reflective of ongoing
operations.
(7)
The Company uses a non-GAAP effective tax
rate of 20%. This rate, which reflects the Company's estimated
long-term expectations for taxes to be paid on its adjusted
non-GAAP earnings, is consistent with how management evaluates the
Company's financial performance. The Company also believes that
providing a fixed rate facilitates comparisons of business
performance from period to period. This non-GAAP effective tax rate
is lower than the average of the statutory tax rates applicable to
the Company's jurisdictional mix of earnings, primarily because it
reflects tax benefits derived from U.S. tax attribute
carryforwards, which consist of operating losses and tax credits.
These economic benefits are expected to recur through 2028. Without
taking into account these benefits derived from its U.S. tax
attribute carryforwards and other similar adjustments, the Company
projects its non-GAAP effective tax rate would be 24.2% based on
its estimated results for the full year 2024. This rate would have
resulted in a $0.02 reduction in Adjusted EPS for the three months
ended March 31, 2024.
(8)
The Company defines "Adjusted common
shares outstanding" as the number of shares of its common stock
outstanding as of the balance sheet date for the quarter-to-date
period and an average of each quarter for the year-to-date period,
plus the shares issuable upon exercise or vesting of all
outstanding equity awards (assuming a performance achievement
target level for equity awards with targets considered probable).
The Company adjusts the number of its outstanding common shares for
this calculation as it believes it provides a better understanding
of its results of operations on a per share basis. See the table
below for further information.
Adjusted Common Shares Outstanding at March 31, 2024 and
2023
The following table shows the Company's adjusted common shares
outstanding at each period presented:
March 31,
(amounts in millions)
2024
2023
Basic common shares outstanding
242.1
241.4
Number of shares issuable upon vesting of
granted Equity Awards
2.4
2.5
Adjusted common shares
outstanding
244.5
243.9
EBITDA and Adjusted EBITDA:
EBITDA represents earnings before interest, provision for income
taxes, depreciation and amortization. Adjusted EBITDA is defined as
EBITDA, excluding the impact of additional items included in GAAP
earnings which the Company believes are not representative or
indicative of its ongoing business or are considered to be
associated with its capital structure, as described in the
footnotes located under the "Adjusted Earnings Per Share (EPS)"
reconciliation table above. Adjusted EBITDA for each segment also
includes an allocation of corporate costs, such as compensation
expense and professional fees. Management believes adjusted EBITDA
and adjusted EBITDA margin provide investors with a more complete
understanding of the long-term profitability trends of the
Company's business and facilitate comparisons of its profitability
to prior and future periods.
The following table reconciles GAAP "Net income" to "Adjusted
EBITDA" for each of the periods presented:
Three Months Ended
March 31,
(dollars in millions)
2024
2023
Net income
$
56.0
$
43.0
Add (subtract):
Income tax expense
13.5
16.9
Interest expense, net
13.9
11.7
Depreciation expense
10.1
9.5
Amortization expense
30.2
29.6
EBITDA
123.7
110.7
Adjustments to reconcile to Adjusted
EBITDA:
Restructuring expense
(2)
2.3
2.3
Acquisition and integration expense
(3)
1.7
3.9
Foreign exchange gains on intercompany
loans
(4)
(6.8
)
(5.6
)
Kuprion Acquisition research and
development charge
(5)
3.9
—
Other, net
(6)
2.2
1.0
Adjusted EBITDA
$
127.0
$
112.3
NOTE: For the footnote descriptions,
please refer to the footnotes located under the "Adjusted Earnings
Per Share (EPS)" reconciliation table above.
Free Cash Flow:
Free cash flow is defined as net cash flows from operating
activities less net capital expenditures. Net capital expenditures
include capital expenditures less proceeds from the disposal of
property, plant and equipment. Management believes that free cash
flow, which measures the Company’s ability to generate cash from
its business operations, is an important financial measure for
evaluating the Company's liquidity. Free cash flow should be
considered as an additional measure of liquidity to, rather than as
a substitute for, net cash provided by operating activities.
The following table reconciles "Cash flows from operating
activities" to "Free cash flow" for the periods presented and the
Company's free cash flow outlook for the full year 2024:
Three Months Ended
March 31, 2024
Outlook
(dollars in millions)
2024
2023
2024
Cash flows from operating
activities
$
58.2
$
53.5
~$330-$360
Capital expenditures
(19.0
)
(9.1
)
~(50)-(60)
Proceeds from disposal of property, plant
and equipment
—
0.5
~0
Free cash flow
$
39.2
$
44.9
~$280-$300
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240429043020/en/
Investor Relations Contact: Varun Gokarn Senior Director,
Strategy and Finance Element Solutions Inc 1-203-952-0369
IR@elementsolutionsinc.com
Media Contact: Scott Bisang / Ed Hammond / Tali Epstein
Collected Strategies 1-212-379-2072 esi@collectedstrategies.com
Grafico Azioni Element Solutions (NYSE:ESI)
Storico
Da Dic 2024 a Gen 2025
Grafico Azioni Element Solutions (NYSE:ESI)
Storico
Da Gen 2024 a Gen 2025
