Key Financial Highlights – Second Quarter 2026

• Record Net Sales: \$978 million, up 56% reported and 15% organically from Q2 2025.
• Reported Net Income: \$77 million, up 63% from \$48 million in Q2 2025. Net income margin improved to 7.9% from 7.6%.
• Adjusted EBITDA: \$184 million, up 35% reported and 33% in constant currency. Adjusted EBITDA margin increased to 27.8% from 26.6%.
• Strong Cash Flow: Operating cash flow \$100 million; free cash flow \$74 million.
• EPS: GAAP diluted EPS \$0.32 (vs. \$0.20 prior year), Adjusted EPS \$0.47 (vs. \$0.37).

The Electronics segment contributed \$767 million in net sales (up 75%), including 29% from acquisitions. Organic net sales increased 20%. Specialties segment net sales grew 14% to \$211 million, with 9% from acquisitions net of divestitures and 3% organic growth.

Adjusted EBITDA for Electronics was \$142 million (up 47%), positively impacted by the Micromax acquisition (31% of constant currency EBITDA growth). Specialties Adjusted EBITDA was \$42 million (up 7%), with EFC Gases & Advanced Materials providing a 10% boost.

Updated 2026 Guidance

• Full Year 2026 Adjusted EBITDA: Expected in range of \$690 million to \$710 million, including contributions from Micromax and EFC acquisitions.
• Adjusted EPS Growth: Approximately 20% for the full year.
• Q3 2026 Adjusted EBITDA: Guidance at approximately \$180 million.

Major Strategic Development: Proposed Merger with Solstice

On July 6, 2026, Element Solutions Inc and Solstice entered into a definitive Agreement and Plan of Merger. The transaction will see Element Solutions shareholders receive:

• 0.5 shares of Solstice common stock plus \$10.00 in cash for each Element Solutions share, with cash in lieu of fractional shares.

The merger is expected to close in the first half of 2027, pending customary closing conditions and regulatory approvals.

CEO Benjamin Gliklich stated the merger aims to accelerate value creation by forming a stronger, differentiated electronics portfolio and unlocking compelling synergies. The combined company is expected to lead the market in profitability and cash flow, with potential for sustained double-digit earnings growth.

Balance Sheet and Capital Structure

• Total Assets: \$5.78 billion (vs. \$5.10 billion in 2025)
• Cash: \$189.6 million
• Debt: \$2.13 billion, with 93% at fixed rates
• Net Debt: \$1.94 billion
• Market Capitalization: \$11.8 billion (based on June 30, 2026 closing price)
• Total Capitalization: \$13.75 billion

Operational and Segment Performance

Electronics Segment: Net sales were \$767 million, up 75%, with pass-through metals pricing contributing \$107 million and acquisitions \$129 million. Organic net sales growth was 20% for the quarter.

Specialties Segment: Net sales grew 14% to \$211 million, with acquisitions providing \$16.1 million. Organic growth was 3%.

Adjusted EBITDA Margin: Electronics margin improved to 31.5% (up 190 basis points), Specialties margin decreased slightly to 19.9% (down 130 bps), and total company margin improved to 27.8% (up 120 bps).

Cash Flow and Liquidity

• Operating cash flow for Q2: \$99.6 million
• Free cash flow for Q2: \$73.7 million
• Year-to-date free cash flow: negative \$0.5 million, reflecting significant acquisition activity

Capital expenditures for the quarter were \$27.9 million, reflecting investment in growth and integration.

Non-GAAP Measures and Adjustments

The company reported various non-GAAP measures, including Adjusted EBITDA, Adjusted EPS, and free cash flow, providing investors with a clearer picture of underlying operating performance. Notably, the company uses a 20% non-GAAP effective tax rate to reflect long-term expectations and recurring U.S. tax attribute carryforwards through 2028.

Adjustments include restructuring costs, acquisition/integration expenses, foreign exchange impacts, gains/losses on divestitures, and metals derivative contracts, among others.

Forward-Looking Statements and Risk Factors

Management highlighted several risks that could materially impact future results, including geopolitical uncertainties, tariffs, changes in trade policies, raw materials and metals price volatility, regulatory changes, and risks associated with merger integration and achieving anticipated synergies.

The successful completion of the Solstice merger is subject to shareholder and regulatory approval, and there are risks of delays, integration challenges, and potential litigation.

Shareholder Information and Proxy Details

Shareholders should be aware that, in connection with the merger, Solstice will file a registration statement (Form S-4) and a joint proxy statement/prospectus with the SEC. These documents will contain important details regarding the transaction and are essential reading for shareholders making voting decisions.

Directors and officers of both companies may be considered participants in the proxy solicitation, and their interests will be disclosed in these filings.

Investor Relations Contacts

For more information, shareholders may contact Element Solutions Inc’s investor relations or media contacts as provided in the report.

Potential Share Price Impact

The announcement of record financial results, strong organic growth, and the proposed merger with Solstice are highly price-sensitive developments. The merger consideration (0.5 Solstice shares plus \$10 cash per Element Solutions share) and the expectation of significant synergies and improved profitability may substantially affect Element Solutions’ share value. Investors should closely monitor regulatory and shareholder approvals, as well as integration progress, which could introduce volatility and uncertainty.

Disclaimer

This article is for informational purposes only and is not intended as investment advice or as a solicitation to buy or sell securities. Investors should review official SEC filings and consult with financial advisors before making any investment decisions. The forward-looking statements discussed are subject to risks and uncertainties that may cause actual results to differ materially.